Brown: No More Cash For Child Poverty

Gordon Brown yesterday admitted the government faced a big challenge to reach its key child poverty target but refused to pledge more money to address the problem.

Giving testimony to parliament’s Treasury select committee, the chancellor also faced accusations that last week’s budget had left many poorer people worse off.

The government was stung this week when its own figures showed that child poverty had increased for the first time in six years while overall poverty had risen for the first time under this government.

The government is committed to halving child poverty by 2010. Mr Brown committed an extra £1bn to tax credits in the budget which he said would lift another 200,000 children out of poverty, although that leaves him 800,000 short of the target. He said: “We have taken a significant number of children out of poverty but there is a lot more we have to do … any statistics that show there is a bigger challenge makes me want to redouble our efforts.”

But the Institute for Fiscal Studies says another £4bn is needed over the next three years if Mr Brown is to have any chance of hitting the target. The chancellor, when pressed, refused to commit more money.

“The key to the future is how many people you can get into work. That’s the bigger contribution to tackling child poverty in future,” he said.

Mr Brown also drew criticism from Conservative MP Michael Fallon that the budget would leave poor people who do not claim tax credits worse off since it abolished the 10p starting rate of income tax. Mr Fallon asked the chancellor about an admission the day before from Treasury official Mark Neale who had said that the working tax credit was only claimed by 25% of the 5.3 million eligible for it.

Mr Brown said: “The idea that somehow low-paid people are losing out this year or losing out generally is completely wrong. People are seeing the minimum wage rise and therefore they are getting more benefit from the work they are doing. They have the benefit of an extended working tax credit if they are single or part of couples, as well as the benefit if they have got children, of the child tax credit.”

He said 20 million families would be better off as a result of the budget and that 100,000 additional claimants had taken up working tax credits since the figures used by Mr Neale were drawn up.

He said that the rise in the tax credit announced last week plus an advertising campaign would further increase take up of the benefit. “The generosity of the budget in providing an extra £1bn for the working tax credit will itself drive changes in behaviour,” said the chancellor.

Conservative MP Brooks Newmark said 2.9 million out of 6.5 million recipients of tax credits were being overpaid or underpaid. The underpayments, he said, could explain why child poverty had risen.

But the chancellor said under and over-payments were inevitable in a scheme which sought to react flexibly to people’s changing employment circumstances.

Figures out yesterday also showed take up of the pension credit had fallen last year. “This is further proof that Gordon Brown’s obsession with mass means-tested benefits is failing to help the most vulnerable people in our society,” said Lib Dem work and pensions spokesman David Laws. “The chancellor has long argued that take-up of means-tested benefits should improve with time, yet almost four out of 10 pensioners are still not claiming the money they are entitled to.”