During the Covid-19 lockdown period and the height of the cost-of-living crisis the Government had to go into emergency mode in supporting households and businesses. Its interventions were, broadly, necessary and welcome. While significant uncertainty remains and households are still under pressure, it is time now in Budget 2024 to return to what might be called a more “normal” package. This means winding down once-off-supports – though some may still be justified – and considering what permanent changes are needed in tax and spending.
In this light the latest study from the Economic and Social Research Institute is a welcome contribution. It addresses what will be a key issue in the years ahead – using public money to support those who really need it, rather than by putting more money into universal supports. And there could hardly be a more important area than the one it looks at: child poverty.
The report is the third in a series on poverty, income inequality and living standards produced by the institute in association with Community Foundation Ireland, a body funded by philanthropic donations. It proposes that a new child benefit payment, introduced alongside the existing scheme but targeted at less well-off households, could make a dent in child poverty.
It estimates that introducing this second tier of child benefit payment would cost around €700 million per year, benefiting more than 100,000 households and reducing the share of children below the poverty line by a quarter. This would mean lifting 40,000 children out of poverty and help many thousands of others.
The proposal is that the second tier of child benefit would replace existing additional payments for children attached to current welfare schemes and the working family payment. This, the research finds, provides a better route to lifting children out of poverty than increasing the main child benefit rate and the other payments already in place. Self-evidently, it also provides a better way of directing resources at those who need it.
The concept of a second tier of child benefit payments is not new, going back as far as a 2012 report to the then government from an advisory group which it established. It also featured in a 2020 report from the National Economic and Social Council and most recently in the report of the Commission on Tax and Welfare, which said it was part of a necessary focus on child poverty. Importantly, the commission said that the administrative system could now handle this type of reform.
Major changes like this cannot be made overnight. But with the Government having made tackling child poverty a key goal, this is an idea whose time has come. Budget 2024 should plan for its introduction.