Twenty years ago, debates about child poverty were focused on the need for all families to share in the growing prosperity of our country. Today we talk more about why so many need to use food banks because they have run out of money before the end of the month. Many factors contribute to family poverty, but an underlying issue is whether our social safety net provides the income required to meet the most basic of needs. Increasingly, under recent policies, the answer has been no.
Universal Credit (UC) provides a baseline income for out-of-work families, with the amount paid progressively decreasing for working families according to their earnings (the more you work, the less you get). Thus, the level of the baseline entitlement affects millions of families both with no earnings and with low earnings. The inflation-adjusted level of this entitlement has fallen by roughly 10 per cent since 2010, mainly due to a freeze between 2016 and 2020. But in addition, most recipients are also being affected by at least one of a range of additional restrictions in UC entitlements, notably its limiting of the number of children supported to two; the freezing of the housing element for private renters despite rising rents; and an arbitrary cap on the total benefits that a family can receive.
A 10 per cent reduction in income may be manageable for some, but less so for families already living close to the edge. And, unfortunately, the cut has been much more serious than this when taking account not just of inflation but of the actual costs that families face.
A key benchmark in considering income adequacy is the Minimum Income Standard, a metric that I helped establish in 2008 and which continues to calculate annually what different family types need to reach an acceptable standard of living allowing dignity and social participation. Researchers at Loughborough University work closely with members of the public to reach agreement on what needs to be included in a household budget. While our social safety net has never come close to reaching this level, this benchmark allows us to see how far it is falling short, and whether this gets better or worse over time.
In 2010, minimum benefits paid around 60 per cent of what families needed to live in dignity; today it is around 40 per cent for most families, and just 35 per cent for larger ones. This is a deterioration by at least a third over 15 years. Following the decade up to 2010, which included generous increases in children’s benefits while adult benefits just kept up with inflation, those without children became much worse off than families, having to live on well under half of the required minimum if they did not work. There was an emotional commitment to protect children from penury. But today, the safety net for families is as bad as it was 15 years ago for adults without children, who themselves now have to live on even less, barely a quarter of what they need. This is not even enough to cover food and fuel.
Out-of-work families with children would need to allocate two-thirds of their budget to cover an adequate diet and energy costs, items that take up only a fifth of the average family budget. This leaves far too little for the many other items they need to cover – such as clothing, transport, household goods, toiletries and a modest amount of leisure – which often means using some of the food budget to cover essentials in other categories.
Why have benefits deteriorated relative to minimum needs by so much more than suggested by the 10 per cent fall in inflation-adjusted benefits? Partly this is due to basics such as food and energy having gone up faster in price than the overall inflation rate. It is also to do with changes over time in what expenditures are considered essential. This has been affected by the perceived effect of austerity on public services. Parents taking part in the research now say that a family outside London needs to pay for a car because of deteriorating bus services, which in 2010 they thought could just about be relied on to meet minimum family needs. Most recently, they have also added a budget to cover occasional health spending using private services that previously they counted on the NHS to provide.
Without action to improve UC entitlements by more than just inflation, this miserable situation for families depending on the benefit system will continue unchanged. In fact, for some family types, it will get worse. Increasing numbers are being caught by the two-child limit, which is applied if the youngest child was born after 2017. There is also a higher rate of UC for first children, which is being abolished for those born after the same date.
This continued rolling out of Conservative austerity policies threatens to take child poverty to record levels. The 1980s and 1990s saw a more than doubling of the prevailing postwar child poverty rate. New Labour’s assault on it in the 2000s reversed about a third of that increase on official figures (although later analysis suggests that the under-reporting of benefits and tax credits in income surveys makes this an under-estimate, and Gordon Brown actually got close to his target of halving the number of children in poverty by 2010). Now, tragically, child poverty is heading back towards the highs of the 1990s.
The realities behind such indicators are stark. By 2029, under present policies, an out-of-work family with three children under 12 will have only a third of what they need to live a dignified life. This condemns many families to the edge of destitution, saved from hunger only by the charity of food banks and others. Did we really expect the 21st century to be like this?
This article first appeared in our Spotlight on Child Poverty supplement, of 23 May 2025, guest edited by Gordon Brown.
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