A million children of working parents growing up in deprivation But it estimates that the same number of children are now growing up amid "material deprivation" - meaning that they have to go without day-to-day comforts - without even being counted in the poverty figures. Of those, almost 1.4 million are children whose parents work but do not bring in enough to maintain decent living standards. While tax credits linked to work have risen by 28 per cent in the last decade, those with no inbuilt incentive are up by 63 per cent, according to the report. Even using the official measure, the poverty rate among typical two parent families in which both parents work fell by only 0.02 percentage points between 1999 and 2011 but by 10.3 points among those who do not work. The report backs plans to overhaul the way poverty is measured to include other factors such as whether a child has been in care, is getting poor grades at school or the family has mounting debts. "Both the income-focused measure and unrealistic targets create perverse incentives for policymakers to focus on short-term income redistribution rather than tackling the full range of disadvantages that children in poverty experience," the report concludes. Matthew Oakley, head of economics at Policy Exchange, said: "The current measure of child poverty needs changing. Simply assessing whether a child is in poverty on the basis of household income fails to take into consideration a number of serious issues. It leads us to think we are improving outcomes for children when in fact they can still be living severely deprived lives. A new measure, focused on income as well as factors such as the quality of housing and level of education, would likely increase the number of children in poverty. However, it would allow the government to focus policy solutions on improving outcomes both now and in the future for deprived children rather than simply masking the problem with state hand outs that do nothing to get to the root of the poverty problem.