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Around 1 million children with key worker parents are living below the breadline, research shows
In some parts of Britain more than two-fifths of kids in key worker households are living below the breadline
Poverty levels “likely to get worse” as ministers hold down pay
Key workers in the public sector facing another year of real-terms pay cuts
ONE in 5 (19%) key worker households have children living in poverty, new TUC research has revealed.
The research, which uses the government definition for key workers, shows that the number of kids growing up in poverty in key worker households has increased by 65,000 over the past two years to nearly 1 million (989,000) in 2022.
It forecasts that in 2023 that number will rise again to 1.1 million unless ministers take further action to support families.
North East hit hardest
The analysis – undertaken for the TUC by Landman Economics – highlights how in some regions of the UK more than two-fifths of children in key worker households are now living in poverty.
Key worker families in the North East (41%) have the highest rate of child poverty followed by the North West (29%) and London (29%) and the East of England (24%).
Scotland (8.3%) and Wales (8.9%) have the lowest rates.
Worse set to come
The TUC warned child poverty rates among key worker households are likely to get worse.
Ministers have announced another of year of real-terms pay cuts for key workers in the public sector.
The union body says this will have a devastating impact on frontline workers after a brutal decade of pay freezes and cuts:
Hospital porters’ real pay will be down by £200 this year
Maternity care assistants’ real pay will be down by £600 this year
Nurses’ real pay will be down by £1,100 this year
Paramedics’ real pay will be down by over £1,500 this year
And ministers are calling for wages to be held down for some key workers in the private sector too.
The TUC says the additional support announced by the Treasury this year to help families with energy bills will be offset by cuts to real-terms pay and other rising living costs.
Risk of recession
The TUC says government calls for widespread pay suppression will reduce household spending and demand as the UK teeters on the brink of recession.
The union body highlighted how at the same time key workers are being told to tighten their belts, city bonuses are rocketing.
TUC analysis published in June month revealed that bonuses in the financial and insurance sector grew by 27.9% over the last year, six times faster than average wages in the same period, which grew by 4.2%.
TUC General Secretary Frances O’Grady said: “Our amazing key workers got us through the pandemic. The very least they deserve is to be able to provide for their families.
“But the government is locking too many key worker households into poverty.
“Ministers’ heartless decision to hold down pay will cause widespread hardship and put the UK at greater risk of recession.
“After the longest wage squeeze in 200 years we urgently need to get more money in the pockets of working families. This will help people get through this cost of living crisis and inject much-needed demand into our economy.
“It is particularly galling that as key workers are being told to tighten their belts, city executives are enjoying bumper bonuses. Once again ordinary working people are being forced to carry the can for a crisis made in Downing Street.”
Support needed for key worker families
The TUC is calling on the government to guarantee decent living standards by:
Raising the national minimum wage immediately.
Giving all key workers a fair pay rise that meets the cost of living
Funding the public sector so that all outsourced workers are paid at least the real Living Wage and get parity with directly employed staff.
Boosting universal credit to 80% of the real Living Wage
Significantly increasing benefit payments to children and removing the two-child limit within social security.
Children in poverty in key worker households by UK nation and region in 2022
Region
Total number of children in key worker families
Number of children in poverty in key worker families
Percentage of children in poverty in key worker families
Parents who refuse to pay child maintenance could face curfews, as Ministers plan new powers for the Child Maintenance Service.
The change is being considered as part of fresh proposals that will get more of the money that is owed to the children of separated parents.
The Child Maintenance Service (CMS) collected or arranged £1 billion in child maintenance payments last year, operating as a crucial weapon in the battle against child poverty. Child support payments help lift around 140,000 children out of poverty each year.
Curfew orders would be another method of enforcement, alongside current powers which include passport and driving license confiscation and earnings deduction orders, to tackle parents who continually refuse to pay maintenance owed.
As an alternative sanction to prison, which is costly and prevents maintenance getting to children, curfews would act as a deterrent by restricting and disrupting non-compliant parents’ lifestyles, stopping them, for example, from going out for dinner, to the pub or going on holiday.
The curfews would be monitored by an electronic tag with an electronic monitoring service applying the tag, monitoring and making sure the parent complies with the rules of the tag. If parents fail to comply, the CMS would be able refer them back to court which might then extend the curfew order or impose a prison sentence.
