Tavistock Institute & JRF launch the third briefing in the series on family poverty and relationships.
In the Chancellor’s summer budget there are significant changes for families. The intention is to support working families by making work pay and creating a high pay, low welfare economy. But are these the right policies to reduce poverty and to help families such as lone parents into work? A new briefing on lone parents & poverty, is launched today (13 July) by the Tavistock Institute supported by the Joseph Rowntree Foundation (JRF).
The new government’s vision is to help working families, improve social mobility, create a welfare system that makes work pay by moving away from a low-wage, high tax and high welfare economy [1]. It has mapped out a plan to increase the national minimum wage and will take those working 30 hours a week on the minimum wage out of tax [2], which are positive steps to address the low-pay trap many families are in. However, by cutting tax credits and reducing the threshold of Universal Credit– in effect targeting the £12 billion welfare cuts at low-income working families – the government is setting itself up to fail on its own terms.
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Work for those in poverty is low-paid and insecure which leads to a low-pay, no pay cycle with people repeatedly falling into poverty over their lifecycle. The pressures are particularly acute for lone mothers with single incomes, who have to balance work and childcare alone. Due to caring responsibilities lone parents are more likely to be unemployed, be in part-time or unstable work than two-parent families. Lone parent families face some of the highest poverty risks both in terms of severity and duration. With child poverty costing an estimated £29 billion per year [3], this is a cost the government cannot afford in a time of austerity.
Our research found that in-work benefits such as tax-credits are vital to ensure working families, including lone parents and their children do not fall into poverty. They also top up low wages to increase the likelihood of people staying in employment by making work pay. But to make a real difference to families, the work allowance for universal credit needs to be raised rather than cut, so more can be earned before benefits are withdrawn.
By cutting these critical resources before addressing the root causes of poverty such as low pay, insecure work and the cost of living, there is a risk that more families – including working families the government wants to support – will fall into poverty [4]. The measures announced to increase pay will not happen quickly enough or be a sufficient amount to make up for these losses from in-work benefits [5] to meet the minimum income standard families need. [6] They undermine the government’s aim of increasing labour market participation for those in poverty.
Similarly, current welfare policy that encourages families and lone parents to work will only succeed if there is affordable and good quality childcare. Long-term poverty risks for working families and lone parents also need to be addressed, by combining in-work benefits with more intensive and ongoing training and support, so people can progress into stable work and higher wages.
Read the policy briefing on Lone Parents and Poverty.
Look out for the next policy briefing in the series by following us on Twitter or subscribing to our ‘Personal Relationships and Poverty’ mailing list here.
Project Lead: Laura Stock
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[1] Cameron, D. (2015). PM Speech on Opportunity. London: HM Government
[2] HM Government. (2015). Budget 2015. London
[3] Hirsch, D. (2013). An Estimate of the Cost of Child Poverty in 2013. London: CPAG
[4] JRF. (2015). JRF Budget Briefing: Using the July 2015 Budget to Tackle Poverty. York: Joseph Rowntree Foundation
[5] Johnson, P, Crawford, R, and Adam, S. (2015). Summer Budget 2015: IFS Post Budget Analysis. London: IFS
[6] JRF. (2015). Minimum Income Standard. York: Joseph Rowntree Foundation
