Dr. Helen Russell:

I thank the Chair for the invitation to the ESRI to appear before the committee. I am the head of the social research division of the ESRI and I am joined by my colleague Karina Doorley, who heads up the tax, welfare and pensions team. We are grateful for the opportunity to discuss the insights from the ESRI research on child poverty and deprivation.

Child poverty is a key concern in Ireland and internationally and there is a growing body of evidence on the detrimental effects of childhood poverty in both the short and long term. Our latest research outlines the lasting link between childhood poverty and poverty, poor health and employment status in adulthood. Our research based on the Growing Up in Ireland study has highlighted the wide range of ways poverty impacts on the lives of children and young people, including cognitive and socioemotional development, mental and physical health, and educational outcomes and opportunities.

Currently, rates of income poverty and material deprivation are significantly higher for children than for adults under 65 and for the older population. The most recent monitoring poverty report we did with colleagues in Trinity College Dublin found that when housing costs are accounted for, one in five children is found to be below the poverty line. This amounts to 225,000 children. Ireland was found to rank 16th out of the 27 EU countries on this metric.

The report also found that those who experienced poverty during childhood are three times more likely to be materially deprived and twice as likely to be income poor in adulthood compared with those who grew up in good or very good financial circumstances. We found that differences in educational attainment and employment are key mechanisms behind these patterns, with higher rates of disability and family factors also playing a role. The ESRI's research has consistently shown that certain groups of children face a much higher risk of poverty, including those in lone-parent households, those living with someone with a disability and those in larger families. We also found that parental educational and social class backgrounds are strong predictors of child poverty, highlighting the role of structural inequalities. Qualitative research has also highlighted other groups not included in sufficient numbers in datasets. These include Traveller children and those living in direct provision or emergency accommodation, who are also among those most exposed to poverty. Using the SWITCH tax-benefit model, my colleagues have investigated the impact of Ireland’s current system of child-related benefits on child poverty and deprivation, looking at cash and in-kind benefits. The research found that these benefits significantly reduce child poverty rates. For example, without those benefits, the child consistent poverty rate would rise from 5.6% to 13.6%.

There are a number of ways policy can reduce those figures further. One such way is by increasing the earnings of families with children by reducing barriers to work. Another is the provision of more free services or in-kind benefits. A third is to increase targeted welfare payments to low-income families with children. Our research focused on the third channel, and colleagues looked at several reforms to the tax-benefit system that could further reduce child poverty. These include increases to the child benefit, the child support payment and the working families payment, as well as the introduction of a means-tested second tier of child benefit.

Among these, we found the second tier of child benefit to be the most cost-effective option. This reform would integrate child support payments with a modified working family payment, allowing all households with children to receive an amount determined by their means. For an annual cost of €773 million, it would reduce the child at-risk-of-poverty rate by 4.6 percentage points, the child deprivation rate by 0.7 percentage points and the child consistent poverty rate by 2.1 percentage points.

Our analysis suggests that such reforms should be designed carefully to avoid income losses for some households and the impacts on work incentives would also need to be investigated. A multifaceted and cross-departmental approach is necessary to address the intergenerational persistence of poverty. Among these, narrowing the gap in educational attainment between those growing up in financially advantaged and disadvantaged households is crucial.

I thank the committee for its attention and we are happy to answer any questions. My colleague Professor Doorley is also happy to answer questions about the analysis of the recent budget, of which the figures were released on Friday.