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This report analyses what changes will be needed for the government to achieve its ambitious target of ending child poverty by 2020.

The study starts by reviewing the character of child poverty in Britain today, and showing that not ending child poverty has high costs for our society, both moral and material. It then reviews a range of measures that can contribute to cutting child poverty, from long-term efforts to improve family opportunities such as improved education for disadvantaged groups, to more direct policies to raise family incomes through tax credits, benefits and welfare to work. A modelling exercise tested the contribution that some of these policies can make to reducing poverty, considering both the effect of existing policies and what new measures might be needed to meet targets.

The study brings together the findings of a project involving leading experts in this field. Its central conclusion is that present policies need to be greatly extended to meet the child poverty targets. This can partly be done through improved benefits and tax credits, but it would be excessively costly to rely on these alone, so wider policies are needed.

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The Government aims to eliminate child poverty by 2020. This study looks at the major policy areas that will potentially deliver this aim. It examines the strengths and weaknesses of how policy works in 2005/06 and – using hypothetical models – examines how far these reduce poverty by 2020.

The study found that the Government’s measures to assess the child poverty targets are problematic. Measuring income before housing costs is inconsistent with the Government’s adoption of after housing cost measures to ensure work pays for families with children. Additionally, the sole reliance on before housing cost definitions for poverty targets does not reflect actual disposable incomes for many poor families.

In-work benefits and tax credits in 2005 ‘make work pay’: in general, families with children are better off in work even at only 16 hours a week. But this does not ensure that families with children are not poor. There are large differences in poverty outcomes for families of different types on the same earnings level. Also, current trends in increased rents, council taxes and childcare costs threaten the success of anti-poverty policies based on incentives to work.

Looking ahead to 2020, a couple with two children will not be poor at all using the Government’s relative measure ,but will face five-and-a-half years of poverty taking housing costs based on a low social rent into account. Rent inflation worsens long-term poverty if measured after housing costs. However, the Government’s target measure will still record families facing high rent levels as never poor. Over the same period, a lone-parent family with a single child could experience eight-and-a-half years in poverty, even using the Government’s relative target measure, and eleven-and-a-half years of poverty after housing costs (assuming a low social rent).

Overall, current taxes and benefits will not be increased sufficiently to ensure that low-paid families escape relative poverty by 2020. But, by 2020, most out-of-work families with children and reliant on benefits will pass the Government’s absolute poverty target. This confuses a consistent policy message that seeks to present employment as the main route out of poverty.

This study forecasts the prospects for child poverty in 2010/11 and 2020/21 under current government policies, and illustrates the impact of various tax and benefit policies that could be implemented in 2010 and 2020.

The paper describes how micro-simulation techniques were used to forecast relative child poverty in the UK in 2010 and 2020 under various scenarios for future policy and socio-demographic change. This modelling work was at the core of the Joseph Rowntree Foundation’s project “What will it take to end child poverty?” It starts by looking at what would happen under present policies, projecting that the poverty rate would be fairly stable, and fall substantially short of meeting government targets for reduction. It then looks at the possible structure and cost of various benefit and tax credit changes, whose projected effects would be sufficient to meet the targets. These projections are not forecasts, but illustrations that allow the size of the impact of various policies to be compared, holding constant a number of unknown factors that could influence the eventual poverty rate.

This study programme constructs a set of forecast populations for 2010 and 2020, and explores the impact of different policy options for ‘eradicating’ child poverty.

To fully understand the impact of policies on the incidence of child poverty in the future we need forecasts of the main characteristics of families and households that influence the risk that children will be poor. Because the government’s poverty reduction goals refer to the numbers of children in poverty, this study forecasts the numbers of dependent children in 2010 and 2020, combining national and regional projections of the population by age. It also forecast the distribution of households by size and families by number of dependent children across 13 UK regions. Further important variables influencing child poverty are forecast, including the number of lone parent households at high risk of poverty, the number of households without an earner and the number of households in social housing. Finally, the study forecasts the future numbers in different ethnic groups, as the risk of poverty is greater in some groups than others. The regional projections of population composition by ethnicity represent new, innovative forecasts.

An eclectic variety of methods for producing these forecasts is used, ranging from simple extrapolation of trends in the past three censuses through cohort-component projections that include estimates of internal and international migration to a method for updating a multi-dimensional 2001 Census population array for each region.

The results of this work are used to re-weight the poverty policy analyses carried out on a microdata sample from the Family Resources survey, in order to judge the feasibility of the Government’s poverty reduction targets.

This study examines the contribution that reducing teenage births might make to ending child poverty.

