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16.07.15

IFS study: 63% of children in poverty live in working families

The proportion of children in poverty living in a working family has increased in the last five years, an Institute for Fiscal Studies (IFS) report into living standards has revealed. 

Despite rising employment between 2009-10 and 2013-14, which led to a rise in the number of children living with working parents, at the same time working families have seen their earnings fall. 

According to the ‘Living Standards, Poverty and Inequality in the UK: 2015’ report, it was revealed that child poverty in working families has increased from 54% to 63%. 

Over the same period, increased rates of poverty within working families acted to increase absolute child poverty by more than two percentage points. This was caused primarily by falling real earnings. The rate of absolute child poverty in working families rose from 19% to 21%. 

Among those in income poverty, ‘material deprivation’ (according to what families say they cannot afford) is much higher for social renters, lone parents and disabled people than for owner-occupiers, the self-employed and those with some savings. 

Cuts to council tax support and the introduction of the so-called ‘bedroom tax’ in 2013–14 also seem to have caused clear increases in arrears, on council tax and rent respectively. 

It was suggested benefit cuts over this Parliament will put upward pressure on absolute poverty for working-age households – including those in work. 

Robert Joyce, a senior research economist at the IFS and another author of the report, said: “The government has recently emphasised worklessness as a cause of poverty. This makes sense, but tackling low living standards will be difficult without improvements for working families too.” 

A government spokesman said the report recognises that rising employment has led to increases in the proportion of children living with working parents. They added that work remains the best route out of poverty and “we want to ensure that when people go out to work they are paid a decent wage and get to keep more of what they earn”. 

But Alison Garnham, chief executive of the Child Poverty Action Group, said the IFS analysis shows the absurdity of the government’s attempt to amend the Child Poverty Act to say there’s no such thing as working poverty.  

“Sixty-three per cent of poor children are now in working families and if the chancellor’s cuts to in-work tax credits go ahead, then the numbers will continue to rise,” she said. 

“Parents need politicians to strengthen, not weaken, work incentives. Rather than spending billions on tax cuts which benefit the better off, the government should stop cutting tax credits and universal credit and start tackling the high housing and childcare costs that are holding parents back.” 

Julia Unwin, chief executive of the Joseph Rowntree Foundation, which funded the report, added that the upcoming minimum wage rise will help, but many low-income working families will still find themselves worse off due to tax credit changes. 

“Boosting productivity and creating more jobs which offer progression at work is vital to make work a reliable route out of poverty,” said Unwin. 

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