Welfare shake-up ‘will double number of children in poverty’

Half of low-income families will lose thousands of pounds a year, warns new study

Flagship welfare reforms will trigger a big increase in families unable to make ends meet, new analysis reveals.

The number of children living in families that have a monthly deficit will double in some areas, because of the combined impact of universal credit, a two-child limit on some welfare payments and the benefits cap.

The research, produced for the children’s commissioner, found that a quarter of children in its sample would be hit by the measures. Almost half of low-income households examined were affected, losing on average £3,441 a year.

Charities and researchers are already warning of rising child poverty. Amber Rudd, the work and pensions secretary, has been attempting to soften the government’s reforms, putting more money into universal credit, limiting the two-child policy and sanctioning fewer claimants.

However, the Policy in Practice consultancy found that the combined effects of the three welfare reforms still meant that 25% of children in its study were in low-income families who would be unable to make ends meet. Without the policies, only 13% would be in households spending more than their income. Anne Longfield, the children’s commissioner for England, said: “The two-child cap penalises children who can’t choose their birth order or the number of siblings their parents are having. Putting children in a position where they are worse off through no fault of their own is morally wrong and risks damaging the life chances of already vulnerable children.”

Adam Corlett, senior economic analyst at the Resolution Foundation, said that welfare cuts announced four years ago kicked in only last month. “These cuts are the culmination of a significant retrenchment of support with children,” he said. “The result is more children living in poverty. Absolute child poverty rose last year, and we expect relative child poverty to rise in the years ahead.”

The new analysis looked at families receiving housing benefit and help with their council tax across 19 councils. It covered a sample of 128,119 households with 257,648 children, but the findings may not be representative of the country as a whole.

It also examined the five-week wait that new universal credit recipients have to endure before receiving their first payment. In response, the government has made significant use of advance payments, which are handed to claimants and clawed back later.

The study found that the practice of recouping advance payments would plunge one in 10 low-paid households into deficit. It also found that a fifth of low-pay households facing a cash shortfall would no longer do so if the two-child limit was abolished. Those households would be £366 a month better off on average.

However, it found that universal credit made 56% of households better off by £172 a month, although 40% are worse off and lose £181 on average.

Frank Field, who chairs the work and pensions select committee, said: “The secretary of state – having inherited these policies – is now faced with the unenviable task of trying to turn the ship around. As a first move, s he will need to take a long, hard look into the face of poverty in this country and begin to ensure that the Department for Work and Pensions, in every single case, acts in a way that is fit for any family – whether it’s hers or anybody else’s.”

It is hoped the new research will help local authorities keep track of children in poor families who may be at risk and design early intervention strategies to help them. Deven Ghelani, founder of Policy in Practice, said: “The government needs to make this information more accessible, so it can be used to help those that most need it.”

A Department for Work and Pensions spokeswoman said: “Policy in Practice’s own analysis shows that 56% of families are better off now than under the old system. Universal credit is a force for good which will see an extra 200,000 people move into work and 700,000 families increase their income.”.

“More than 1.8 million people across the UK are getting tailored support through universal credit and people can get their first payment in full as an advance on day one of their claim and repayments can be adjusted in certain circumstances. We also recently announced that all children born before 6 April 2017 will continue to be supported by the benefit.””

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Michael Savage Observer policy editor

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