London working parents face 'toxic' costs package

Mothers in couples in London are significantly less likely to be working than their counterparts elsewhere, new research from Child Poverty Action Group finds.

Employment among London’s couple-mums lags some 12 percentage points behind the rest of the UK according to the report, Hard Work.

The report also includes new analysis of Housing Benefit data which suggests that the traditional relationship between paid work and reduced poverty may be breaking down. Since 2011, despite a large fall in children in workless families, the number of working families assessed to be struggling with housing costs in London has increased significantly for both lone parents and for couples with children.

The report suggests that a ‘toxic combination’ of the capital’s high housing, childcare and travel costs, low pay and increasingly inadequate social security support for the low paid means that work is not a route out of poverty for many families.

London currently has the UK’s highest child poverty rate at 37%, with more poor children living in London than in Scotland and Wales combined.

For second earners in couples- usually mothers - sharp universal credit ‘tapers ’ - which claw back universal credit as earnings rise - can weaken both work incentives and gains from work, the report says. This currently affects very few London families given the delays to the roll out of Universal Credit, but would have a major impact on families in the next few years. Whilst the ‘first-earner’ of a couple gets to keep a proportion of their income before universal credit starts to taper off, for every pound that second earners get paid, 65 pence is cut from their universal credit.

Other key findings from the report are:

• Childcare fees are the biggest in-work cost for many London families yet help with the fees through tax credit and universal credit is capped far short of actual costs. A low-income London family needing full-time childcare for a child under two will spend £100 more per week on childcare than the equivalent family outside the capital. London parents are also far less likely to use free or low cost ‘informal childcare’, normally provided by friends or family.

• Low pay continues to hold working parents back, particularly for part-time workers. Despite higher costs in the capital, the lowest paid, in part-time jobs in the city miss out on a ‘London premium’, getting no more in pay than those in other areas of the UK (in contrast to full-time work where even in the bottom 10% of the earnings distribution hourly wages are 10 per cent higher than at national level).

While the number of children in workless households in the capital fell (1) steeply between 2010 and 2013, most of the fall is down to more single parents moving into work: the employment rate of couple parents - both mums and dads - has remained static in recent years.

Among its recommendations, the report urges the Government to make employment support available to parents - especially mothers in couples - who are not required to look for work.

Chief Executive of Child Poverty Action Group Alison Garnham said:

“At nearly every turn, London parents looking for jobs with pay and prospects they can build a life on aren’t getting a fair deal. Our research shows that getting a job in the capital doesn’t necessarily help parents get a better living standard for their kids. Parents across the country should be able to be confident that work provides a route out of poverty. Housing, childcare and transport costs are sky- high but wages are often low, and support from in-work benefits inadequate, especially for part-time workers in the city.

“London parents need a real living wage and a social security system that helps more with childcare and housing costs and makes it easier, not harder, to make work pay. As a would-be champion of working families, the Government should be ensuring that London parents who graft can be sure of getting their kids over the poverty line.”

End

Notes to Editors:

(1) Hard Work is available on request from CPAG’s press office.

(2) 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.

(3) CPAG is the host organisation for the Campaign to End Child Poverty coalition, which has members from across civil society including children’s charities, faith groups, unions and other civic sector organisation, united in their campaigning for public and political commitment to ensure the goal of ending child poverty by 2020 is met.

For further information please contact:

Jane Ahrends

CPAG Press and Campaigns Officer

Tel. 020 7812 5216 or 07816 909302

jahrends@cpag.org.uk

www.cpag.org.uk