Weakening the Safety Net

The UK’s safety net has been dramatically weakened by years of underinvestment, with £34 billion of cuts made to social security since 2010. The Coalition and Conservative governments slashed social security budgets and this in turn has hit children and low-income families hard.

Child benefit has been subject to freezes and below inflation uprating since 2011. Alongside this, we’ve seen the introduction of the two-child limit, which restricts the child element in Universal Credit and tax credits to the first two children in a family. As a result, it is no surprise that child poverty has increased.

Child benefit was first frozen between 2010-’11 and 2013-’14, then capped to a 1% increase in both 2014-’15 and 2015-’16. It was then frozen again between 2016-’17 and 2019-’20.  Recent TUC analysis shows that freezes to child benefit, coupled with changes in how benefits were uprated since 2010, will leave two-child families over £500 worse off in 2020-’21.

TUC analysis from 2019 showed child poverty in working households had risen by 800,000 since 2010 to 2.9 million – and that government policy on social security accounted for most of the rise in child poverty. More than 485,000 children (over 60%) in working households had been pushed below the breadline as a direct result of the government’s in-work benefit cuts.

Even the government’s own statistics reflect the growing prevalence of poverty in the UK. Their latest poverty statistics show that in 2018-’19, 4.2 million children were living in poverty. This is an increase of 100,000 on the previous year, and 600,000 higher than it was in 2010-’11.

It is also clear that work is not always a route out of poverty, as the government claims. Most children living in poverty live in a working household (72%, equivalent to a record-high 3 million). This is of little surprise given that the current government has presided over the longest pay squeeze in centuries. Even before the pandemic hit, real weekly earnings had still not recovered to the level they were at before the financial crisis.

Work has become increasingly precarious and insecure, with 3.6 million workers in insecure work. This has a particular impact on those with children, as parents must juggle childcare alongside last-minute shift cancellations, erratic work rotas and unpredictable changes to their weekly pay.

Lifting Children Out of Poverty

Even before coronavirus crisis hit the UK, it was clear that our safety net was broken. The holes have been exposed again by the large numbers now falling through the net as their income disappears in the wake of the coronavirus.

New analysis by IPPR and TUC shows that doubling child benefit payments or raising universal credit and tax credits for children would make a life-changing difference to many of the poorest families as the pandemic continues.

Doubling child benefit from its current rates would:

• Inject £14 billion directly into the economy over the next 18 months
• Boost GDP by £19 billion over 18 months (delivering a boost of 0.6% to GDP in 2021-’22) when considering the ripple or multiplier effects of additional spending
• Lift more than 500,000 children and 200,000 adults out of poverty

Increasing the child element of Universal Credit by £20 a week per child and removing the two-child limit would:

• Inject £11 billion directly into the economy over the next 18 months
• Boost GDP by £15 billion over 18 months (delivering a boost of 0.5% to GDP in 2021-22)
• Lift more than 700,000 children and 300,000 adults out of poverty

Both policies would cause a substantial reduction in child poverty, as well as lifting over 1 million people above the projected poverty line.

Tackling the Causes

The pandemic has highlighted just how precariously families on low incomes live. Rather than deflecting and distracting, the government needs to start tackling the causes of child poverty.

The social security system will be increasingly important for preventing poverty and destitution among families. Specific measures targeted at children are now urgently needed, as many families turn to support to the social security system.

As a start, an emergency overhaul of Universal Credit is needed. Unemployment support in the UK compares poorly with other European countries.

Alongside increasing the standard allowance of Universal Credit to £260 per week and getting rid of the five week wait, there must be a significant increase in support for children either from child benefit, tax credits or the equivalent in the child element of universal credit. And the two child limit needs to be scrapped.

The government also needs to ensure that work pays. The introduction of a £10 minimum wage for all would be a step towards an economy where everyone in work is paid enough to live on.

But this alone is not enough. As unemployment hits in the wake of the pandemic, the government must begin to invest in creating good, well-paid socially beneficial jobs. TUC analysis has shown how a public sector jobs drive and investment in green jobs of the future could help to deliver around 1.8 million jobs.

While this all happens, children need to be fed right now. And for many that means free school meals.