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The Autumn Statement: The Squeeze for Families Is Here to Stay

Posted: 06/12/2012 11:12

This week's autumn statement has set the scene for struggling families in the years to come. A weak economy - and further cuts to public spending now and continuing to 2018 - mean that family finances are likely to be under severe pressure for a long time yet.

This was a chance for the chancellor to help these struggling families, and help the government towards achieving its commitment to end child poverty by 2020. A chance he did not take.

What changed in the Autumn Statement?

The headline impact on families from the autumn statement is the decision to increase some working-age benefits and support with housing costs by only one percent - well below the rate of inflation. This means that families will see the price of essential items such as food, clothing, fuel and rent rise faster next year than their budgets can keep up with.

As well as the short-term hit to family budgets; when the government makes decisions on a year-by-year makes it impossible for struggling families to plan ahead. The intention for a Welfare Up-rating Bill to provide consistency is a good one, but the results must be fair for families whether in or out of work.

What is the outlook for child poverty in the UK?

Coming almost exactly half-way through this parliament, now is a good time to reflect on what the government is doing to keep this promise to end child poverty by 2020.

There are 3.6million children living in poverty in the UK. Despite popular perceptions, most of them (58%) live in families where at least one parent works. Poverty is a very real issue for many low-income working families in the UK.

We would welcome any steps that help families work their way out of poverty. But based on what has been announced this week, and previously, we have real concerns that welfare reform could leave the most vulnerable families worse off.

One of the main difficulties families face right now is the cost of childcare. The only mention of childcare in the chancellor's statement was about preventing fraud. Not about how to support many working families finding it hard make ends meet. Helping families with expensive childcare costs means that unemployed parents are able move into work, or parents on a low income can increase their hours or even accept a promotion. It is an efficient way of spending money to help people off benefits and into work.

But the introduction of Universal Credit will see 100,000 of the country's poorest families take a hit when it comes to childcare costs. A big cut in the proportion of childcare costs covered - from up to 96% to 70% - means that for many families, work will no longer pay. Going out to work will simply not be worth it due to the high costs of childcare.

Apart from rethinking these changes to the welfare system, the government could help poor children by making sure that all children in poverty receive a free school meal. Currently, 1.2million children living in poverty do not. The introduction of Universal Credit is a chance to address this unacceptable situation.

Free school meals can be of enormous value to children in poverty, helping a child to stay healthy and improve educational attainment, but also easing the financial pressure on their family.

If the qualification criteria aren't changed, we risk creating an income "cliff edge" for families, where low income families could be considerably worse off if they got a pay rise or took on more hours, and lost their entitlement to free school meals as a result.

The chancellor stated that he wanted to create a system that was fair for working people. The government's current plans could in fact leave hundreds of thousands of families better off if they worked less or were paid less. That is not fair. The government should reconsider its plans and take the steps necessary to end child poverty.

 

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