To tackle in-work poverty, start with second earners

It will be difficult to reduce levels of child poverty in the UK without a concerted effort to increase the employment rate of workless partners.

Spencer Thompson is an economic analyst at IPPR

While yesterday’s unemployment figures presented some welcome news on the jobs front, just as important is the large number of families who are in work, but are not bringing in enough income to escape poverty.

More than 2 million children in working families are living in poverty, against 1.3 in workless families.

At least in terms of scale, working poverty is at least as big an issue for anti-poverty campaigners.

We can lay the blame for this situation at many doors: endemic levels of low pay, negative real earnings growth and spiralling housing costs all contribute.

But one dimension that warrants interest is the significant number of single earner couple families, those with only one parent in work. It is good that around two thirds of couples of children are both working, but just over a quarter have only one earner (around 5 per cent are workless).

IPPR’s research for the Joseph Rowntree Foundation, published today, shows just how important dual earning is for family living standards; almost a third of poor families with children are single earners. And the risk of child poverty is 20 per cent in single earner families, four times the risk of poverty in families where both parents work.

In addition, the recession has affected second earning – between 1997 and 2007 the situation improved, but since 2007 the proportion of couple families that are single earning has increased back to the same level it was in 1997.

Given the current unprecedented constraints on benefit spending, expected to last for the foreseeable future, we will find it extremely difficult to reduce levels of child poverty in the UK without a concerted effort to increase the employment rate of workless partners.

What can we do to fix this problem?

Since the vast majority (around 9 in 10) of workless partners in these families are female, and around half have children aged less than five, policies that support families with the dual demands of work and care are likely to be key.

In this context, moving towards universal affordable childcare that is flexible for parents should be seen as a key plank in an anti-poverty strategy.

In other areas, policy is moving in entirely the wrong direction. When Universal Credit is rolled out nationwide, an enormous number of workless partners (the DWP estimates around 900,000) will find they lose money if they move into work, because of the speed at which the benefits they are claiming under Universal Credit will be withdrawn.

Instead, the government should introduce a second earner disregard alongside Universal Credit, which would allow workless partners to keep some of their extra income from work, up to a specified amount.

Finally, helping fathers to spend more time at home is important. This is what many fathers want to do, it is good for family relationships, and also helps balance the responsibility of childcare between parents. The first step towards this will be the introduction of dedicated and flexible paternity leave, paid at a higher rate for a longer period of time.

More challenging for policymakers, we need to widen the idea of flexible work, changing the culture in the workplace so both men and women can fit work around their family needs.

There are other groups with high poverty rates that need to be considered, especially lone parents and workless families, but an emphasis on dual earning among couple families will be essential if we are going to make in-roads into poverty rates in an era of fiscal retrenchment and constrained benefit spending.

Some of the solutions, like introducing a second earner disregard into Universal Credit, do cost money and therefore require hard political choices and trade-offs to be made. But what is certain is we cannot rely on every increasing transfers of income through the benefit system to alleviate poverty.

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