Child poverty after housing costs on the rise again

Today (5 June) the End Child Poverty Coalition released their annual after-housing-costs local child poverty statistics for local authorities and constituencies in the UK.

At a national level, an end to the additional support made available during the pandemic has driven up the number of children experiencing poverty to 4.2 million in 2021/22 (29 per cent of all dependent children aged 0-19), up from 27 per cent in the previous year.  At a regional level, the rate of child poverty has climbed most steeply in the North and the Midlands since 2014/15, when the local area statistics were first produced. But digging deeper into the rates within regions, the picture is more varied. The new statistics, produced for the Coalition by our team at the Centre for Research in Social Policy at Loughborough University, show that this already high overall child poverty rate in the UK masks substantial variation at a regional and local level.

At local authority level, certain areas of London are faring particularly badly. As in every previous year since 2014/15 Tower Hamlets has the highest rate of child poverty after housing costs – this year nearly half the children living in this local authority (48 per cent) are estimated to be living in poverty. Other areas of London, including Newham and Hackney, are among the worst affected.

This is not the case, however, when looking at the before-housing-costs local child poverty data that are produced by the Department for Work and Pensions in their ‘Children in Low Income Families: Local Area Statistics’ release. London areas do not feature anywhere in the top twenty local authorities with the highest child poverty rates when housing costs are not taken into account, with cities in the Midlands and the North – such as Leicester, Nottingham and Manchester – dominating. This makes it extremely clear that failing to take housing costs into account can drastically change our understanding of who is affected by poverty.

The bottom line is that housing represents an ‘inescapable cost’ – paying for a roof over your head is almost always a non-negotiable fact of life. By taking housing costs into account, we have provided a much more accurate picture of the disposable income that families have available to meet their living costs and have shown how this is especially important in areas with high housing costs – and particularly in London.

Nevertheless, housing is not the only factor to have an impact on the risk and rate of child poverty in different areas of the UK. In-work poverty is an increasingly pressing issue across the UK - in 2021/22, 71 per cent of children who were in poverty after housing costs were in a family where at least one adult was working [1], up from 65 per cent and 6 per cent, respectively, in 2020/22.[2] But our analysis suggests that this is not experienced uniformly between different areas of the UK, with the proportions ranging from 63 per cent in Northern Ireland to 86 per cent in the South West. This suggests that regional variation in the nature and availability of work, as well as other factors such as costs of childcare, are also playing a role.

The new analysis further shows that children with two or more siblings are particularly disadvantaged, even if their parents are working. This is almost certainly a direct result of the introduction of the so-called ‘two-child limit’, which restricts most child-related benefits to the first two children in a family. While the policy was supposed to provide parity between families receiving benefits and those for whom work is their only income source, in making decisions about family size.  However, this overlooks the fact that an estimated 58 per cent of families affected by the policy are already in work. Moreover, research suggests that the two-child limit in reality has little impact on fertility choices, and simply pushes more children into poverty. Our analysis further reveals that children in lone parent families where the parent is in work are particularly vulnerable to the impact of the two-child limit – in such families, more than half of children are estimated to be in poverty after housing costs. 

Our analysis also highlights that children with a disability and those from minority ethnic backgrounds are especially vulnerable to experiencing poverty, and that this is the case (to varying degrees) across the UK.

Our findings emphasise that the importance of considering local circumstances and context in improving our understanding of the risk of child poverty. However, it is also clear that national polices such as the two-child limit are having a detrimental effect across the UK. Furthermore, the data do not yet cover the period of the cost of living crisis and of persistently high inflation. We therefore expect that in next year’s data, the situation will almost certainly have got worse rather than better. Addressing both local and national issues that are driving up child poverty rates remains crucial if we are to see any improvement in the coming years. 

[1] DWP (2023) Households below average income: for financial years ending 1995 to 2022 Table 4.3db

[2] Author’s analysis of HBAI 2020/21 data. Note that 2020/21 estimates should be treated with caution due to sampling issues related to the pandemic.