Study finds 2.6m children in working households in poverty

According to Monitoring Poverty and Social Exclusion 2016, a total of 7.4 million people, including 2.6 million children, are in poverty despite being in a working family.

The report by the New Policy Institute, finds that despite the economic recovery stopping poverty rates from rising higher, since 2010/11, in-work poverty has increased by 1.1 million people.

It says this has been driven by the ‘UK’s housing crisis’, high costs and insecurity in the private rented sector (PRS).

The report also reveals that a total of 13.5 million people, 21 per cent of the UK’s population, are living in poverty.

More than half of people in poverty in England live in London and southern England. The capital has the highest poverty rate at 27 per cent, which is six-per cent above the UK average.

However, the report does show the number of children living in a workless household has continued to fall and is now at 1.4 million, the lowest figure on record.

To reduce poverty, the JRF is calling on the Government to implement a number of measures, they include:

• Reversing cuts to the Work Allowance, which currently means that many families will be considerably worse off even after changes to the income tax threshold and Universal Credit taper are taken into account. A lone parent with two children working on the National Living Wage (NLW) will be £2,600 worse off, while a family of four with both parents in work on the NLW will be almost £1,000 worse off.
• Ending the freeze on working-age benefits so that they can rise in line with inflation. The OBR predicts that inflation will rise to above 2-per-cent next year, putting pressure on the budgets of low-income families if they do not see similar increases in wages and the value of social security.
• Making sure that people in low-paid work feel the benefits of action to solve the UK’s productivity crisis by extending plans to include low-wage sectors like retail, hospitality and care.

Helen Barnard, head of analysis at the Joseph Rowntree Foundation, said, ‘The UK economy is not working for low-income families. The economy has been growing since 2010 but during this time high rents, low wages and cuts to working-age benefits mean that many families, including working households, have actually seen their risk of poverty grow.

‘As it negotiates Brexit, it is vital that the Government does not allow its focus to slip from the domestic concerns that make a huge difference to people who are just about managing. This report shows that people on low-incomes cannot rely on economic growth and rising employment alone to improve their financial prospects. Families who are just about managing urgently need action to drive up real-term wages, provide more genuinely affordable homes and fill the gap caused by cuts to Universal Credit, which will cost a working family of four almost £1,000 per year.’

Alison Garnham, chief executive of the Child Poverty Action Group (CPAG), said, ‘As the report makes clear, for all the talk about helping just managing families, if you scratch below the surface, we have the highest ever proportion of poor people in households with jobs.  We have higher employment and falling worklessness, but we also have 2.6 million poor children with a working mum or dad.

'Today’s report chimes with Child Poverty Action Group’s own analysis, which shows that life is very much more insecure for millions of families. Families who are poor have got poorer, CPAG’s own research finds, and the experience of poverty has got harsher.

‘There are clear choices we can make to reduce our appalling poverty rates in working and non-working households. Reversing the deeply unpopular cuts to Universal Credit and ending the freeze on benefits would be a good place to start.’

A Government spokesperson said, 'We are committed to building a country that works for everyone, helping those who are just about managing so that nobody is defined by the circumstances of their birth.
 
'Since 2010, the number of people living in poverty has fallen by 300,000 but we know there’s more to do.
 
'We’re increasing the National Living Wage and taking millions of people out of income tax, to make sure it always pays to be in work.'