“Because this Government is committed to ending child poverty … the spending review has no measurable impact on child poverty over the next two years”
Chancellor George Osborne, Spending Review announcement, 20 October
It was families with children who lost out most in the Spending Review – according to analysis from the independent think tank, the Institute of Fiscal Studies. And that’s because of the various cuts to child benefit and child tax credits.
This led the Child Poverty Action Group to accuse the Chancellor of making “hollow claims”.
The charity’s Imran Hussain said: ” The IFS have made clear the awful truth that families with children are hardest hit. The claim that child poverty will not increase from the spending review is clearly wrong too.”
But that’s a bit misleading – because the IFS was talking about all families with children, not just the poorest.
It told Channel 4 News that it was not faulting Mr Osborne’s claim that the Government’s measures would not increase child poverty in “the next two years”. But the test would be what happened after 2012, when £11bn of the Government’s £18bn welfare cuts actually come into effect.
These cuts include changes to the way benefits are increased over time – after 2012, inflationary increases for benefits will be based on the consumer prices index, rather than the retail prices index. CPI is lower than RPI.
There will also be changes to local housing allowances paid to people who claim housing benefit and live in the private rented sector.
In future, there will be limits on how much rent can be covered by benefits, meaning people could be worse off if they remain in the same home.
People claiming disability living allowance will be re-assessed, with some moving on to less generous benefits.
And new rules will be introduced to ensure that families on benefits will not be able to claim more than £500 a week.
All of the measures above could drive up child poverty, if the Government does not introduce additional support for the poorest.
In the Spending Review, Mr Osborne made a move in this direction – announcing increases in the child element of the child tax credit to “provide support to four million lower income families”.
He can be given the benefit of the doubt when he says that “the spending review has no measurable impact on child poverty over the next two years”.
But he’s not making any promises after that – and we don’t know what will happen to child poverty beyond 2012.