'Budget action on minimum wage and family benefits needed to tackle living standards crisis' say child poverty campaigners

March 2014
  • AME cap on benefits and tax credits could drive up child poverty
  • Additional childcare support welcome, but must not come at cost of wider family support
  • Living standards in crisis as ‘cost of a child’ rises faster than wages, inflation and family benefits

Speaking ahead of the UK Budget Statement tomorrow (19th March) John Dickie, the head of the Child Poverty Action Group (CPAG) in Scotland John Dickie said;

“With current policies pushing up to 100 000 children in Scotland into poverty it is vital that the Chancellor uses tomorrow’s Budget to support family incomes. That means increases to the national minimum wage and to the in work support provided by tax credits and the new Universal Credit, as well as a boost to the family benefits that protect families and support local economies. The news that all families who receive the new Universal Credit will be able to get support with up to 85% of childcare costs is a very welcome move in the right direction, but must not come at the expense of wider support for families. ”

The call comes as CPAG published new analysis highlighting the risks of the Chancellor’s new AME spending cap. The analysis, commissioned from the Institute for Social and Economic Research (ISER) at Essex University, highlights how an expected budget announcement on capping Annually Managed Expenditure (AME) could drive up UK child poverty rates.

The ‘AME cap’ will set an annual ceiling on overall spending for working age support through tax credits and benefits for low paid workers, carers, disabled people and single parents.

The analysis shows that:

  • Income transfers from this kind of support are an essential part of preventing high poverty rates in the EU countries with the lowest child poverty.
  • The UK leaves tax credits, social security and family benefits to do much more of the heavy lifting than in other EU countries where progressive taxation and structural factors of the economy play a larger role.

Mr Dickie added;

“The Chancellor’s cap would degrade the vital poverty-fighting role of social security by introducing rationing of basic support for children, working families and disabled people. It would tie the government’s hands on some of the most effective actions UK Ministers can take to reduce child poverty, locking-in cuts for the poorest families in Scotland and across the UK. What children really need is the same protection we’ve given pensioners. All the EU countries with much lower child poverty rates than us use income transfers for poverty prevention. If they can do so much better for their children, then so can we.”

Referring to research commissioned by the Child Poverty Action Group on the minimum costs of raising a child Mr Dickie continued;

“Low income families are facing a living standards crisis. Our research show that the cost of raising a child rose by 4% in 2013, the national minimum wage by only 1.8%, earnings by 1.5% and family benefits and tax credits by just 1%. Child benefit didn’t rise at all. The Chancellor needs to use this budget to ensure all our families benefit from economic growth.”

For further information or comment contact John Dickie, Head of CPAG in Scotland, on 0141 552 3656 or 07795 340 618

Notes to Editors

  • The attached Budget briefing set out CPAG priorities for Budget Statement 2014 as well as providing the latest child poverty facts and figures for Scotland and the UK as a whole. It includes CPAG’s previously unpublished Budget submission letter to the Chancellor.
  • The full ISER analysis on the role of social security spending in tackling poverty across Europe is available on request. Contact John Dickie on 0141 552 3656 or 07795 340 618. As well as the analysis, a short explanatory note authored by CPAG is available. Information and graphics may be reproduced from the ISER note in reporting.
  • To read CPAG’s response to proposals for the AME cap see our press release in response to the Autumn Statement 2013: www.cpag.org.uk/content/autumn-statement-creates-new-rationing-system-ch...
  • CPAG commissioned report The Cost of a Child in 2013 can be found at www.cpag.org.uk/content/cost-child-2013
  • For information on the large rises in UK child poverty that are projected by the Institute for Fiscal Studies, read their latest analysis published in January 2014: www.ifs.org.uk/bns/bn144.pdf
  • CPAG is the leading charity campaigning for the abolition of child poverty in the UK and for a better deal for low-income families and children.