More children 'are escaping poverty'

Work and pensions secretary Andrew Smith said the number of children in absolute poverty had fallen more rapidly, with 2.1 million fewer 'growing up with their opportunities undermined by acute financial hardship'.

Figures from the Department for Work and Pensions' Households Below Average Incomes survey showed that 700,000 children have escaped income poverty since Labour came to power in 1997.

However, research for the Institute of Fiscal Studies (IFS) found that only the Government's tax and benefit policy 'has kept the lid on what would otherwise have been a much bigger growth in inequality'. The IFSpointed to an 'unusual combination' since the mid-1990s of 'slightly rising income inequality and yet falling relative poverty'.

The IFS said, 'The gap between the very rich, particularly the richest 500,000 individuals, and the rest of the population has got wider since 1997. But at the same time, many lower-income families have seen their incomes rise faster than the average.'

The Government plans to introduce a new relative poverty measure that does not take into account the effect of housing costs on living standards. But the IFS said the result would be that 900,000 children, classified previously as poor, would not be included in future statistics.

The Child Poverty Action Group welcomed the reduction in income poverty and anticipated that many more children would be lifted out of it when the child tax credits introduced in April 2003 were reflected in Government statistics. But policy and research officer Dr Paul Dornan warned that 'enormous numbers' of children remained in poverty and called on the Government to take further steps to help them in the next spending review.

The charity Save the Children estimated that nearly one million children in the UK were still living in severe poverty.