A cash boost for struggling families is urgently needed to spare up to 700,000 children from poverty, a report warns today.
Strengthening the welfare system by doubling child benefit payments or hiking Universal Credit and tax credits for kids would help the poorest families, according to a study by the Institute for Public Policy Research and the Trades Union Congress.
In a research paper published today, they call on ministers to pump cash into childcare to ensure parents can continue to work during the coronavirus crisis.
The “family stimulus” demanded would help boost the economy through higher household spending, increasing GDP by £19billion, they claimed.
The Government should maintain the emergency £20 increase to Universal Credit and tax credits made at the beginning of the pandemic but which is due to end in April, they say.
TUC general secretary Frances O’Grady said: “We need additional protection for children and families as part of the Government’s wider package of support.
“Some of this must go directly to families to prevent an increase in child poverty and to lift more families above the poverty line – and it’s vital to support childcare services too, which have been heavily hit by the pandemic.
“When a childcare provider goes out of business, the knock-on effects are dreadful for working parents, employers and the economy.
“Without childcare, many parents would have to reduce their hours, or may not be able to work at all, and that will hold back our economic recovery.”
Poverty in Britain is generally defined as having a household income below 60% of the average.
Researchers examined two ways to boost cash to families – doubling child benefit and increasing the child element of Universal Credit by £20 a week per child and removing the two-child limit.
The child benefit move would inject £14billion into the economy over the next 18 months and lift more than 500,000 children and 200,000 adults out of poverty, they say.
Increasing the child element of Universal Credit and removing the two-child limit would pump £11billion into the economy over the next 18 months and raise more than 700,000 children and 300,000 adults out of poverty, according to the study.
IPPR executive director Carys Roberts said: “Families across the country are in dire financial straits and hundreds of thousands more will have the rug pulled from under them this winter through no fault of their own.
“The Government’s plan is missing a crucial piece of support.
“We have one of the least generous social security systems of any developed country.
“The higher payments we’re calling for with the TUC today will mean fewer families forced to rely on foodbanks to feed their children or otherwise scrambling to keep themselves afloat as the pandemic continues.
“Putting more money into families’ pockets will spare hundreds of thousands of children from the scarring effects of poverty over the next 18 months.
“But this family stimulus will also mean an economic stimulus – helping to keep the economy going as we push through the pandemic, and preventing even more jobs being lost.”
A Government spokeswoman said: “This Government has consistently supported the lowest-paid families.
“We have raised the living wage, ended the benefit freeze and funded free childcare in addition to allowing up to 85% of childcare costs to be claimed back on Universal Credit.
“This is on top of £9.3billion extra welfare support during the coronavirus pandemic.
“The benefit cap provides a reasonable safety net of support for the most vulnerable and some claimants may qualify for a nine-month period where Universal Credit is not capped.”
Separately, the Government today announced working parents on the Government’s coronavirus support schemes will still be eligible for childcare support even if their income falls below the minimum threshold requirement.
From Sunday, eligible working parents who receive help through the Government’s new Job Support Scheme and extended Self-Employed Income Support Scheme will continue to receive their childcare entitlements – including the 30 hours offer and Tax-Free Childcare, even if their income temporarily falls below the threshold whilst on the schemes.
Children’s Minister Vicky Ford said: “This Government is increasing the safety net available to families, protecting working parents and our dedicated early years sector.
“This has been our constant priority, which is why I am so pleased to see attendance rates rising, as more parents return to work and take up the formal childcare arrangements they used before Covid-19 struck.
“It’s testament to the hard work of early years professionals that these numbers are returning to what we would have seen before the pandemic.
“We know challenges remain for many families, which is why we continue to protect parents’ eligibility for our free childcare offers so they retain this vital support.”