23 Feb 2016

a mother and daughter

More than seven million children live in families facing a four-year freeze to their benefits, research by The Children’s Society reveals.

The charity is warning that from April the freeze will hit just over four million low-income families across the UK. It risks pushing many more children into poverty over the next four years as living costs rise.

Shockingly, almost two thirds of those affected – 4.9 million children living in 2.6 million families – live in working households who receive benefits to top-up low pay.

Freezing Child Tax Credits, Working Tax Credits and Job Seekers’ Allowance – rather than raising them in line with living costs – could see affected families losing up to 12% from the real value of their benefits and tax credits by 2020.

The freeze forms part of the Welfare Reform and Work Bill, which is due to be debated in Parliament on Tuesday 23 February.

Ahead of the debate, and ahead of next month’s Budget, the charity is urging the Government to reconsider its plan to freeze benefits and agree to a moratorium on further cuts in support for low-income families.

The charity’s briefing, The Future of Family Incomes: How key tax and welfare changes will affect families to 2020, reveals for the first time the collective impact of a range of welfare, tax and benefit measures announced, but not yet introduced, by the current and previous governments.

While some changes, such as the introduction of a higher minimum wage, might increase household incomes by 2020, others will cancel out any gains by significantly cutting key support for many families.

Planned changes that threaten to make life harder for struggling families, aside from the benefits freeze, include limiting Child Tax Credits to a family’s first two children and scrapping the family element of Child Tax Credit. In addition, Universal Credit claimants may receive less support than they might have under other benefits.

Young parents and families with disabled children claiming Universal Credit for the first time are particularly likely to lose out.

The changes are expected to impact various family types in the following ways for people making new claims in 2020:

  • A 23-year-old primary school teacher and single mum of two children renting their home could be worse off by £239 per month, or £2,868 per year.
  • A nurse and her partner with three children, renting in London, could be worse off by £425 per month, or £5,100 per year.
  • An army corporal and his partner with three children, including one who is disabled, who own their home, could be worse off by £771 per month, or £9,252 per year.

Matthew Reed, Chief Executive of The Children’s Society, said: 'Families on low incomes are facing a barrage of cuts. If ministers are genuinely concerned about child poverty they must reconsider plans to freeze benefits over the next four years. At the very least, the Government needs to guarantee there will be no further cuts when the Chancellor delivers his Budget next month.

'Austerity has hit families hard, including those in work. Further cuts to support would push more children into poverty and undermine incentives for families to move into work or earn more.'

Research by the End Child Poverty coalition shows 28% of children in the UK live in poverty – and that nearly two thirds of children in poverty live in working households.

Estimated number of families and children in the UK facing four-year benefit freeze starting April 2016:

  • WORKING families facing 4-year benefit freeze: 2.62m
  • CHILDREN in WORKING families facing benefit freeze: 4.92m
  • TOTAL number of FAMILIES (working and out-of-work) facing benefit freeze: 4.01m
  • TOTAL number of CHILDREN in families (working and out-of-work) facing benefit freeze: 7.59m

The estimates are based on the most recent official data on tax credit claimants. Figures have been rounded.

Media enquiries

For more information or an interview, please call The Children’s Society media team on 020 7841 4422 or email media@childrenssociety.org.uk. For out-of-hours enquiries please call 07810 796 508.

Notes to Editors

  • Download The Future of Family Incomes: How key tax and welfare changes will affect families to 2020
  • Changes to benefits and other forms of support: Over the coming five years the Government will introduce a large number of changes affecting benefits, tax credits, income tax liabilities and earnings. They include an increase in the income tax personal allowance threshold to £12,500 by 2020, an increased National Minimum Wage (of £9 per hour) for workers over 25, the introduction of a four-year freeze on entitlements to most benefits and tax credits – including Local Housing Allowance rates (affecting Housing Benefit for families in private rental accommodation), a limitation on the receipt of the child element of Child Tax Credit and Universal Credit to the first two children in the household, the loss of the family element of child tax credit (and equivalent higher rate of first child addition in Universal Credit), reductions in work allowances/ income thresholds in Universal Credit and Tax Credits, a cut to the disabled child addition within Universal Credit compared to equivalent support available through the Tax Credits system, and a reduced standard allowance for parents aged under 25 within the Universal Credit system.
  • Full details of examples above: 1) Lone parent aged 23, two children, £500 pm rent, £15pw council tax. Earning £22,000, starting as a primary school teacher. 2) Couple (aged over 25) with three children, renting in London, rent £800 per month, council tax £20 per week. One working and earning £22000 as a nurse. 3) Couple with three children, one disabled in receipt of low rate DLA care component. Own their own home, mortgage £600 per month. One partner working, as army corporal earning £27,053. Figures correct as of 2015.
  • The Children’s Society is a national charity that runs local services, helping children and young people when they are at their most vulnerable, and have nowhere left to turn. We also campaign for changes to laws affecting children and young people, to stop the mistakes of the past being repeated in the future. Our supporters around the country fund our services and join our campaigns to show children and young people they are on their side.