Labour's record on poverty in tatters

Ministers abandon targets for children as new figures reveal rising number on breadline

The full scale of Labour's failure to help the poorest in Britain was laid bare yesterday with revelations that hundreds of thousands of people were being plunged into deprivation even before the recession hit, and that the Government had been unable to make any impression on the numbers of children and pensioners in poverty.

Ministers were forced to admit that they had all but abandoned Labour's historic promise to halve child poverty by next year, telling The Independent that the state of the economy meant that saving jobs had to be the priority.

The admission came as official figures blew apart the Government's credibility on helping those struggling the most. They painted a bleak picture of worsening poverty in Britain even before the recession took root. The number of people living in poverty had climbed to 11 million by March 2008, a rise of 300,000 since 2006.

The poorest have seen their incomes drop, with 200,000 working adults falling below the poverty line last year. The Institute of Fiscal Studies (IFS) said inequality had risen to its highest level since 1961, warning that the situation would become even worse during the recession. Alastair Muriel, a research economist at the IFS, said: "If history is any guide, average income growth is likely to slow even further across the population." Meanwhile, pensioner poverty had also stalled, with 2.5 million living in relative poverty, the same amount as the previous year.

Michelle Mitchell, charity director for Age Concern and Help the Aged, criticised the Government for its lack of "concrete" progress in reaching poor pensioners. "Two million older people were in poverty before the recession even started," she said. "Now, after facing last year's rocketing inflation, pensioners on low incomes are still struggling with high food and fuel prices, while watching their income from savings evaporate."

Labour earned significant political capital in 1999 when it pledged to eradicate child poverty by 2020 and halve it by 2010, with Gordon Brown describing it as a "scar on Britain's soul". But around 2.9 million children were still living in poverty in 2007-08, the same as the previous year. Children defined as living in poverty are those in households earning less than 60 per cent of Britain's "median income".

Stephen Timms, Financial Secretary to the Treasury, conceded that the perilous state of the nation's finances meant that other concerns had to take priority over meeting the 2010 pledge. He said: "The short-term focus does have to be on maintaining and safeguarding employment."

Another measure suggested that child poverty was now on the rise. The number of children eligible for free school meals slightly increased this year in both primary and secondary schools – an extra 17,370 pupils qualify for free meals than did last year, as the effects of the recession begin to bite. Children are given free meals if their parents are on benefits or earn less than £15,575 per year.

The breaking of the promise over child poverty has angered senior figures within the Labour Party. John McFall, chairman of the Commons Treasury Committee, called on the Government to act urgently. "It is more important, not less, in these difficult economic times that the Government maintains its effort to eliminate child poverty," he said. "That action was missing in this year's Budget."

Earlier this year, the IFS calculated that the Government would have to target poor families with a £4.2bn bailout if it wanted to hit the 2010 commitment. It found that far from eradicating child poverty, it would be back up over the three million mark if no significant action was taken. But Mr McFall said that neither November's £20bn fiscal stimulus package, nor the Budget announced by the Chancellor two weeks ago, contained any significant measures to kick-start progress in reducing child poverty.

Ministers say they are now focusing their efforts on meeting the even more ambitious target to eradicate child poverty by 2020. Children's minister Beverley Hughes admitted that meeting the 2010 target would be "very difficult", but that the Government remained "absolutely committed" to wiping out child poverty by 2020.

The absence of measures to lower child poverty in the Budget meant the Government had "no hope" of hitting the 2010 target, said Carey Oppenheim, of the Institute for Public Policy Research. "These figures also pre-date the recession so the number of children in poverty today is likely to be higher," she said. "Many more children will be growing up in poverty, and at greater risk of underperforming in school or missing out on employment opportunities in later life. Turning this around requires greater financial support.

Theresa May, the shadow Work and Pensions Secretary, said the promise to halve child poverty was one of many Mr Brown had failed to deliver. "It is a tragedy that the number of children falling into the poverty cycle is continuing to rise," she said. "The Government needs to wake up and get a grip of this problem. We must tackle the root causes of poverty, such as educational failure, family breakdown, drug abuse, indebtedness and crime."

Steve Webb, the Liberal Democrat work and pensions spokesman, said Labour was "losing the fight against poverty", adding: "What chance has it got of abolishing child poverty if it can't even get half way?"