Work pays, we are always told, but for many it is clearly not paying enough. The latest official child poverty figures released today show that in-work poverty is on the rise, with two-thirds of poor children now living in families with at least one working parent.

Alison Garnham is chief executive of the Child Poverty Action Group

Work pays, we are always told, but for many it is clearly not paying enough. The latest official child poverty figures released today show that in-work poverty is on the rise, with two-thirds of poor children now living in families with at least one working parent.

So just what is going on?

In part, of course, we have to look to the economy for an explanation – research from the Institute for Fiscal Studies showed yesterday that employees have frequently accepted shorter hours since 2008 rather than risk their jobs.

Couple this with the fact that real wages have stagnated for several years and it’s clear that poorer families have been pinched by both lower pay and underemployment.

Enter tax credits, designed to bridge the gap for poorer families in situations like these. Both working tax credit (WTC) and child tax credit (CTC) are widely regarded as the key reason child poverty decreased by over one million between 1998/99 and 2010/11. And certainly today’s statistics emphasise the critical poverty prevention role that these benefits play.

It’s hard not to see a link, for example, between the significant cuts to WTC that were rolled out from April 2011 and the rising share of poor children living in working families. By freezing the value of elements of WTC, tapering entitlements more sharply as earnings increase and reducing the amount that families can earn before their benefits were reduced, the government effectively cut over £1.3 billion of support to working families in 2011/12 alone.

Similarly, the fact that the overall number of children in poverty did not rise in 2011/12 is at least in part explained by the real increases in CTC implemented from April that year.

Reducing child poverty seemed to rank highly on the chancellor’s list of priorities in 2010 when he over-indexed CTC to the tune of £180 per child. But his promise to top up CTC in the subsequent fiscal year was later abandoned while his decision last autumn to uprate most benefits and tax credits at a sub-inflation one per cent for the next three years is but another turn of the screw.

What this year’s child poverty figures tell us, then, is that politically unpalatable though it may be, tax credits matter. Iain Duncan-Smith himself has tacitly acknowledged this today, stating that the government had “successfully protected the poorest from falling behind” in 2011/12.

What he failed to say, however, was that the way they did just this was through tax credits, the very policy he appears so thoroughly to despise.

Today’s child poverty figures, then, are the lull before the storm. It is next year’s figures that will begin to show the impact of austerity as tax credits and other benefits are stripped back to the bone.

With income support for poorer families unravelling left, right and centre, it comes as no surprise that child poverty is projected to rise by 1.1 million by 2020 . As a matter of policy, we are leaving our children utterly exposed.

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