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'Chancellor's cap will cause child poverty'

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'Chancellor's cap will cause child poverty'

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Published by Max Salsbury for 24dash.com in Central Government and also in Communities

40% of London's children 'living below the poverty line' 40% of London's children 'living below the poverty line'

The capping of annually managed expenditure (AME) that the chancellor is expected to announce in tomorrow's budget could drive up UK child poverty rates, new analysis has warned.

The ‘AME cap’ will set an annual ceiling on overall spending for working age support through tax credits and benefits for low paid workers, carers, disabled people and single parents.

But the study - commissioned by Child Poverty Action Group from the Institute for Social and Economic Research (ISER) at Essex University - found that:

  • Income transfers from this kind of support are an essential part of preventing high poverty rates in the EU countries with lowest child poverty.
  • The UK leaves tax credits, social security and family benefits to do much more of the heavy lifting than in other EU countries where progressive taxation and structural factors of the economy play a larger role.

Alison Garnham, chief executive of Child Poverty Action Group, said: “Our economy and our society get a huge return from social security spending but the Chancellor’s cap would degrade its poverty-fighting ability by introducing rationing of basic support for children, working families and disabled people.

"It would tie the government’s hands on some of the most effective actions ministers can take to reduce child poverty, locking-in cuts for the poorest families who really need the same protection we’ve given pensioners.

“The research makes clear that all the EU countries with much lower child poverty rates than Britain use income transfers for poverty prevention. If they can do so much better for their children, then so can we.

“If we caught up with other countries on things like progressive taxation, decent pay, affordable housing and better help with childcare to make it easier for parents to work, our social security system wouldn’t be left to do so much of the heavy lifting. Action in these areas would bring down child poverty too, whereas Osborne’s cap will only push more children into poverty.”

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