Welfare reforms to hit poorer working women, pushing 250,000 children deeper into poverty
EMBARGOED: NOT FOR PUBLICATION UNTIL 00:01 TUESDAY 13th March 2012
Poorer working mums trying to earn more for their children by working longer hours will be hit hard by the new Universal Credit, despite government pledges to make work pay, new research by Save the Children shows.
The charity has found that 150,000 of the UK’s poorest single working mums could lose up to £68 a week under the new Universal Credit, pushing a quarter of a million children deeper into poverty. The flagship welfare reforms will also hurt "second earners" - most of whom are women - with some families losing up to £1800 per year.
There are 3.5 million children living in poverty in the UK, one of the highest figures in Europe. The majority of these children come from working households, while evidence from overseas shows that supporting mothers in work drives down child poverty.
Female unemployment has recently topped 1m, while mothers already struggling to support their children have suffered cuts to childcare support, child benefit and tax credits. A new poll by Save the Children and Netmums found that 56% of mums said the main thing stopping them from taking a job or making them consider giving up work is the cost of childcare.
“Universal Credit will help some families, but mums working hard to stay above the breadline are its big blind spot. It's incredibly hard bringing up 3 kids on £370 a week - losing almost a fifth of that will push many families over the edge,” said Save the Children CEO Justin Forsyth. "The government must make sure mums who want to work keep more of their incomes and get more support with childcare. Otherwise we’ll see fewer women in the workplace and more children growing up in poverty.”
Universal Credit, which begins to replace the current benefits and tax credit system from October 2013, will leave many families better off but will also make a total of 1.1 million families with children poorer.
Ahead of the budget on 21st March, Save the Children is launching its Mums United campaign in collaboration with Gingerbread, the Daycare Trust and Netmums to make work pay for mothers who want to work their way out of poverty. It makes three main calls to Chancellor George Osborne for his next Budget:
- Ensure single working mums keep more of their incomes before losing benefits, as they are the only earner in the family.
- Ensure second earners keep first £2000 of their earnings without losing any benefits, as main breadwinners do;
- Increase support for childcare costs for low income families from the current level of 70% to 80%, to make sure mums are not priced out of work.
“Too many children in this country are going without basics like hot meals or proper clothes because their parents can’t earn enough. We know from other countries that supporting mums who want to work takes children out of poverty, so we need a system which offers mothers that choice. Unless we see movement on childcare and benefits for struggling working mums in this budget, it could be too late for hundreds of thousands of children,” said Mr Forsyth.
The main findings of the Save the Children research are:
- Lack of funding means that many poor parents trying to work more will lose out under Universal Credit, pushing more children into poverty. The majority of children in poverty live in working households;
- A typical single parent with three children, working full time on or around the minimum wage, could be as much as £3500 per year (£68 per week) worse off;
- A single parent with two children, working full time on or around the minimum wage, could be as much as £2500 per year (£48 per week) worse off;
- As well as hitting single parents working longer hours, the new system will support single earner couple families at the expense of couples where both parents work part-time on a low income. A typical low income couple with three children where one parent works 24 hours a week and the other works a few hours on low pay could lose as much as £1800 a year (£35 per week) under the new system;
- The number of people having to work part-time but wanting full-time work has recently reached a record 1.3 million;
To join Save the Children’s Mums United campaign or find out more, please go to www.savethechildren.org.uk/mums-united and sign your name. To watch mums joining the campaign, follow #MumsUnited on Twitter.
For further information, including interviews with case studies and spokespeople, please contact: Oliver Courtney on 0207 012 6469 or out of hours on 07831 650409.
Notes to editors:
- Universal Credit will streamline the current benefits and tax credit systems into one system. Its impact on family incomes will be complex and vary by family type and size, and by housing and childcare costs. Many low income working families will see increased incomes and improved work incentives, which is very welcome news for those in poverty. However under this top line picture there are worrying exceptions, with some hard-working parents - especially mums - being hit hard. Overall, 2.8 million households will have higher entitlements, 2.7 million households will see no change and 2 million households including 1.1 million households with children will have lower entitlements, according to the Department for Work and Pensions impact assessment of November 2011.
- A single mum who is £68 a week worse off has three children and has earnings from work of around £242 a week (equivalent to working 35 hours a week just above the minimum wage). Her gross income after housing costs is £370 under the current system and £302 under Universal Credit. The calculations are based on a family with average local authority rent and average pre school childcare costs.
- Across the country there are now over one million women unemployed, up from 700,000 in September 2008, with a further 1.3million women classed as economically inactive (as opposed to counted as being unemployed) but wanting a job. 2011 was the first year since 1996 that the Job Seekers Allowance (JSA) claimant count for women was consistently over half a million.
- Amongst couple families only 5% of children in families where both parents work full time and 8% of children where one parent works full-time and one parent works part-time are in poverty. This compares with 29% of children in households where one parent works full-time and the other parent doesn’t work. In spite of this the Government is prioritising support for single earner households at the expense of second earners, at a time when full-time work isn’t obtainable for many households.
- Female employment and child poverty are inextricably linked. In countries where child poverty is lower there tend to be more women in work
- The Government has said it will ensure no one is worse off under the new system in cash terms by making extra payments to those whose entitlement under Universal Credit is lower than under the current system. However, this protection will only be provided to current claimants and for a time limited period. Details of cash protection have yet to be fully set out. If the circumstances of the claimants change (what this means has not been defined) then they may lose this protection. New claimants will not be protected.
- Some working poor single parents will be better off under the new system because Universal Credit is likely to boost the incomes of single parents working less than 16 hours a week on low pay. However, there will be less of an incentive for this group to increase the number of hours they work to more than 16 compared to the current system.
- An online poll by Save the Children and Netmums found that 56% of mums said the main thing stopping them working is the cost of childcare. This figure is drawn from a random sample of more than 2000 mothers across the UK, who responded to a poll on the Netmums website between 1st and 7th March 2012.