DWP Lords Minister Baroness Stedman-Scott said: “For children in low-income households, maintenance payments can make all the difference, lifting them out of poverty.
“We are not afraid to go after those parents who deliberately and repeatedly refuse to pay for their children.
“Curfew orders are another step towards providing the CMS with a full arsenal of powers to make sure children get the financial support they need to have the best start in life.”
This builds on a new powers introduced earlier this year to digitise all communications to parents and improvements to help the service trace the paying parent, calculate maintenance and enforce arrears more effectively.
The consultation is published here and closes on 12 August 2022.
MCKS Charitable Foundation UK provides schools across the country with support for food, toiletries and sanitary products by sending a weekly delivery to stock up their pantry cupboards.
The charity currently supports 16 schools across the country and aims to increase this to 100 within 12 months. Each school cupboard supports around 25 families a week and has become a vital life line for children and their families.
The Charity’s Chairman Les Flitcroft says: “Our charity is dedicated to providing caring and compassionate support and our school pantry cupboards provide an efficient way to get food and supplies directly to children who need them most”.
Westminster UTC School in London who has received care packages from the charity commented: “Genuinely, we are extremely grateful for the support from MCKS Charitable Foundation UK.
“Quite often our students confuse feeling sick with being hungry but we are not always in a position to offer them anything other than water, the cereal bars provided helped them throughout the exam week.
“For many of our pupils who are facing homelessness or challenging financial situations at home, having basic items such as deodorant and shower gel will mean we can practically support our students in a very important yet discreet way with this help”.
Stewards Academy in Harlow, Essex has been receiving weekly food deliveries from the charity for over a year and are extremely grateful for the support: “The help from MCKS Charity this year has helped many at a time of worry, and the support of vouchers, food, sanitary supplies and toiletries has been invaluable to our families.
“We cannot thank the charity enough for their tireless work for our community of Harlow”.
Les added: “As with any charity we rely on donations to keep our services going and we would like to partner with corporate companies who can support the charity to continue this vital support”.
Schools who feel they could benefit from this ongoing service are asked to contact the charity for further information.
One Parent Familes Scotland asked single parents accessing their services about the main issues affecting their lives and what needs to be done to tackle them.
Please give a child dignity, confidence and a sense of belonging when they go to school. Times are hard and families need your help more than ever.
A set of uniform can be the difference between a child attending and engaging in school or staying away.
There are two ways you can get involved in our Sponsor A Child appeal this summer:
Email us at info.esub@gmail.com and we will send you details of a child’s age, gender and what’s needed for a “back to school” pack. You then shop for the items and drop them in to one of our collection baskets.
Donate money and we will do the shopping for you (please ask us for our bank details if you would prefer to donate directly or if you are donating on behalf of a group or company).
You can of course just buy an item or two of new school clothing, and we will add it into a pack. Our Amazon wishlist also remains open if you would like to have something sent directly to us.
It’s a popular line with this government. And it should be true – but sadly, it isn’t.
The majority of people in poverty (57 per cent, or 8.3 million people) live in a working household. That rises to 75 per cent of children in poverty.
The government’s record on this is atrocious. The number of people in in-work poverty has increased by 2 million since they came to power in 2010. It’s now at a record high, as is the number of children in poverty living in a house where at least one adult is in work.
If work is to be the best route out of poverty, the government must do more to get pay rising. In the meantime, it can’t use “work is the best route out of poverty” as a cop out for not properly addressing the cost of living crisis. We need proper action. Structural solutions – such as improved trade union rights, nationalisation of energy companies, and improvements to the benefits system – are needed alongside a windfall tax to fund urgent support to pay energy bills.
17-year pay squeeze
A key reason for the rise of in-work poverty is that work simply doesn’t pay enough. The government’s minimum wage, even the one it calls a living wage, isn’t a real living wage.
And we’re in the midst of a 17-year pay squeeze. Real pay is currently lower than it was in 2008, and the Office for Budget Responsibility forecasts that it won’t return to above 2008 levels until 2025. This 17-year pay squeeze is, by far, the longest in living memory.
