IFS: Poverty rose in 2005-6

The Institute of Fiscal Studies reports that poverty in Britain rose for the first time in nearly a decade in 2005/6. This was the first year that benefit and tax credit rises for some of the groups most at risk of poverty rose slower than average incomes. Some of the key points:

*Government targets are to reduce child poverty by 200,000 a year, but despite the fact that extra spending since 1999 has been aimed specifically at hitting this target, levels of child poverty rose by 200,000 last year.

*The number of working age adults without children who are living in relative poverty is at its highest level since records began in 1961.

*But levels of pensioner poverty have continued to decline. It is only very recently that pensioners have been less likely than the general population to live in poverty, but this trend is continuing.

Interestingly, in the last couple of years the government shifted their approach to tackling poverty. Believing that their reforms had tackled the structural causes of poverty for the vast majority, they have been working up strategies to try to alter the behaviour of people who are in deep and persistent poverty (under Hilary Armstrong), and who are in receipt of incapacity benefit (under John Hutton).

What the IFS report shows is that this approach, personally supported very strongly by the Prime Minister, is based on faulty logic. Targeted spending increases aimed at 'deserving' children and pensioners can reduce poverty amongst those groups, but has not caused a structural change, so that as soon as the spending falls, levels of poverty rise again. Meanwhile, people who aren't seen as 'deserving' are at an increasing risk of poverty.

The response in the DWP to the slowdown in public spending has been to push for the introduction of the private sector into the 'multi billion pound market of welfare benefit delivery'. At the last election, this was a manifesto commitment - of the Conservative Party. Even its proponents don't make the case that it would lead to lower levels of poverty, and it seems to have managed to avoid the 'child poverty proofing' which all new policies are meant to go through.

Overall levels of poverty are still much lower than they were ten years ago. But this has been caused by rising levels of employment and direct cash transfers to particular groups at risk of poverty. Since public spending will not be growing as quickly in the next five years as in the past five, existing policies are likely to see further increases in levels of poverty. But the Blairite reflex response that this is an example of state failure and shows the need for more private sector involvement in delivering services isn't right either.

A political consensus has been built that child poverty should be ended and that it is job of government to make this happen. What's needed now is a broadening of this goal to encompass all kinds of poverty. Many working age adults living in poverty are going to be the parents of the future, and measures which reduce poverty amongst these people will also reduce poverty amongst families. Poverty is caused by low levels of benefit and low wages, and this is what needs addressing.