Children born to teenage mothers are one of the groups at greatest risk of living in poverty. The prevalence of teenage births in the UK is high internationally; the government aims to reduce it. Even though it does not look likely that it will reach its targets for this policy, there are a range of approaches, from sex education to incentives to return to education, which can be developed further. However, it is important to bear in mind that children of teenage parents are such a small proportion of all children in poor families that even a successful policy to reduce teenage births would have only a minor impact on child poverty.

This study examines how the pattern of child poverty has changed since the Prime Minister’s pledge to reduce child poverty in 1999.

Child poverty has fallen in recent years, but what has happened to its composition? Are some groups represented to a greater or lesser extent now than previously? This paper looks at how poverty changed for different groups of children between 1999/2000 and 2004/5. It finds in particular that a declining proportion of poor children live with lone parents, in three-child families and in local authority housing, while a rising proportion live in families where all adults work, in families receiving tax credits and in housing association accommodation. Note, however, that this is relative, in a child poverty total that is declining. A wide range of groups, also listed in this paper, have seen significant falls in their poverty rate.

This study examines the cost of child poverty to society as a whole.

The Joseph Rowntree Foundation has been calculating the cost of ending child poverty. But the substantial cost to taxpayers of helping families on low incomes has to be set against the large costs of allowing child poverty to persist.

Child poverty carries costs to society on many levels. Some are psychological – the burden of seeing children suffer – and others more tangible. Among tangible consequences, some are experienced by the individuals and their families who are in poverty, and some by society as a whole – including the extra money that has to be spent helping people face the consequences of poverty, and the public finance consequences of those who grow up in poverty being less likely to work and having lower earning expectations if they do.

None of these things is easy to quantify. This paper, however, proposes a structure for describing the wider costs of child poverty, and gives some examples of the very large scale of those costs that can be measured. The following costs are not all attributable only to child poverty, but are likely to fall substantially if child poverty were eliminated:

• £3 billion a year spent on children by local authority social services, of which more than £1 billion goes to residential provision;
• over £500 million a year spent directly on homeless families with children;
• an estimated £3.6 billion a year spent on children with special educational needs, which include social, emotional and behavioural difficulties;
• about £300 million a year spent on free school dinners;
• extra spending on primary health care for deprived children, potentially of the order of £500 million a year;
• knock-on costs in lost taxes and extra benefits from adults with poor job prospects, which is linked to educational failure in childhood. For example, the fiscal cost for those who are not in education, employment or training aged 16 to18 is estimated at above £10 billion over the lifetime of a two-year cohort.

This study examines the impact on child poverty of mental illness among parents and carers.

Mental illness is an under-recognised but significant contributory factor to child poverty. There is a lack of hard data but it is likely that there are approximately 1.25 million children in England and Wales living with parents or carers who have a mental health problem.

Given the huge over-representation of people with mental health problems among those who are out of work (only 24 per cent of people with long-term mental health problems are in employment), and amongst recipients of sickness and disability benefits (larger than the total number of recipients of Jobseekers’ Allowance in England), it is a reasonable presumption that this situation must be producing hardship for many children: the conservative estimate made in this paper is 368,000.

Action is needed to improve the position of people with mental health problems as benefit claimants, users of financial services and consumers. Among the priorities for reform are benefit rules, which need to be sufficiently flexible to accommodate the fluctuating and unpredictable nature of most mental illnesses; welfare to work programmes that have the depth of expertise and continuity to support parents with mental health problems back into work; and policies and practices in the financial services sector that adequately acknowledge the vulnerabilities of families where a parent is mentally distressed.

This study reviews how other countries have tackled child poverty, and how the UK compares.

International comparisons help put the fight against child poverty in the UK in perspective, both by showing that other countries have succeeded in containing the problem and by pointing to some underlying characteristics of child poverty distinctive to the UK.

In reviewing the international evidence, this paper points out that despite a lack of completely up-to-date comparable statistics, the main picture is fairly clear. The UK has a higher rate of child poverty, measured relative to average incomes, than most comparable countries, despite some relative improvement in recent years. This arises both because of the larger number of UK families with children who have low or no earnings and because of the relatively limited extent to which government redistribution brings these families above the poverty line.

From the mid 1980s to the mid 1990s, child poverty rose faster in the UK than in any other developed country, and by 2000 the UK had the highest child poverty rate in the EU. Since then, there has been some improvement, but still only Italy, Portugal and the Slovak Republic have higher rates than the UK, and Poland and Greece about the same. The other 19 EU countries have lower child poverty, and the Nordic countries under half our rate.

One key driver of child poverty in the UK is the high proportion of children (second only to Sweden in the EU15) living in lone parent families, and the high proportion of these children (second to none) whose parents do not work. However, it is not just the high proportion of children in workless families, but also a relatively high risk of these children being poor, that makes the UK stand out. This reflects a less generous than average benefits system. We do less than average to iron out inequalities through cash transfers, and much less than a country like Sweden which has similar pre-redistribution child poverty but less than half the rate post-redistribution.