The impact of this on workers’ pay packets has been massive. If real weekly wages had continued growing at the pre-2008 rate, they’d now be £111 per week higher than they are. By 2026, if forecasts are correct, this’ll be £164.
Impact of energy costs
It’s against this background that real pay is falling again. Inflation, at 9 per cent, is hitting wages hard. In March 2022, average weekly earnings fell by £16 per week (-2.7 per cent) compared to the same month a year ago. Public sector pay growth is the worst on record – falling by £30 per week (4.9 per cent) over the same period.
The news that the energy cap will rise by around £800 in October is incredibly worrying. If this does happen, it means that between December 2021 and December 2022, energy bills will have risen by a massive 119 per cent. In contrast, nominal wages will have risen by just 5.2 per cent. The standard benefits payment will have risen by just 3.1 per cent. This means that energy bills are set to grow 23 times faster than wages and 38 times faster than benefits this year.
Pushing work as the route out of poverty is also often the government’s way of refusing to improve the welfare system. decent work and social security must go hand in hand, not be seen as alternatives.
Since it came to power, the government has repeatedly cut benefits payments in real terms. The real value of the standard benefits payment has fallen by £51 per month since 2010.
As set out above, in the face of massive rises in energy bills, the government has made real term cuts to benefits payments. When the price cap rises again in October, energy bills will be £1,523 per year higher than they were a year before. The standard benefits payment will only be £121 per year higher.
A common proposal around benefits is to bring forward the increase in benefits and pensions that would be expected in April 2023/24 to autumn of this year. For example, if inflation hit 10 per cent in September of this year (September is the reference month for benefit uprating), rather than waiting to increase benefits in April, they could be increased in October, and then maintained at that level from April onwards.
But this would increase benefits by around £7.70 a week, meaning it wouldn’t even go close to making up for cutting the £20 uplift.
Like the standard benefits payments, pensions also went up by just 3.1 per cent in April this year. Government made an active decision not to maintain the triple-lock – which would have seen pensions rise by around 8 per cent in line with the wage figures last autumn. This will cost pensioners almost £500 across the year.
Good, well-paid work is a route out of poverty
The current government has a proclivity towards badly funded temporary schemes and half-baked novelty ideas, which has again become clear during the current crisis. If it’s serious about tackling the cost of living crisis, we needed proper solutions to support people right now, alongside structural changes to fix these problems in the long term.
It’s not enough to just say that work is a route out of poverty. The reality is that too much work is low-paid and insecure. If government wants work to be a route out of poverty, it needs to ensure all work is well-paid and secure.
When it comes to pay, government should stop attacking trade unions, and instead improve trade union rights. Trade unions need stronger powers and better access to workplaces to drive up wages and conditions.
Fair pay deals need to be implemented in whole industries, negotiated with unions, and designed to get pay and productivity rising in every sector. We also need an emergency boost to the national minimum wage, as well as the long-awaited introduction of that employment bill they’ve been promising for ages to tackle insecure work.
To help people with energy costs, the government must recognise that energy is an essential public good that should come under public ownership, and implement an accelerated programme to insulate homes. To help people right now, we need a windfall tax to pay for additional grants to help with the costs of energy. With the energy cap rising by £1,523 in the space of just a year, this support will need to be substantial.
Government must also fix the benefits system. We want much more generous benefits payment (with the standard payment raised to £260 per week), alongside the scrapping of the cruel aspects of the system, such as the five-week wait, the benefits cap, the two-child limit and no recourse to public funds.
Work isn’t currently a route out of poverty, but it can be if government takes steps to ensure that all work is good, well-paid work.
MORE SUPPORT NEEDED, SAYS SCOTTISH FINANCE SECRETARY
The most vulnerable households across Scotland will receive support of over £1,000 this year, including a new one-off £650 cost of living payment
Universal support increases to £400 across Great Britain, as the October discount on energy bills is doubled and the requirement to repay it over 5 years scrapped
This new £15 billion support package is targeted towards millions of low-income households and brings the total cost of living support to £37 billion.
New temporary Energy Profits Levy on oil and gas firms will raise around £5 billion over the next year to help with cost of living, with a new investment allowance to encourage firms to invest in oil and gas extraction in the UK.
