Families with children hit hardest financially by Covid-19

According to new research four million children live in a family which has lost income since the start of the pandemic. Of those, 1.6 million children live in a family which has lost a third or more of its total household income. New analysis published today by Standard Life Foundation [22 March] finds over a quarter of UK families (27%) are currently living on a reduced income as a direct result of a pandemic-related loss of earnings, compared with 17% of households without children.

The analysis shows the drop in incomes is hitting families hard. Three million children in the UK now live in a family that is struggling to buy food and other essentials. On almost all indicators of financial hardship, the rate is doubled for families with children – compared to households without children. The table below illustrates difficulties families with children are encountering.

 

The research was conducted in January 2021 and analysed by the Personal Finance Research Centre (University of Bristol). It is the fourth in Standard Life Foundation’s coronavirus financial impact trackers series which has been tracking household finances since the start of the pandemic.

As a result of the economic impact of the pandemic, families with dependent children are three times as likely as other households to have claimed Universal Credit since March 2020 (9% of families vs. 3% of households without children), and to still be claiming it in January 2021 (6% vs. 2%). This means about 1.2 million children live in families that have claimed Universal Credit because of the pandemic; 800,000 of whose parents are still claiming it.

Mubin Haq, CEO of Standard Life Foundation, said:

“Almost a third of children in the UK live in families who have experienced a drop in income due to the pandemic, and for many this will have long-term impacts. Families with children are twice as likely to be facing financial hardship compared to households without children and on a range of indicators are more severely affected. It will be distressing for many that 1 in 5 families are struggling to pay for food.

“Whilst much support has been provided by the UK government there has been a blinkered approach to children. During the pandemic, families with children were three times more likely to claim universal credit, and are much more dependent on this lifeline. Yet the £20 a week increase has only been extended for six months. This must be made permanent. However, we also need to see significant increases in child benefits, mirroring the approach in Scotland, if we are to improve the life chances of our children.”

Professor Sharon Collard, Chair in Personal Finance at the University of Bristol, the report’s lead author, said:

“Just as we see an uneven distribution of financial distress in the general population, some families with children are also much harder hit than others. Families bearing the brunt include single parents; those on lower incomes; those in rented homes; and those with a parent whose daily activities are limited a lot by ill health or disability. Improving the financial resilience of such families should be a high priority as the UK moves out of the Covid-19 crisis, bringing knock-on benefits in the form of better outcomes for children.”

Action for Children’s Director of Policy and Campaigns, Imran Hussain, said:

“As we mark a year since the first lockdown, many families have experienced 12 long months of financial hardship, struggling to cope with job losses, pay cuts and rising household costs. Today’s report is yet more evidence that those with children have been among the hardest hit by the pandemic and are now paying the price.

“Our frontline staff tell us children and parents are at rock bottom, many going without enough food, heating, warm clothes and other essentials. Serious action is urgently needed if we are to prevent a generation of children from being scarred by poverty and the pandemic.

“We know poverty can severely restrict life chances, so it is essential that the Government increases financial support for families with children as part of its core recovery planning. The Prime Minister can start by making the vital uplift in Universal Credit permanent, rather than just extending it for the next six months.”

Download the report.