Causes of poverty

Costs

Families with children at home have to spend more on particular things. These include housing, childcare, food, clothing, transport, bills, school costs, activities and entertainment.

As I am working I must pay for breakfast and afternoon childcare for my youngest. That is a chunk out of my single wage, plus I’ve had to pay for new school uniforms and the other costs associated with school. One of my children’s schools has asked for a payment to buy some books. It’s not even half way through the month and I barely have enough left over to cover travel costs to and from work - let alone anything else!

Aurora T, Changing Realities

Housing and childcare costs can take up most of the family budget and vary dramatically across the UK. For families with a disabled adult or child, energy costs may be particularly high.

Low-income households often pay more for essential goods and services like household fuel, telecommunications, insurance and food and grocery shopping, as well as for credit. This is often called the 'poverty premium'.

The cost of a child

We've been publishing annual reports on how much it costs to bring up a child since 2012.

In 2024, the cost of raising a child to age 18 was £260,000 for a couple and £290,000 for a lone parent. The cost is higher for lone parents because they cannot achieve some economies of scale that can help couples. 

Income

When their children are young, parents and carers face increased costs but are also likely to be less able to do paid work because of the need to care for their children.

This can be a big change for families where the adults have been in employment until that point. For families without a stable employment history, perhaps because of disability, ill-health or local economic conditions, the challenges are greater still.

Low pay

Many people are in insecure, low-wage service sector jobs which do not pay enough to support their family. They may not be able to find work that offers better pay and conditions.

In recent years, wages have not kept up as prices have soared, so many parents and carers are now struggling to afford family costs which were previously manageable.

Since 2006 there has been a 60 per cent rise in the number of people moving repeatedly between work and unemployment, while the proportion of people at or below the minimum wage has risen sharply.

Inadequate social security benefits

Since 2010, about £50 billion has been taken from the annual social security budget through policies such as benefit freezes, the two-child limit, the 'bedroom tax' and the benefit cap. Cuts in housing benefit mean that many families have to make up a shortfall in rent. The system is doing less when it needs to do more.

People on benefits also often have money taken from their benefits payments for things like repaying an advance, which reduces already low payments even more.

Particular circumstances

People in particular circumstances are more likely to be in poverty.

Lone parents

One in four families with children are headed by a lone parent. Lone parents tend to work fewer hours due to childcare needs. Nine out of ten lone parents are women, who tend to have a lower hourly wage, reflecting the gender pay gap. Even if they work full time, lone-parent families still only have one wage.

So universal credit been in touch with me about my low wage this month bearing in mind I've told them as I struggle with childcare I take parental leave which is for single parents who do struggle with childcare which is unpaid. They're wanting me to go in for an appointment - I've already told them I have to pick my son up from school due to his anxiety of being bullied. I don't live near his school. I had a massive amount of pressure on my shoulders thinking they were going to not pay me.

Prince H, Changing Realities

Larger families

Parents in families with three or more children face considerable challenges balancing paid work and care.

Childcare costs for three or more children can be very high. This makes it difficult for parents to work more hours and still have any money left after paying for childcare. A single childcare provider may not be able to care for all children in a family, which may make it too complicated to arrange. Faced with the difficulties of finding affordable, appropriate childcare, one parent or carer may stop working in order to care for the children, so the family must survive on a single income (assuming there are two adults in the household).

In larger families, there is also a higher likelihood that one child will be ill and need care at home, meaning parents must either have family or friends ready to help out or need to find work that is reasonably flexible.

The benefit cap and the two-child limit disproportionately affect larger families meaning that low benefits payments must stretch further than for families with one or two children.

Disabled people

Families with a disabled child or a child with health needs can find it much more difficult to work, especially full time. This is because of the increased difficulties of organising childcare for disabled children and because of the extra demands on parents' and carers' time, including managing additional needs and therapies, and attending appointments.

If parents or carers are disabled or ill it is much more likely that the household will be in poverty. Adults who are disabled or experiencing temporary or long-term sickness are less likely to be in paid work themselves. If they are in paid work, they are more likely to be underemployed, for example in jobs which don't use all their skills or qualifications, or working part time even if they could work full time. They may also need care from other adults in the household, meaning that those adults' ability to work may also be affected.

Families with babies under one

In their baby's first year, many parents and carers take parental leave or change their working patterns, and so they may have a reduced income.

Families with mothers aged 25 or under

Young parents are at higher risk of poverty even if they do work, due to having a lower rate of pay (the minimum wage increases for those aged 21 and over). Universal credit is also lower for parents under the age of 25 than it is for parents aged 25 or over.

Families from Black and minority ethnic backgrounds

Families from some Black and minority ethnic groups are likely to have three or more children. People from minority ethnic groups tend to be paid less per hour, are more likely to be underemployed, may work irregular hours that do not reflect childcare provision and may face discrimination when applying for a new job or promotion.