Causes of poverty

Costs

While a family has dependent children at home, the household’s needs are greater and expenditure rises. This can include on:

• food
• clothes and shoes
• books
• fuel and public transport
• childcare
• housing
• bills, from energy to internet access
• school costs, like uniform, trips and equipment

Housing and childcare costs can take up the lion’s share of the family budget and vary dramatically across the country. For families in which an adult or child is disabled, energy costs may be particularly high.

In addition, low income households often pay more for essential goods and services - 'the poverty premium.'

The Cost of a Child

We've been publishing annual reports on the Cost of a Child since 2012. This calculates the minimum cost of bringing up a child in the UK based on research with the public to identify the items required for a minimum acceptable standard of living. 

In 2023 the basic cost (excluding rent and childcare) to bring up a child to aged 18 was estimated at £76,000 for a couple and over £122,000 for a lone parent. The cost is higher for lone parents as they cannot achieve some economies of scale that can help couples. For a family not in work, benefits cover less than half of what a family with two children requires in 2023. 

Income

While costs increase when children are young and dependent, this is also likely to be when family income takes a hit because of the need to balance paid work with caring responsibilities.

Most families face heightened challenges in making ends meet when a baby arrives, even if they have been in paid work up to the birth. For other families, without a stable employment history, perhaps because of disability, ill-health or local economic conditions, the challenges of welcoming a new member of the household are greater still. 

At greater risk of poverty: lone parents

Around a quarter of children live with a lone parent. Lone parents tend to work fewer hours due to childcare needs and have a lower hourly wage reflecting the gender pay gap. Even if working full time, lone-parent families still only have one wage. Nine out of ten lone parents are women.

At greater risk of poverty: larger families

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

The cost of childcare is a key factor in explaining why parents do not spend longer hours in paid work. There are also the practical logistics of getting childcare organised when there are children with different drop-offs and pick-up times. 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 disproportionally impact larger families.

At greater risk of poverty: disabled people

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

Disability or sickness among adults is an important risk factor for child poverty. Adults who are disabled or experiencing temporary or long-term sickness are less likely to be in paid work themselves, and if in paid work, more likely to be underemployed. They may also need care from other adults, further reducing the possibilities of paid work for the household as a whole. 

At greater risk of poverty: families with babies under one

If working, many parents will see a reduction in income from employment in their baby's first year, due to reduced income while on parental leave or re-adjustment of working patterns. Free childcare does not begin until a child is three (two in some cases in Scotland) which may be a barrier to work for new parents. 

At greater risk of poverty: families with mothers aged 25 or under 

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

At greater risk of poverty: minority ethnic families

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

Low pay

Even where parents are in employment, work does not always pay. Many people are in insecure low-wage service sector jobs offering fewer prospects. Since 2006 there has been a 60 per cent rise in the number of people moving repeatedly between work and unemployment, while the proportion at or below the minimum wage rose sharply. The minimum wage has become a maximum wage for more and more workers.

Inadequate social security benefits

In recent years, while real wages have fallen and costs have soared, cuts to social security support have meant the system is doing less just when it needs to do more. Since 2010, about £40 billion has been taken from the annual social security budget through benefit freezes, the two-child limit, the 'bedroom tax' and the benefit cap. Deductions for things like repaying universal credit advances also reduce incomes. And many families need to make up a shortfall in rent due to cuts in housing benefit.