Welfare reform ‘will drive children into poverty’

Hundreds of thousands of children will be living in poverty by 2012 due to radical changes in welfare payments, according to a report by the Institute of Fiscal Studies (IFS).

The IFS report predicts that 400,000 children will fall into relative poverty in the course of this parliament and by 2015 there will be over three million children in absolute poverty, meaning the government will miss the legally binding targets of reducing child poverty by 2 million by 2020.

"Absolute and relative child poverty are forecast to be 23% and 24% in 2020–21 respectively. These compare with the targets of five per cent and ten per cent, set out in the Child Poverty Act (2010)," the IFS warned.

It added: "This would be the highest rate of absolute child poverty since 2001/02 and the highest rate of relative child poverty since 1999/2000."

A child is considered to be living in relative poverty if the household income is less than 60% of the average in that year. If the household income is below 60% of the 2010/11 average – a standard set out in this year's Child Poverty Act – they are classed as living in absolute poverty.

The report's authors have pointed to changes in the welfare system as a cause of the predicted increase in child poverty, with the new universal welfare replacing the system of tax credits brought in under Labour with the prime objective of getting children out of poverty.

Paul Johnson, the director of the IFS, said within the coalition there is "a colossal gap between rhetoric and reality".

He told the Guardian: "Even if there were a huge increase in the resources made available, it is hard to see how child poverty could fall by enough to hit this supposedly legally binding target in just nine years.”

A department for work and pensions spokesman said: "The IFS acknowledge that universal credit will substantially reduce child poverty. It will make work pay for the first time, tackling in-work poverty and lift over one million people, including 450,000 children, out of poverty.

"Our wide-ranging reforms will have a dynamic impact on some of the poorest families, encouraging people into work, many for the first time and improving the life chances of children at an earl