Current policy has started to change that, with the recent improvements in transfers to families with children in the UK not paralleled in most countries. However, one reason there's still a long way to go is that other countries start with more generous general out-of-work benefits supplemented by substantial universal child benefits, in which large families often get proportionately more. The current UK strategy of focusing largely on targeted children's benefits is an alternative approach, but it has a long way to go in catching up with these other systems.

This literature review explores how education can contribute to ending child poverty..

The study identifies powerful evidence that education in childhood and youth improves one's chances in adulthood. Gains from adult learning are more mixed, but less qualified adults can boost their incomes by participating in some kinds of programme.

An important finding is that the returns from investment in education are especially high for vulnerable groups, including those likely to leave school early, and those with disadvantaged backgrounds (most especially men). Some lower-level vocational qualifications have no discernible impact on wages, but dramatically improve job prospects.

Not only does parental education thus help children by providing family income, it also helps them in turn to do better at school, and thus weakens the intergenerational cycle of poverty. For example, one extra year of a mother's education increases her child's probability of staying on in school beyond compulsory school-leaving age by 8 to 10 percentage points.

These generalised effects are easier to measure than the impact of particular programmes. There is clearly a need for interventions to target extra help at disadvantaged and vulnerable students, but the effectiveness of each of these measures needs to be assessed on its own merits. It is not evident that all these programmes will bring benefits in line with their costs. The same goes for adult interventions, where there is stronger evidence of certain programmes raising employment prospects than raising wages.

In conclusion, education clearly has a powerful general role to play, in combination with other measures, in raising the long-term prospects of people with lifetime disadvantages. What is harder is to use particular programmes to meet particular short-term goals. When it comes to providing direct help to disadvantaged groups, solutions that work need to be chosen with care, and can be expensive if they are to be effective.

This study examines the contribution that 'welfare to work' might make to ending child poverty.

The paper looks at the scope for raising employment rates among parents (in particular among lone parents), and at wage opportunities, determining whether those moving into work get good enough pay to produce adequate incomes for their families. It focuses in particular on the situation of lone parents, but recognises that around half of children in poverty live with couples, and that the employment rates and in particular the joint earnings of these couples will also be important in getting child poverty down.

The study suggests that, on current policy positions, the Government will miss the stated 70 per cent employment target for lone parents. However, lone parent employment rates will rise, partly because more lone parents will be older and have older children in the future, but also because of the future effect of government initiatives, including its childcare strategy and the Pathways programme.

This study suggests that the lone parent employment rate could reach 65 per cent by 2010 on the basis of measures already in place or announced in the Welfare Reform Green paper, the 2005 Pre-Budget Report (PBR) and the 2006 Budget. To go beyond that, and to have a fighting chance of hitting the target of 70 per cent by 2010, will require three additional steps: rolling out the New Deal Plus for Lone Parents; a series of special, focused measures to tackle the weak employment of lone parents in London; and a new approach to job retention. Further improvements to work incentives may also prove necessary.

The paper's analysis draws from the experience of reforms in the United States as well as from recent trends in the United Kingdom, including the demonstrable effects on employment rates of various measures to date. It concludes that the Government is running out of time to meet its targets, and that given lags between policy announcement and delivery, the Pre-Budget Report, Budget and Comprehensive Spending Review taking place between the end of 2006 and summer 2007 represent the last opportunity to give the required boost.

This study examines the contribution that childcare might make to ending child poverty.

Many parents would like to work, but lack adequate childcare arrangements allowing them to do so. One consequence is that their income remains low and their children grow up in poverty. Providing accessible and affordable childcare is thus central to a strategy to end child poverty. This is largely because of the importance of parents working, but a related issue is that where childcare remains expensive relative to available wages, parents may have the option of working but this will not allow them to escape poverty.

The present government has shown high awareness of these factors since it came to power, and has made many efforts to improve childcare and access to it. Yet despite all these efforts, many people still lack satisfactory options for childcare. A new ten-year strategy is now trying to improve this. Yet the prospective impact on child poverty of improved arrangements remains poorly understood and largely unquantified.

Efforts both to boost supply and to finance demand have been energetic yet have fallen short in different ways. On the supply side, provision remains uneven. The development of a network of childcare centres is now intended to ensure that all communities are covered, but this is not the same as ensuring that all individuals receive adequate options. On the demand side, subsidies through tax credits have paid 70 per cent of eligible costs for people on low incomes, but still leave childcare expensive to many users compared to other countries. The subsidy rate and ceiling on costs are now increasing and this may help. However, it remains unclear to what extent current policy will increase employment rates and improve net earnings for those entering jobs – and thus the contribution that these policies will make to ending child poverty.