ESRI: Second tier of child benefit would lift 40,000 children out of poverty

There is currently an estimated 170,000 children in Ireland living below the poverty line.

The introduction of a second tier of child benefit has the potential to take more than 40,000 children out of poverty, the Economic and Social Research Institute (ESRI) estimates.

The introduction of this reform, recommended by the Commission on Taxation and Welfare, the National Economic and Social Council, and the Children's Rights Alliance among others, would cost around €700m per year.

The move to introduce the means-tested child benefit could help more than 100,000 households and reduce the number of children below the poverty line by a quarter. The findings are included in new research published on Thursday by the ESRI conducted on behalf of Community Foundation Ireland.

There is currently an estimated 170,000 children in Ireland living below the poverty line. The ESRI estimates that a second tier of child benefit would be more effective at reducing child poverty than similarly costed increases in universal Child Benefit or means-tested increases for a qualified child (IQCs).

While such measures would reduce child poverty far less, in introducing a second tier of means-tested child benefit the Government will have to confront some of the implicit choices made by the structure of the current welfare system. This includes whether the welfare system should incentivise low-income individuals to engage in part-time work.

The introduction of such a reform would move the system in Ireland closer towards the model used by most other EU and OECD members, the report notes, where supplementary child income support is based on levels of income and family status rather than employment status or the receipt of a particular social welfare payment.

A substantial body of evidence finds that poverty has a negative effect on a child and their later life outcomes "particularly when it starts in early childhood and persists throughout", according to Dr Barra Roantree, assistant professor of economics at Trinity College Dublin and an author of the report.

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“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.”

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 has placed renewed emphasis on with the establishment of a Child Poverty and Well-being Programme Office in the Department of the Taoiseach." 

Targeting child support for those families most at risk of deprivation and poverty is a proven way to narrow the inequality gap, according to Denise Charlton, chief executive of Community Foundation Ireland who funded the research. 

"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.”