Millions of households across the UK will benefit from a new £15 billion package of targeted UK government support to help with the rising cost of living, the Chancellor announced yesterday.
The significant intervention includes a new, one-off £650 payment to more than 8 million low-income households on Universal Credit, Tax Credits and legacy benefits to be made in two tranches starting in the summer, with separate one-off payments of £300 to pensioner households and £150 to individuals receiving disability benefits – groups who are most vulnerable to rising prices.
Rishi Sunak also announced that the energy bills discount due to come in from October is being doubled from £200 to £400, while the requirement to pay it back will be scrapped. This means the vast majority of households will receive a £400 discount on their energy bills from October.
The new Cost of Living Support package will mean that the most vulnerable households in Scotland will receive over £1,000 of extra support this year.
To ensure there is support for everyone who needs it, Mr Sunak also announced a £500 million increase for the Household Support Fund. This brings the total Household Support Fund to £1.5 billion.
To help pay for the extra support – which takes the total direct government cost of living support to £37 billion – Mr Sunak said a new temporary 25% Energy Profits Levy would be introduced for oil and gas companies, reflecting their extraordinary profits. At the same time, in order to increase the incentive to invest the new levy will include a generous new 80% investment allowance. This balanced approach allows the government to deliver support to families, while encouraging investment and growth.
The Chancellor of the Exchequer Rishi Sunak said: ““I know that people in Scotland are anxious about keeping up with rising energy bills, which is why today we have introduced measures which will take the support for millions of the lowest income households over £1,000.
“As a nation we have a responsibility to help the most vulnerable, which is why this support is mostly targeted at people on low incomes, pensioners and disabled people. But we understand that all households in Scotland will be concerned about the rise in energy costs this Autumn, so every household is set to get £400 off their energy bills from October, with no repayments necessary.
“It is right that companies making extraordinary windfall profits from rising energy prices should contribute, and I’m introducing a temporary energy profits levy to help pay for this support, while still encouraging the investment that generates jobs in Scotland.”
Scottish Secretary Alister Jack said: “Global issues are causing real pressures in the cost of living for UK families. We understand how tough it is at the moment for many households, which is why the Chancellor has today announced a further £15 billion support package.
“A total of £400 per household towards fuel bills will help protect families from rising energy costs. Cash payments of £650 for low-income households on means tested benefits will target support at the most vulnerable in our society at this difficult time. This comes on top of our existing £22bn support package.
“Some of these measures will be paid for by a temporary levy on oil and gas companies – one which incentivises investment in the UK’s energy security.”
There is now more certainty that households will need further support, with inflation having risen faster than forecast and Ofgem expecting a further rise in the energy price cap in October.
So as part of the UK government’s targeted support, the Chancellor announced that around eight million of the lowest income households on Universal Credit, Tax Credits, and legacy benefits will receive an automatic £650 cost of living payment in two instalments via the welfare system this year.
Yesterday’s announcement is on top of the government’s existing £22 billion cost of living support which includes February’s energy bills intervention and action taken at this year’s Spring Statement including a £330 tax cut for millions of workers through the NICs threshold increase in July and 5p cut to fuel duty.
Energy Profits Levy
Surging commodity prices, driven in part by Russia’s war on Ukraine, has meant that the oil and gas sector have been making extraordinary profits. Ministers have been clear that they want to see the sector reinvest these profits in oil and gas extraction in the UK.
In order both to fairly tax the extraordinary profits and encourage investment, the Chancellor announced a temporary new Energy Profits Levy with a generous investment allowance built in. This nearly doubles the tax relief available and means the more investment a firm makes, the less tax it will pay.
The new Levy will be charged on oil and gas company profits at a rate of 25% and is expected to raise around £5 billion in its first 12 months, which will go towards easing the burden on families. It will be temporary, and if oil and gas prices return to historically more normal levels, will be phased out.
The new Investment Allowance, similar in style to the super-deduction, incentivises companies to invest through saving them 91p for every £1 they invest. This nearly doubles the tax relief available and means the more a company invests, the less tax they will pay.
The government expects the combination of the Levy and the new investment allowance to lead to an overall increase in investment, and the OBR will take account of this policy in their next forecast.
