Two thirds of children in poverty living in working families

June 13, 2013

New figures today show that children below the poverty line are now twice as likely to come from homes with work, than homes without work.

Responding to today’s official figures on UK child poverty for 2011/12, published today by DWP, Alison Garnham, Chief Executive of Child Poverty Action Group, said:

“Despite all the talk about ‘scroungers’ and generations of families never working, today’s poverty figures expose comprehensively the myth that the main cause of poverty is people choosing not to work. The truth is that for a growing number of families work isn’t working. The promise that work would be a route out of poverty has not been kept as wages stagnate and spending cuts have hurt low income working families.

“It’s no coincidence that 2011 was the year nearly £1.5 billion of targeted support for working families was cut. The lowest paid also gained the least from increases in the personal tax allowance because nearly all of their gains were clawed back by the benefits system.

“The government deserves some credit for holding back an increase in relative child poverty by giving extra support to the poorest families through child tax credit in 2011. But the frightening truth is that this is the calm before the storm. New analysis from the Institute for Fiscal Studies suggests we face a massive surge of 1.1 million more children in poverty by 2020 due to the coalition’s tax credit and benefit cuts.

“We should remember that child poverty currently costs the UK economy £29 billion a year, a figure that academics estimate will rise to £35 billion if child poverty increases as projected. Failure to tackle child poverty is a false economy, costing both our children and our country dearly.

“People care about child poverty right across the political spectrum. New research by the End Child Poverty coalition shows that 8 out of 10 people believe child poverty should be a priority for any government to tackle. As the government prepares a new child poverty strategy for publication next spring, it will need to get tough on tackling poverty pay and job insecurity, while making sure that all families have access to affordable childcare, and a decent affordable home.”

ENDS

Notes to Editors

  • In 2000/01, 51% of poor children on the relative low income measure were from homes with work. Today’s figures show that in 2011/12 the balance has dramatically shifted over the last decade with 66% of poor children on the relative low income measure coming from homes with work.
  • The main Working Tax Credit cuts that hit in 2011/12, and help explain the shift in balance towards in-work poverty are:
Cuts to Working Tax Credit (WTC) 2011/12

Value of cut

£ Millions

   
Family element withdrawn from families on more than £40,000 130
Withdrawal rate increased to 41% 645
Disregard for in-year income rise reduced from £25,000 to £10,000 130
Childcare costs cut from 80% to 70% 270
Basic and 30 hour elements frozen fo 3 years 270
   
TOTAL 1445

 

  • The Institute for Fiscal Studies has estimated that under the government’s current child poverty strategy, alongside their tax and spending plans, relative child poverty will rise to 3.4 million by 2020: http://www.ifs.org.uk/comms/r78.pdf
  • Research by Donald Hirsch of Loughborough University has found that the UK’s high rates of child poverty cost the UK at least £29 billion a year if the rises predicted by the IFS were to, the cost to the UK economy would increase to at least £35 billion a year. Full details of the can be found here: http://www.cpag.org.uk/content/child-poverty-costs-uk-%C2%A329-billion-year
  • Child Poverty Action Group have written to the Chancellor ahead of the forthcoming spending review warning of the need to consider the costs to the economy and the Treasury of failure to reduce child poverty. The new research reinforces the importance of spending plans that factor in the long-term economic and fiscal benefits of reducing child poverty – benefits which therefore will help reduce and prevent government spending deficits. The text of the letter can be found on our website: http://www.cpag.org.uk/sites/default/files/CPAG%20spending%20review%20letter.230513.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.
  • 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:

Tim Nichols

CPAG Press Officer

Tel. 020 7812 5216 or 07816 909302 

tnichols@cpag.org.uk

www.cpag.org.uk