One in five parents in dire financial straits as charity warns UK in ‘cost-of-children crisis’

• New Action for Children analysis shows that by almost every financial measure families with children are among the hardest hit by the cost-of-living crisis.
• Analysis of survey data from over 5,000 UK households shows that in May 2023, one in five (19%) families with children were classed as being in ‘serious financial difficulty’ – the most severe form of financial insecurity.
• Action for Children found that compared to households without children, families with children were:
– Six times more likely to have had a pay-as-you-go energy meter installed (affecting 475,000 families) and to have turned to informal lenders or loan sharks in the preceding six months
– Three times more likely to be behind on household bills (affecting 2.1m families) or debt repayments, and
– Twice as likely to be behind on rent or mortgage payments, to have gone without food when hungry or missed multiple meals in the preceding month
• Action for Children calls on government to address the inadequate social security safety net and reform Cost of Living Payments to take family size into account.

Action for Children today warns the UK is in the midst of ‘a cost-of-children crisis’, as its new analysis¹ reveals that by almost every financial measure² families with children have been among the hardest hit by the country’s high inflation.

The charity’s analysis of data from the abrdn Financial Fairness Trust’s survey³ of more than 5,000 UK households shows that in May this year, one in five homes with children (19%/1.5m) were classed as being in ‘serious financial difficulty’ – the most severe form of financial insecurity. This was six percentage points higher than those without children (13%).

Action for Children found that compared to households without children, families with children were:

• Six times more likely to have had a pay-as-you-go energy meter installed and to have turned to informal lenders or loan sharks (6% vs 1% / affecting an estimated 475,000 families) in the six months between November 2022 and May 2023;
• Three times more likely to be behind on household bills (29% vs 9% / affecting c2.1 million families) or debt repayments (25% vs 7%); and
• Twice as likely to be behind on rent or mortgage payments (10% vs 4%), or to have gone without food when hungry (15% vs 8% affecting c1.2m families), or missed multiple meals (9% vs 5%) in the preceding month.

Single parents fared the worst, with a quarter being in ‘serious financial difficulties’ (26%) – higher than any other family type.

Action for Children is calling on the government to protect low-income families by increasing social security levels in line with inflation at the Autumn Statement and to reform future Cost of Living Payments to take family size into account. The charity also wants to see family incomes boosted further through an increase to the child element of Universal Credit and a scrapping of the Benefit Cap, both of which would lift more than 300,000 children out of poverty.

Paul Carberry, chief executive at Action for Children, said: ‘Our stark findings show the UK is in the midst of a cost-of-children crisis, where a parent penalty premium makes every day a battle for low-income families just to stay afloat.

‘With more mouths to feed, clothes to wash, rooms to heat and typically fewer savings, families with children are especially vulnerable to financial shocks, and that pressure is being felt most by those on low-incomes, and single parents in particular.

‘The cost-of-living crisis is far from over as prices across the economy are still rising with food inflation remaining particularly high at almost 14%. The Bank of England does not expect to reach its 2% inflation target until early 2025, and energy prices remain volatile and stubbornly high as winter draws near.

‘Every day, our frontline workers are applying to our Crisis Fund for emergency grants to support low-income families in their care with basics like food, clothing and utility costs. The Chancellor must act at the Autumn Statement to protect families with children from these intense and ongoing pressures on household finances. At the very least, we must see benefits rise with inflation and Cost of Living Payments reformed to take family size into account.’

actionforchildren.org.uk