Priorities for a new child poverty strategy
By Adam Butler, Public Policy Manager
The Government’s Child Poverty Taskforce aims to tackle problem debt and build financial resilience among families — what should ministers prioritise?
Problem debt and child poverty and closely connected. Almost half of StepChange’s clients are parents with children; single parents alone accounted for 27% of clients in 2024 compared to an estimated 7% of UK households. Mothers are particularly likely to experience poverty, one of the reasons women are over-represented in debt advice clients.
StepChange and Gingerbread’s research with single parents found that persistent poverty was a key driver of debt problems, with many caught in a cycle of arrears on essential bills, desperation borrowing, hardship and health problems.
Poverty also leads to debt problems because it makes parents less financially resilient — for example, unable to build up savings — and more likely to be exposed to life events like unemployment, illness or relationship breakdown that are frequent triggers for debt problems.
And problem debt causes and deepens poverty because debt repayments can reduce income below the level needed to make ends meet. Recent research found unsecured debt repayments pushed 10% of families with children below the Minimum Income Standard threshold.
Child poverty has negative impacts on children’s development, health and educational outcomes. Any sustained period of poverty can have negative impacts, but longer experiences of poverty, deeper poverty and living in a community with a higher concentration of poverty all tend to lead to worse outcomes.
Problem debt compounds the negative consequences of poverty. StepChange research with the Children’s Society, for example, found that families in problem debt were more than twice as likely to argue about money problems, leading to stress on family relationships and emotional distress for children. Worryingly, children of parents experiencing problem debt were twice as likely to report being bullied at school.
That’s why StepChange called for a new child poverty strategy, and why we’re pleased the Government’s Child Poverty Taskforce — which will shape the new strategy — has a key focus on problem debt.
Priorities for the new child poverty strategy
StepChange’s briefing for the Taskforce sets out priorities to reduce child poverty and support families to build financial resilience.
An effective child poverty strategy must move the dial on living costs. At its heart, child poverty is a simple challenge: when parents have children, household expenses rise at the same time that their ability to earn income falls due to their caring responsibilities. That leaves many families without enough to make ends meet.
Households with children have lost the most through tax and benefit changes since 2010: on average an estimated £2,200 each year. As a result, while the proportion of parents in work and the national living wage have risen over that period, so has child poverty — particularly among parents affected by the two-child limit or benefit cap.
Undoing significant cuts in support for families and new spending commitments are unfortunately less likely in the context of the spending restrictions the Government has set for itself and OBR projections for limited economic growth.
But the Government must use the strategy to take urgent action on drivers of hardship and destitution incompatible with a commitment to end child poverty like the two-child limit and benefit cap.
Where it cannot take action now, the Government should set out its ambitions and a pathway through a long-term strategy. Key priorities to reduce child poverty include:
- introducing a ‘child lock’ to catch-up the value of social security payments by increasing non-pensioner benefits in line with inflation or earnings each year, whichever is higher;
- re-introducing the family element in UC (which would particularly benefit single parents);
- increasing funding for council tax support so that all councils can provide 100% reductions for households at risk of poverty;
- re-linking local housing allowance to at least the 30th percentile of rents and maintaining the link in future years; and
- introducing a targeted energy social tariff to prevent fuel poverty among families and others.
Ensuring work — whether full- or, as is the case for many parents, part-time — leads to a secure and sufficient income is a vital part of an effective strategy. Six in 10 StepChange clients with children are in work, but challenges like high childcare costs and low wages in part-time roles mean these parents often still struggle to make ends meet.
Supporting in-work progression through investment and reforms in childcare, promoting flexible work, supporting adult training and education, and easing conditionality requirements to promote sustainable careers are all important ways to help parents who can work increase their income.
A focus on financial resilience
The focus on problem debt and savings in the Taskforce terms of reference is also an important opportunity for the Government to take action now.
StepChange highlighted three opportunities: first, parents struggling with living costs like council tax are often the subject of harsh government debt collection practices including pressure to make unaffordable repayments and rapid escalation to bailiff enforcement.
Reforming council tax regulations and introducing statutory guidance to make collection more compassionate — a process the devolved governments in Scotland and Wales have already taken steps towards — would ensure those struggling the most, like many single parents, are supported out of their difficulties rather than pushed further into hardship.
Second, those at risk of poverty struggle to build savings and have fewer options to cope safely with life shocks and unexpected costs. The Government can help by putting the Household Support Fund, which provides emergency grants in England, on a permanent footing matching equivalent schemes in the devolved governments, investing to scale up affordable credit through a national no-interest loan scheme and improving support for rainy day saving by expanding the Help to Save scheme.
Third, debt advice can be held back by fragmented support journeys where clients need to contact multiple services or creditors, a lack of infrastructure for sharing data and insufficient funding for income max services and specialist advice like that needed for those affected by domestic abuse.
We would like to see the new child poverty strategy — and wider Government policy — include a focus on creating joined-up, holistic advice journeys, including local community-based services, for those experiencing problem debt and other forms of crisis.
Finally, one simple change the Government can make is to introduce financial resilience and problem debt metrics as secondary indicators supporting national child poverty targets to monitor progress.
The Government’s commitment to a child poverty strategy in a difficult economic environment is laudable. Those difficulties must not lead to an unambitious strategy: ministers should be honest about what the Government can do now and plan for what it will do next.
The New Labour government’s commitment to end child poverty was a decision to show moral leadership in government: ministers made concrete commitments to address a pernicious social issue, set out measurable targets and followed through with sustained action and investment. A new strategy cannot solve child poverty at a stroke, but it can pick up that baton.
