Decent in-work benefits are crucial for reducing child poverty

Annual cuts to key benefits will take £17.9bn a year from working families by 2016/17


In the run up to the General Election, every few weeks Left Foot Forward will take a look back at the coalition’s record on a specific policy area. This week we focus on low pay, and each day we will feature a piece that looks back at the impact of coalition policies on in-work poverty over the past five years. The following is from Richard Exell, senior policy officer at the TUC

For many years governments have repeated the mantra that ‘work is the best route out of poverty’ and based their anti-poverty plans on schemes to get jobs for more people out of work. The government’s Child Poverty Strategy for instance, claims that tackling the ‘root causes’ means job creation, labour market programmes helping parents into employment and ‘making work pay’. It failed to mention the likely impact of cuts in benefits and tax credits.

There’s some justification for this: the risk of being poor is much higher in working families. In the government’s Households Below Average Income statistics, families that are workless because of unemployment are the only group where a majority live in relative poverty.

But unemployed families with no-one who has a job are quite a small minority in this country; fewer than four percent of the population live in a family like that. Most people in relative poverty live in other family types – 21 per cent live in households with a pensioner, 46 per cent live in working families and just 14 per cent in families that are workless because of unemployment.

And if we exclude pensioner families the figures are even starker: 58 per cent of working age people in relative poverty live in working families and a massive 63 per cent of children. And the fact is that it simply won’t be possible to deal with poverty only by relying on employment.

Last summer the Social Mobility and Child Poverty Commission published a report devoted to Understanding the parental employment scenarios necessary to meet the 2020 Child Poverty Targets. This report showed that achieving the Child Poverty Act targets for levels of child poverty in 2020 by increasing employment and earnings alone would require ‘an extreme (and implausible) increase in employment rates’ and an increase in hours worked that was almost as substantial.

What is more, if we look back at the substantial reduction in child poverty achieved by the last Labour government, although helping parents (especially lone parents) into employment played a role, most of this progress was due to the tax credits and above-inflation increases in Child Benefit and other benefits for children.

According to Prof Mike Brewer, ‘the increase in financial support for families with children was crucial’. Prof John Hills has also argued that the last government’s decision to move benefit resources from working age people without children to families with children was the main factor leading to a substantial reduction in child poverty.

Of course, as a trade unionist I believe that decent pay and more jobs must play a role in defeating poverty. But, given the labour market as it stands (and is likely to stand for some time yet), decent in-work benefits must play a part too.

And at this point we have to face the damage that has been done by the past five years of benefit cuts and reforms. Last year the TUC commissioned Landman Economics to look at just who has been hit by those cuts.

Our report based on that research, Benefit Cuts by Household Type, found that three-quarters of all welfare cuts to people of working age will hit working families. Annual cuts to key benefits will take £17.9bn a year from working families by 2016/17.

Working families with children stand to lose the most – £11.7bn a year. Benefit cuts on this scale, mainly affecting low-paid working families, mean that the claim to have a strategy for dealing with poverty that is based on welfare-to-work is a fraud.

Richard Exell is senior policy officer at the TUC. Follow him on Twitter

As you’re here, we have something to ask you. What we do here to deliver real news is more important than ever. But there’s a problem: we need readers like you to chip in to help us survive. We deliver progressive, independent media, that challenges the right’s hateful rhetoric. Together we can find the stories that get lost.

We’re not bankrolled by billionaire donors, but rely on readers chipping in whatever they can afford to protect our independence. What we do isn’t free, and we run on a shoestring. Can you help by chipping in as little as £1 a week to help us survive? Whatever you can donate, we’re so grateful - and we will ensure your money goes as far as possible to deliver hard-hitting news.