The Levy does not apply to the electricity generation sector – where extraordinary profits are also being made due to the impact that rising gas prices have on the price paid for electricity in the UK market, which has also been making extraordinary profits partly due to record gas prices but also due to how the market works.
As set out in the Energy Security Strategy the government is consulting with the power generation sector and investors to drive forward energy market reforms and ensure that the price paid for electricity is more reflective of the costs of production.
The Chancellor announced yesterday that the Treasury will urgently evaluate the scale of these extraordinary profits and the appropriate steps to take.
During the announcement, the Chancellor also set out the government’s strategy to control inflation through independent monetary policy, fiscal responsibility, and supply side activism – a plan he said that should see inflation come down and returning to its target over time.
Finance Secretary Kate Forbes has welcomed the short term action announced by the Chancellor of the Exchequer, but warned more support is needed for households and businesses as the cost of living crisis worsens.
Following calls from the Scottish Government, the UK Government has taken steps to ensure that cash grants, rather than loans, are provided to those on lowest incomes. Ms Forbes has also cautiously welcomed the decision to introduce a Windfall Tax on energy companies benefiting from significant profits but commented that it means Scottish industry is disproportionately funding interventions across the UK.
Responding to the Chancellor’s statement, Ms Forbes has said UK Ministers should have acted earlier and gone further to provide more support that would make a real long term impact, including following the Scottish Government’s lead by doubling the Scottish Child Payment to £20 per week – which is due to increase to £25 from late 2022 helping lift an estimated 50,000 children out of poverty in 2023-24.
Ms Forbes said: “Many households will be relieved to see the support belatedly announced today, but we still need a long term solution to the cost of living crisis and reassurance that the UK Government is going to tackle long term inequalities rather than provide one-off bursts of crisis support.
“Rather than listen to our plea for a comprehensive funding package that fully addresses the unprecedented rise in the cost of living and uses the full £30 billion of fiscal headroom, this piecemeal approach makes it highly likely that more support will be needed later when energy prices rise significantly in the autumn.
“There is also a severe lack of support for businesses – many of them are still struggling to recover from the pandemic and now face crippling increases in energy costs and the damaging impacts of Brexit on supply chains and the labour market. Without urgent economic support there is a real risk that the UK economy is heading for a recession.
“Inflation is at its highest levels in 40 years and the UK Government’s failure to fully invest in increasing incomes, tackling inequality and boosting economic competitiveness will only risk pushing households into further debt and poverty
“The UK Government has almost £30 billion of fiscal headroom, spending only half of this during a cost of living crisis does not go far enough, especially when a further £5 billion from the Windfall Tax will be raised.
“The introduction of a windfall tax is a start, but as a stand-alone measure this means Scottish industry is carrying the weight of UK-wide interventions.
“The removal of the £20 Universal Credit uplift last year was a hammer blow to hard pressed families and the Chancellor’s failure to restore it and increase it to £25 only places a disproportionate burden on the shoulders of those who need help most. The statement was also worryingly silent on public-sector pay with no related consequential funding, when the lowest paid need urgent assurance in the face of rising inflation.
“The refusal to reverse the National Insurance increase implemented in April and temporarily suspend VAT on household energy bills will also cost families hundreds of pounds annually at a time when their budgets have never been more squeezed.
“The Scottish Government has already taken action to support people, communities and businesses as much as possible, with almost £770 million per year invested in cost of living support. We have increased eight Scottish benefits by 6%, closer to the rate of inflation, and introduced a range of family benefits not available elsewhere in the UK.”
Commenting on the government’s cost of living support package announced today (Thursday), TUC General Secretary Frances O’Grady said: “Unions have repeatedly called for an Emergency Budget to help families, and a windfall tax on energy companies.
“The Chancellor should have acted far sooner after his inadequate Spring Statement. His dither and delay has caused unnecessary hardship and worry for millions.
“While today’s intervention is badly needed, we should have never been here in the first place.
“Years of attacks on wages and universal credit have left many households on the brink.
“The government still doesn’t have a plan for giving families long-term financial security.
“With energy bills rising 23 times faster than wages we urgently need to get pay packets rising and to pay universal credit at a permanently higher rate – not just a one-off boost.
“That’s the best way to protect livelihoods and to support the economy.”
