Unemployment creates new child poverty crisis

03 November 2009

A staggering two million British children now have no parent in work and the number of children in families having to survive on benefits has jumped by 170,000 in just twelve months according to a new report published today by the Campaign to End Child Poverty, of which The Children’s Society is a founding member. Child poverty is growing in affluent areas as well as those traditionally hard hit.

Through Thick and Thin: Tackling Child Poverty in Hard Times, written by leading social policy researcher Donald Hirsch, provides strong evidence for the government to implement End Child Poverty’s “Recession Recovery Package”.

The report warns that the number of children in families without jobs is rising to its highest level for a decade. It claims that without substantial investment now, 2.3 million children will be living in poverty in 2010, more than half a million above the government’s target. Investing £4 billion would take the government close to its aim of halving child poverty.

Donald Hirsch said, “We couldn’t afford to let the banks fail and now we can’t afford to fail our children, our future. Rising unemployment has created a new poverty crisis which could leave children scarred for life and cost society some £25 billion a year. This dwarfs the investment needed to hit the target to halve child poverty by 2010.”

Kate Green, Chief Executive of the Child Poverty Action Group, said, “This shows that more investment is needed as families feel the effects of the recession.”

“The Government must provide additional financial support for families on benefits and tax credits in the Pre-Budget Report in November. We also need a wider recession recovery package that improves the Social Fund, increases childcare, helps parents to work part time without losing benefits and meets extra school costs.”

The report contains some surprises. Affluent Berkshire and Surrey have suffered the highest proportionate rises in unemployment. And there has been an 18% rise in families with both parents out of work. After housing costs, a couple with two small children is left with £225 a week for everything, which puts them £115 below the poverty line.
 
The report also urges the government to give better financial support to parents who are out of work or in low-paid jobs, to help make work pay during the recovery.

End Child Poverty is calling for people to contact their local MP, the Chancellor and their local newspaper to press the government to invest in financial support for families in the Pre-Budget Report and action the Recession Recovery Package.  Find out more at www.endchildpoverty.org.uk.

Notes to Editors:

For more information, a copy of the report and interviews, please contact:
Melanie Dias or Liz Thorne Tel: 020 7278 3404 Email: Media@ecpc.org.uk

1.      More information can be found at www.endchildpoverty.org.uk. A full report can be supplied on request, using the contact details above.

2.      The Campaign to End Child Poverty is a coalition of more than 150 organisations, including Barnardo’s, UNICEF, Save the Children, National Union of Teachers, TUC, NSPCC, Shelter, National Children’s Bureau, Action for Children, Child Poverty Action Group, The Children’s Society and the Family Fund.

3.      Poverty is defined as living below 60 per cent of median income. Children growing up in poverty are more likely to fail at school, be unemployed as adults and get in trouble with the law, costing the UK economy £25 billion a year. 

4.      Taking into account announced policy changes, the number of children living in poverty in 2010 is estimated to be 2.3 million, half a million more than the Government’s target to halve child poverty by 2010. These figures are calculated on a before housing costs basis, which is the Government’s preferred measure. Child poverty is significantly higher once housing costs are taken into account. The latest official figures, from 2007/08, show that there are 2.9 million children living in poverty before housing costs are taken into account and 4 million children after housing costs. The after housing costs measure gives a more accurate picture of a family’s disposable income, especially as there are wide geographical variations in housing costs.

5.      Other report findings:

*        Affluent areas are not exempt from the economic crisis. Seven of the ten constituencies with the highest proportionate rises in unemployment – which affects the number of children facing poverty – are in Berkshire and Surrey, and include Mole Valley (162% rise in Jobseekers’ Allowance claims), Windsor (158% rise), and Runnymede & Weybridge (157% rise).

*        Despite new welfare to work measures, there has been no progress in three years towards meeting the target of 70% of single parents working by 2010. A typical unemployed lone parent with two children lives on £67 below the poverty line. 

6.      The report confirms the positive impact that government investment has on reducing child poverty. For example, between 1998 and 2004 when the government implemented the New Deals and increased greatly the amount of money given to low income families, through its tax credit regime, child poverty fell by 700,000.  

7.      The Campaign to End Child Poverty has launched a “Recession Recovery Package” to support Britain’s struggling families. This is a targeted and costed plan to help keep families afloat and out of debt, support Britain’s economic recovery and lift hundreds of thousands more children out of poverty. It urges the government to take five key actions: invest in benefits and tax credits; increase funding and access to the social fund and extend eligibility to those families on working tax credit; increase support for childcare costs; enable parents to work in ‘mini’ jobs; and help parents to meet the costs of school. See below for details.

*        Invest in benefits and tax credits: It’s the quickest, most cost effective way to support families and children and help them avoid debt. The more invested, the more children are lifted out of poverty and the more is spent in local businesses.
*        Cost: Any increase will make an important difference to families. Around £4bn would ensure the 2010 target to halve child poverty is met.[1]

*        Increase funding and access to the Social Fund and extend eligibility to those families on Working Tax Credit: This essential source of grants and free credit for low income families helps meet urgent costs like a broken oven or funeral. It must be better resourced and reach more families struggling in the recession before the loan sharks get to them.
*        Cost: £350 million

*        Increase support for childcare costs: Working Tax Credit only covers 80% of the costs of childcare. Meeting the other 20% will help ensure parents are better off in work. With many families forced to cut working hours, this could be the difference that keeps them in employment.
*        Cost: £420 million gross, but with a net economic and fiscal benefit from keeping more parents in work.

*        Enable parents to work in ‘mini’ jobs: Government has promised to pilot an earnings disregard of £50 a week to help lone parents on benefits who can only get jobs of 16 hours or less. A third of all Jobcentre Plus vacancies are for this type of job. Government should fast-forward rolling out the pilot nationally.
*        Cost: £790 million, with a net economic benefit and an income boost to families over £1 billion.

*        Help parents to meet the costs of school: The cost of school meals cuts deep into the budgets of low-paid working families.  Extending free school meals to families on Working Tax Credit could make the difference between being better off in work and claiming benefits. A school clothes grant for families without work will help keep many out of debt when the extra costs arise.
*        Cost: Free school meals extension: £102 million to offer free school meals to all children below the poverty line.[2]

[1] M Brewer, J Browne, R Joyce and H Sutherland, Micro-simulating child poverty in 2010 and 2020, Institute for Fiscal Studies, 2009
[1] http://www.schoolfoodtrust.org.uk/UploadDocs/Library/Documents/