Working families on breadline ‘would need to work eight days a week to escape it’

Research from Action for Children shows how low-paid jobs, housing costs, self-employment, ethnicity, location and more mean many parents working full time are unable to make ends meet.

Child hold woman's hand at a table. She has her head in her hands and there is an open purse on the table with just a few pence spilling out of it.

 

An average low-income family where every parent was already working full time would need to squeeze in an extra 19 hours a week to escape the breadline – equivalent to working an eight-day week, according to new research from Action for Children.

Its research shows around 300,000 families with children are living in poverty in the UK despite every parent being in full-time employment.

As well as looking at the number of extra hours needed to escape poverty, the research looked at earnings. It found the average (median) low-income family where every parent worked full time would need a weekly pay rise of £168 (£8,736 more a year) to clear the poverty line – and over a quarter (28%) would need to earn more than £300 extra a week (over £15,600 more annually).

The report say factors such as low pay and job quality, ethnicity, geographic location and housing and disability are to blame. Nearly a quarter (24%) of parents affected are self-employed. The analysis shows nearly eight in 10 (78%) self-employed parents working full-time below the breadline are earning less than minimum wage.

It estimates there are 41,000 low-income families in full-time work who are trapped in poverty because at least one adult is self-employed with very low or even negative earnings.

Moreover, nearly half (46%) of those in poverty working full time are single parent families, and nearly one in five (18%) are from London.

Low-income parents in full-time work are much more likely to be in caring, leisure and other service and ‘elementary’ roles like cleaning, as well as significantly less likely to be in professional roles than the wider population of full-time workers. Nearly one in four (23%) are employed in the health and social work sector.

The figures also show that housing costs are on average £28 a week higher for this group than other households with children. Even if all their housing costs were reduced to zero, two fifths (39%) would still be in poverty, according to the research.

Earlier in the week a report from the think tank IPPR and Changing Realities highlighted a series of previously unreported flaws with the current benefit system which prevent people getting on in work including the impact of the sudden end of the emergency cost of living payments [for instance, it says a single adult who is out of work, under 25 and on Universal Credit faces an 18 per cent real terms cut to their income for day to day living costs]. It says some households are put off work due to having a combined tax-benefit withdrawal rate of 69 per cent because of the way Universal Credit taper rates and work allowances work alongside national insurance and income tax and says that even when Local Housing Allowance is unfrozen, research estimates over 800,000 households on Universal Credit who rent privately will continue to face a shortfall between their rent and housing support.

The report sets out a package of reforms, including calls to:

  • Increase the core entitlement for all households on Universal Credit by £50 a month, with an equivalent for those on legacy benefits.
  • Remove the two-child limit and benefit cap.
  • Introduce a second-earner work allowance and reduce the taper rate to 54 per cent (towards a goal of 50 per cent over the next parliament).
  • Tackle the five-week wait by introducing two weeks of backdating for new claims.

On 1st March the Court of Appeal dismissed an appeal by the Secretary of State for Work and Pensions against a ruling that a revision of a UC award could be backdated by up to one month. However, the Child Poverty Action Group says the online UC claim form does not ask the right questions for them to be able to claim it. It adds that this could impact in particular those currently being migrated from legacy benefits to UC.

Lynsey Dalton, solicitor at Child Poverty Action Group, said: “We welcome the court’s decision that universal credit can be backdated on revision, meaning claimants can receive a month’s worth of additional payments. But DWP must urgently change the online claims form or else many, many more will miss out on this much needed financial support. It is unjust to make individuals pay the price for an inadequate application process, especially with hundreds of thousands of claimants being moved onto the universal credit system in the coming months.”



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