Chancellor may miss target to halve child poverty, MPs warn

Gordon Brown will be warned today that he will miss his target to halve child poverty in four years unless he spends more on poorer families.

The report by the Treasury Select Committee is a blow to the Chancellor's hopes for a smooth transition of power from Tony Blair and could be used as ammunition against him by his critics.

The Tories claimed 600,000 more children were living in poverty by the Treasury's own measure than in 1997 when Mr Blair came to power.

George Osborne, the shadow Chancellor, is also set to exploit the committee's findings, highlighting the MPs' demand for more clarity over Budget changes to tax credits which the Treasury admitted could result in 5.3 million households being "losers" from the package. Mr Osborne said: "This is a powerful attack on Gordon Brown's addiction to stealth taxes."

The Government has announced a funding review with the aim of giving further help to people who lost money when their pension schemes wound up under-funded. Mr Brown announced the extension of the financial assistance scheme in the Budget to top up pensions to 80 per cent of the sum pensioners expected.

The Chancellor has been under sustained attack by the Tories for the £5bn a year "raid" on pension funds although he has denied it led directly to a collapse in the value of private pensions. James Purnell, the minister for Pensions Reform, said the report by the government actuary would be delivered in the summer.

The MPs also warn that the recent rise in inflation which triggered a letter by the Governor of the Bank of England to the Chancellor could lead to higher pay demands, knocking the economy off course, and said they would keep it under scrutiny.

However, the report from the committee - chaired by John McFall, a close friend of the Chancellor's - will be seen as a clear signal that Mr Brown will make tackling child poverty a priority for the Comprehensive Spending Review (CSR). The Chancellor has delayed the CSR to the autumn - by when he is expected to be Prime Minister - and said in the Budget he is making savings that would release £2bn for "frontline services".

The committee report warns that a "significant improvement" in government funding will be needed to halve child poverty over the next four years. "This year's Budget represents a small step in the battle against child poverty, but a significant improvement will be needed in the Comprehensive Spending Review if the Government's target for halving child poverty by 2010-11 is to be met," said Mr McFall.

The MPs expressed concern at a reported rise in child poverty in 2005-06 by 100,000 children.

Mr McFall said: "We would like the Government to publish its analysis of the impact of improving incentives to work on meeting its child poverty targets.

"Autumn will be time for the Government to spell out how they intend to meet the four-year target.

"Extra resources will need to be devoted both to welfare-to-work measures and to the benefits and tax credits systems for this to happen, and the Government needs to set out its strategy at that time."