Emergency Budget: Campaigners fear child poverty will worsen under coalition plans

Delivering the first Budget of the Conservative and Liberal Democrat coalition, Chancellor George Osborne outlined a series of measures intended to plug the hole in the nation’s finances.

However, the headline announcement that VAT will rise to 20 per cent – except on children’s clothes and food – is set to impact on lower-income families as much as the more affluent.

Meanwhile, child benefit will be frozen for the next three years and child tax credits will be withdrawn for families earning more than £40,000 a year.

Positive measures for families included the announcement that the tax-free personal allowance on income tax will be increased by £1,000 in April, giving 23 million people up to an extra £170 per year and taking 880,000 out of the tax system altogether.

The child element of child tax credit will also rise by £150 above inflation next year.

Tim Nichols, spokesman for the Child Poverty Action Group, welcomed the positive measures and a recognition that child benefit should remain in its current form. But, overall, he said the measures will not take more children out of poverty.

"It [the Budget] is certainly not good for child poverty," he said. "It is likely to be bad for it in terms of material deprivation and a lack of progress on the headline number [of children in poverty].

"We have always made it clear to government that we believe child poverty can continue to be reduced in bad as well as good times. It is about reducing inequality and that can be done."