Anti-poverty drive is failing working families

from the Guardian

Anti-poverty drive is failing working families

· 1.4m children still poor despite parent having job
· Figure unchanged since 1997, says thinktank

Tania Branigan, political correspondent
The Guardian

Almost a million and a half children are living in poverty despite having a working parent - as many as when the government came to power in 1997, according to a report published today.

The Institute for Public Policy Research warns that low wages mean the strategy of "making work pay" is failing many families and that the benefits system creates little incentive for a second parent to work.

The government has pledged to end child poverty by 2020. Around 600,000 children have been lifted out of poverty since 1997. But the IPPR report shows that 1.4m - the same number as when Labour came to power - are still poor despite having at least one working parent.

It argues: "Almost six in 10 poor households in the UK (57%) have someone at work, up 10 percentage points on a decade ago ... for too many families, moving into work has not meant moving out of poverty. Millions of families are meeting their responsibility to contribute to society, but are not receiving a fair deal in return."

Graeme Cooke, co-author of the report Working out of Poverty, said: "They have made work pay relative to being on benefits - but haven't made sure it's a route out of poverty. Their approach has been two-pronged, getting people into work and transferring money through benefits and tax credits. But they need a third prong: taking action to make sure people have a chance to progress in working, wages are decent and both of those in a couple can do some work."

The figures show that while some jobless households have found work, and some working households have lifted themselves out of poverty, most working households in poverty have stayed there.

The report urges the government to raise the minimum wage in line with average earnings, enforce it more stringently and extend the adult rate to 21-year-olds. At present it kicks in at 22. It suggests a higher rate is needed for London.

It also calls for the introduction of a personal tax credit allowance, allowing both parents to earn up to £100 a week before their entitlement begins to be withdrawn, to encourage both to work. It argues that the current structure does not recognise that the poverty line is higher for couples than for single people. It believes the value of working tax credit could be increased for two-parent families by removing child tax credit from 2m better-off families.

Martin Narey, chair of the End Child Poverty campaign and chief executive of Barnardo's, welcomed the report. He said: "It is hard to get away sometimes from the public belief that child poverty is all about people on benefits ... we are a million miles away from the economic possibility of many households living out of poverty even if one parent is working."

Kate Green, chief executive of Child Poverty Action Group, warned that work often amounted to a new poverty trap. She added: "The main plank of the government's strategy to end child poverty is failing."

A Treasury spokesman said: "The government is committed to meeting its target of halving child poverty by 2010, and decisions on tax credits and financial support will be taken in the budget and pre-budget report in the usual way."