Release Date: 08 Apr 2013
Today welfare reform measures take effect that cap benefits at 1 per cent increase per year until 2015 for families who are in and out of work, breaking the historic link between benefits and inflation (1).
Barnardo’s chief executive Anne Marie Carrie comments:
It is shameful that the Government is risking the well-being of vulnerable children growing up in poverty by breaking the link between benefits and inflation, adding to the hardship they faced last year when energy bills soared by up to 10 per cent, leaving the poorest families reporting that they are unable to afford adequate heating (2).
This move adds insult to injury as many low income households are already teetering on the brink of financial crisis, squeezed by the rising cost of essentials and high childcare bills that price them out of working more hours (3).
If the Government wants to make work pay, then why are the UK’s poorest families excluded from its new childcare funding measures, making it impossible for them to work their way out of the poverty trap(4)?
Only by acting decisively and urgently to support vulnerable families by committing to review its cap on benefits increases and helping to make childcare more affordable for the UK’s poorest families does the UK have any hope of reaching its target of eradicating child poverty by 2020 (5).
Notes to Editors
- On Monday benefits will be up-rated by one per cent rather than in line with inflation, as announced at the Autumn Statement. Furthermore the Welfare Benefits Up-rating Act legislated for the one per cent cap to also apply in 2014-15 and 2015-16. Sixty per cent of the households affected by the measure contain someone who works.
- Last year the price of essential utilities escalated, with gas bills rising by 10.4 per cent, electricity by 5.7 per cent, and food by 3.1 per cent last year. Barnardo’s The Real Cost of Living report demonstrates that poor families spend up to 1.75 times as much as richer families as a proportion of their weekly budget on essentials such as fuel, energy and food. As a result they experience inflation at 3.4 per cent in 2012 – up to a third more than those on the highest incomes who experienced it at 2.5 per cent. The families interviewed for the research reported that they were struggling to heat their houses adequately due to rising energy bills. The Government’s figures suggest that 200,000 more children will be plunged into poverty as a result of the Welfare and Benefits Up-rating measures.
- Currently all three and four year olds, and many disadvantaged two year olds, are entitled to 15 hours of free early years education and low income families can also have up to 70 per cent of childcare subsidised through the tax credit system. However, Barnardo’s Paying to Work reports reveal that under Universal Credit lone parent families with two pre-school children who attempt to work up to 24 hours a week will gain nothing from working more hours because of high childcare costs. In fact they could end up effectively paying out 28p per hour or more over what they earn beyond 25 hours work. (Please note, this report is calculated on the cost of childcare in England, however we believe the effects will be similar in Scotland, Wales and Northern Ireland.)
- The Government has announced that childcare funding for some low income families under universal credit will be increased from 70 pr cent to 85 per cent. However, this will only be available to families who pay income tax and as such there will be no additional support for those families working lower (part-time) hours.
- Under the 2010 Child Poverty Act the Government has a legal duty to eradicate child poverty by 2020.