Child poverty is set to soar under the coalition

Cameron promised that there would be no "increase in child poverty". But the IFS says it will soar.

David Cameron has previously insisted that the government's austerity programme will not result "in any increase in child poverty". But today's IFS report suggests that entirely the reverse is true: the coalition's policies will lead to a dramatic rise in absolute poverty and relative poverty.

The number of children in absolute poverty in 2015 is forecast to rise by 500,000 to 3 million, while the number in relative poverty (defined as households with less than 60 per cent of the median income) is estimated to rise by 400,000. The planned introduction of IDS's Universal Credit will reduce the number in relative poverty by about 450,000 children and 600,000 working-age adults in 2020-21. However, other changes such as indexing benefits in line with the lower Consumer Prices Index (CPI), rather than the higher Retail Prices Index (RPI) (see James Plunkett's Staggers blog on the coalition's £11bn stealth cut), will more than offset the impact on poverty of the Universal Credit.

It's a finding that should set alarm bells ringing in Downing Street. Cameron and George Osborne have chosen, against the judgement of some in their party, to claim that their austerity package is a "progressive" one. Should poverty increase on their watch (as it is now certain to), they will stand accused not only of being unfair but of being insincere. It was Cameron, after all, who made the Rawls-esque pledge that "the right test for our policies is how they help the most disadvantaged in society" and not the wealthy. A year later he promised: "We can make British poverty history, and we will make British poverty history."

There are plenty on the right who have urged the coalition to shift the goalposts and reject the internationally recognised definition of poverty (Imran Hussain, head of policy at the Child Poverty Action Group, defended this definition on The Staggers last year). For instance, Neil O'Brien, the director of Policy Exchange, has argued: "The problem with what the IFS is saying is that the measure they use isn't an indicator of real poverty; it's a measure of inequality.

"It defines 'poverty' as being below 60 percent of the average income. This is a hangover from the Gordon Brown era. Real poverty isn't the same as inequality. The IFS's definition would mean that there are actually more people in poverty in Britain today than there are in Poland."

But the government, to its credit, has so far refused to abandon the relative measure of child poverty. When Cameron claimed that the Spending Review would not increase child poverty, he used the same definition as Gordon Brown. He may soon wish he hadn't.

George Eaton is political editor of the New Statesman.

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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.