UK 'lags behind' in helping poor

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The UK is spending proportionally less on its poorest families in its efforts to fight recession than any other rich nation except Russia, a charity claims.

After comparing G8 countries' stimulus packages, Save the Children demanded ministers set aside £3bn for low-income families in this year's Budget.

The call comes as charities mark the 10th anniversary of Labour's pledge to eradicate child poverty.

The Treasury says "decisive action" has helped people hit by the recession.

According to the government, 600,000 children have been lifted out of relative poverty since 1998 and a futher 500,000 are expected to follow as a result of current policies.

This figures refer to the numbers living in households with a disposable income of less than half the national average. <a name="top"></a> <a class="bodl" href="#spending">Spending on low-income families</a>

But the Child Poverty Action Group says that still leaves a shortfall of 700,000 on the goal set by former prime minister Tony Blair of halving child poverty by 2010 and wiping it out by 2020.

It is calling on ministers not to abandon the targets in the face of the economic downturn.

A Treasury spokesman said targeted support had included bringing forward an increase in child benefit, worth an extra £22 on average to families, and a £25 rise in child tax credit. When it comes to helping the poorest people in the financial crisis we are lagging way behind Colette MarshallSave the Children

Save the Children, which estimated the value of each country's measures introduced as part of moves to aid the economy, concluded this was worth £1.2bn to low-income families.

However, this amounted to just 0.06% of national income, measured as Gross Domestic Product (GDP).

The charity said $370bn (£262bn) of President Barack Obama's stimulus package was targeted at poor families in the US - the equivalent of 2.7% of GDP.

Japan spent 0.3% of GDP on low-income households, Italy 0.2% and both France and Germany 0.1%, according to the figures.

Colette Marshall, director of UK programmes for Save the Children, said: "This is a shocking discovery... at odds with the government’s own commitment to end child poverty.

"The UK is the only country in the G8 that has promised to end child poverty and yet when it comes to helping the poorest people in the financial crisis we are lagging way behind."

Essential spending

However, the UK government says that - unlike countries such as the US - it has a permanent financial safety net in place for those who are made redundant. These benefit payments would not be included in the charity's figures.

Save the Children cited US research that claims that every dollar spent on the poorest households gives a return of $1.78 to the economy, compared to $1.28 for each one spent on tax cuts.

The theory is that society's poorest people are more likely to spend cash immediately on essentials and in doing so create instant demand for goods and services.

Wealthier people are more likely to save the extra cash.

Ms Marshall said: "Other countries have obviously realised that investing in the poorest people is the most efficient way to stimulate your economy.

"Research shows that investing in low income families is not only the right thing to do for the poorest children, it is the right thing to do for the economy." <a name="spending"></a> <a class="bodl" href="#top">Back to top</a>