14 Responses to “Decent in-work benefits are crucial for reducing child poverty”

  1. Gary Scott

    I think we sometimes misidentify the problem. ‘In-work benefits’ ie Working Tax Credits, simply act as a subsidy for employers and allow them to pay less than employees can live on but avoiding the consequences. People simply have to be paid a fair amount. Interest rates are unbelievably low, inflation is low so why won’t employers pay the going rate. Of course it does not help that the highest concentration of jobs are in areas where both rents and house purchase prices are many times higher than elsewhere. A double whammy of council house sales and a strange concentration of work in the most expensive areas kills any chance of affordability for workers. In-work benefits are a symptom of the problem, not the problem itself…

  2. madasafish

    TUC support subsidsing employers… and then they wonder why wages are so low.

  3. Guest

    Yes, far too high for you, after all.

  4. Leon Wolfeson

    Or we could cut out all the poverty traps and burocracy and pay a living wage.
    Not to mention the issue of many of the benefits you’re talking about being corporate subsidies

  5. littleoddsandpieces

    Poor pensioners and the working poor are very much the same people.

    Half of the over 60s are within the working poor.

    The unemployed include the 1 million aged 60-64 on some kind of welfare.

    Because of the rise in retirement age, unemployed people are being told no state pension pay-out under Universal Credit rules til 73 or even 76.

    Universal Credit will hit the working poor with permanent sanctions, because the hardship payments will become a recoverable loan from any future benefit or from earned income.

    Housing Benefit will be sanctioned within UC, as that is absorbed by the benefit.

    Pension Credit is payable long before state pension age, but that get hits by Universal Credit.

    So babes in wombs to sanctioned mothers and onwards to grannies and grandads are all hit by Universal Credit, in or out of work.

    The TUC are not giving the
    Trade Unionist and Socialist Coalition (TUSC)
    any help with ads and media coverage,
    when TUSC have trade unionist stewards and branch secretaries as candidates.

    As TUSC has reached the fair media coverage threshold of 111 candidates in the general election, but the media are entirely ignoring them,
    the public are being denied information to vote for TUSC in Tory and Lib Dem marginals, especially in England (most populous of nations in the UK).

    The public do not get brand awareness of TUSC’s logo and will not vote for something they know nothing about.

    Labour by themselves will not get sufficient for the 323 MPs threshold to rule parliament after 7 May.

    The support and confidence alliance with Scotland SNP and Welsh Plaid Cymru will not be enough for Labour to rule government.

    The poor, in or out of work, disabled, chronic sick, poor grey vote, now outnumber all other voters in a great many marginals where the sitting Tory and Lib Dem MP have a slim majority, sometimes very tiny indeed.

    TUSC could win in many marginal voting areas, if the poor knew TUSC existed and realised they were old Labour they have known all their lives and current trade unions.

    Not something new, but just what they have known in work over their lifetime.

    The staff reps in public sector, the union stewards in a private job.

    TUSC would bring Labour back from Tory spending cuts and policies that is not bringing Labour its core voters.

    Universal Credit threatens permanent sanctions by the hard to find out about Hardship Payments becoming recoverable loans from future benefit or earned income.

    Child poverity will only get worse.

    Current welfare reform has not saved a penny.

    The starving have just had to be treated in hospital for malnutrition, and GPs treating kids for Rickets, effecting their bone development for life.

    Even obesity and gout is a poverty symptom, from the rubbish cheap food that is only affordable by the poor so so-called saving on welfare reform has just been more cost on NHS.

    This is a Vote or Starve election, but hardly anyone will come out to vote.

    This gives small parties the best chance in a generation.

    Labour need TUSC.

    The trade unions have given Labour sufficient for electioneering.

    Now it is the turn of TUC and the trade unions to all help TUSC by putting TUSC’s posters on their union buildings in towns and cities and pay for such as bicycle ads by the Jobcentres and the foodbanks, within the Tory and Lib Dem marginals in England, where TUSC is running.

    Something like that, please.

    Or else TUC’s banners saying Stop the Starvation is not what the trade unions are doing.

    Without TUSC, then the Tories will continue to rule after 7 May.

    Do you actually care about the children you say you do?

    Prove it please.

Comments are closed.