Second-tier of child benefit has potential to take more than 40,000 children out of poverty

New research funded by Community Foundation Ireland, published today by the Economic and Social Research Institute has shown that child poverty could be reduced by a quarter – equivalent to taking over 40,000 children out of poverty – by introducing a means-tested second-tier of child benefit.

Such a reform – which would provide all households with children with a payment determined by their means and number of children – has been recommended by the Commission on Taxation and Welfare, the National Economic and Social Council and the Childrens Rights Alliance among others. We estimate that introducing this 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.

A second-tier of child benefit is far more effective at reducing child poverty than similarly costed increases in universal Child Benefit or means-tested IQCs (Increases for a Qualified Child), which would reduce child poverty by less than half as much. However, in undertaking such a reform the Government will have to confront some of the implicit choices made by the structure of the current welfare system that are rarely discussed, such as whether the welfare system should incentivise low-income individuals to engage in part-time work.

Dr. Karina Doorley, Senior Research Officer at the ESRI and an author of the report said: “The introduction of a second tier of child benefit would help to address child poverty, something the Government have placed renewed emphasis on with the establishment of a Child Poverty and Well-being Programme Office in the Department of the Taoiseach.“

Dr. Barra Roantree, Assistant Professor of Economics at Trinity College Dublin and another author of the report said: A substantial body of evidence finds that poverty has a negative effect on child and later life outcomes, particularly when it starts in early childhood and persists throughout. Our research provides evidence on the impact of different measures the Government might consider in trying to achieve their stated ambition of ending child poverty.”

Denise Charlton, Chief Executive of Community Foundation Ireland who funded the research added: “Targeting child supports at those families most at risk of deprivation and poverty is a proven way to narrowing the inequality gap. Here it has been a decade long debate prompted by child advocates. As a philanthropic hub with 5,000 community partners we believe the potential it offers to lift tens of thousands of children out of poverty is - on the back of this research - worth serious consideration by policymakers in the context of Budget 2024 and future budgets.”