It’s been a cold start to 2025. For some of us, this has meant turning the heating up and curling up on the sofa feeling cosy with the latest season of The Traitors. But things have been very different for households struggling to make ends meet - as powerfully shared by Gemma, a member of Changing Realities. Gemma is one of many parents around the country who awaits the next cold snap with dread.
The latest Financial Fairness Tracker also shows this stark reality: households with children are less financially well than other households. 48% of households with children are ‘struggling’ or ‘in serious difficulties’, compared with 35% of other households. This increases to nearly 62% of households with three or more children.
Over four million children in the UK now live in poverty, which is equivalent to three in every ten children. For those with larger families, the indicators are especially grim. One-in-five households with children say they are often unable to afford a healthy and balanced diet (21%), rising to 29% of households with three or more children. Half of households with three or more children (52%) have problems with damp, condensation or mould (compared to 41% of all households with children and 26% of households with no children). The findings of the Financial Fairness Tracker (carried out by a team from the University of Bristol’s Personal Finance Research Centre for the Trust), tally with research by the IFS showing the poverty rate is higher for larger families.
For larger families who rely on income-related benefits, their income and financial wellbeing can be impacted by the two-child limit on Universal Credit. Research by the Child Poverty Action Group (CPAG) in 2023 looking at the cost of raising a child, reports that the shortfall between the amount received in benefits and the minimum needed to live with dignity (the minimum income standard) for an out-of-work couple with three children in private rented accommodation was £540. They show that the shortfall is greater for larger families and has been increasing over time, with a key reason being the two-child limit. Looking at the Financial Fairness Tracker data, we see that 77% of families on Universal Credit with three or more children were in serious difficulties or struggling. Over a third of this group (35%) told us that they were “currently struggling to pay for food or other necessary expenses”.
The Prime Minster is fond of talking about levers. There are levers the government can pull to lift children out of poverty. The Government is working on a child poverty strategy, which has committed to support households to increase their income and help bring down essential household costs. This is welcome, as research from many of our funded partners shows the feedback loop between costs and raising ones’ income. Essential costs (especially the cost of childcare and transport) can serve as a barrier to people entering employment or working more hours. Simultaneously, the poverty premium increases the cost of essentials for low-income families.
Complex interactions between the tax and benefit system can also make it very difficult for working parents to improve their take-home pay by working more hours (and may even leave them worse off by causing them to lose entitlement to other benefits like free school meals or the Scottish Child Payment).
We also need to look at how the adequacy of the social security system itself could better support children. In the short term, this means scrapping both the two-child limit and the benefit cap immediately, as these policies mean larger families are being pushed ever further away from reaching a decent standard of living. In the longer term, this means improving our safety net as our economy grows, to ensure families (and others) living on the lowest incomes get a fair share of increasing national wealth.
We know child poverty can be reduced; it has been done before. Many have high hopes the government will take bold steps when they announce the upcoming child poverty strategy. The Trust, alongside many of our funded partners, encourages the government to look at the evidence and take action so that parents like Gemma aren’t forced to skip meals to keep their children warm.
The latest Financial Fairness Tracker also shows this stark reality: households with children are less financially well than other households. 48% of households with children are ‘struggling’ or ‘in serious difficulties’, compared with 35% of other households. This increases to nearly 62% of households with three or more children.
Over four million children in the UK now live in poverty, which is equivalent to three in every ten children. For those with larger families, the indicators are especially grim. One-in-five households with children say they are often unable to afford a healthy and balanced diet (21%), rising to 29% of households with three or more children. Half of households with three or more children (52%) have problems with damp, condensation or mould (compared to 41% of all households with children and 26% of households with no children). The findings of the Financial Fairness Tracker (carried out by a team from the University of Bristol’s Personal Finance Research Centre for the Trust), tally with research by the IFS showing the poverty rate is higher for larger families.
For larger families who rely on income-related benefits, their income and financial wellbeing can be impacted by the two-child limit on Universal Credit. Research by the Child Poverty Action Group (CPAG) in 2023 looking at the cost of raising a child, reports that the shortfall between the amount received in benefits and the minimum needed to live with dignity (the minimum income standard) for an out-of-work couple with three children in private rented accommodation was £540. They show that the shortfall is greater for larger families and has been increasing over time, with a key reason being the two-child limit. Looking at the Financial Fairness Tracker data, we see that 77% of families on Universal Credit with three or more children were in serious difficulties or struggling. Over a third of this group (35%) told us that they were “currently struggling to pay for food or other necessary expenses”.
The Prime Minster is fond of talking about levers. There are levers the government can pull to lift children out of poverty. The Government is working on a child poverty strategy, which has committed to support households to increase their income and help bring down essential household costs. This is welcome, as research from many of our funded partners shows the feedback loop between costs and raising ones’ income. Essential costs (especially the cost of childcare and transport) can serve as a barrier to people entering employment or working more hours. Simultaneously, the poverty premium increases the cost of essentials for low-income families.
Complex interactions between the tax and benefit system can also make it very difficult for working parents to improve their take-home pay by working more hours (and may even leave them worse off by causing them to lose entitlement to other benefits like free school meals or the Scottish Child Payment).
We also need to look at how the adequacy of the social security system itself could better support children. In the short term, this means scrapping both the two-child limit and the benefit cap immediately, as these policies mean larger families are being pushed ever further away from reaching a decent standard of living. In the longer term, this means improving our safety net as our economy grows, to ensure families (and others) living on the lowest incomes get a fair share of increasing national wealth.
We know child poverty can be reduced; it has been done before. Many have high hopes the government will take bold steps when they announce the upcoming child poverty strategy. The Trust, alongside many of our funded partners, encourages the government to look at the evidence and take action so that parents like Gemma aren’t forced to skip meals to keep their children warm.