Child poverty going up, but by both less and more than previously thought
The latest IFS child poverty projections show a mixed picture compared with last time. In May 2013, they predicted that relative child poverty would rise from 2.3 million (before housing costs; the numbers after housing costs are all rather larger) in 2011 to 3.4 million by 2020. Yesterday, they revised that second figure down to 3.2 million. At the same time, though, the number of children in absolute poverty is now estimated to increase from 2.5 million in 2011 to 4.0 million in 2020, up from the previous estimate of 3.9 million.
So what’s going on? The IFS give a different answer in each instance. Projections for relative poverty rates have slightly fallen because, since May, weaker forecasts for earnings growth have lowered median incomes more than the incomes of low-income households. Since relative poverty is a measure of how many children have fallen too far behind the social norm, this narrowing of the gap between the incomes of middle-income and low-income households reduces the numbers who are poor under that measure.
In the case of absolute poverty, though, fluctuations in median income don’t have an impact. Instead, the poverty line is uprated each year in line with RPI inflation. Since projections for RPI inflation have gone up since May, the absolute poverty line in 2020 is a little higher, and thus the number of children caught below it goes up.
While a difference of a hundred thousand or two in poverty is obviously very important, these projections don’t change the overall picture, which is that child poverty is set to increase – a lot – while the government has a legal obligation to be doing the opposite, to end child poverty for good by 2020.