Tackling child poverty - progress report 2022 to 2023: annex d - cost of living focus report

Conclusions

The cost of living crisis is the latest development in a 15 year period of financial instability and uncertainty. Low income households have entered the latest crisis in a highly vulnerable position with few, or no, options left to reduce household costs. Many of these families do not have any more choices left. Interventions and support from government are both urgent and necessary to help families through this period.

However, when developing policies it is necessary to design services and support that respond to specific family circumstances. The evidence has outlined the structural challenges faced by those on low incomes and in particular those in the priority family groups. Their opportunities to increase income through paid work, even when the economy is better, can be limited. This in turn places a financial strain on the household. For example, for minority ethnic families this would mean navigating the impacts of structural racism in the labour market.

Equally important is a clear consideration of how the assistance and support is accessed by families. This refers not only to how and where individuals can access assistance (e.g. online, in person), but also how well this assistance meets the needs of individuals (e.g. localised approaches, consideration of eligibility criteria for targeted measures). These need to be equitable, while considering variation in need and demand. For example, the UK Government Cost of Living support package, in the form of lump-sum payments, does not account for the higher expenses faced by larger families.

The current cost of living crisis has added an additional layer of complexity to the stigma many families on low incomes face. Recurring across the evidence was the stigma experienced by many low income households. This was internalised, in feelings of inability to provide for their family, and externalised, in terms of not accessing welfare assistance due to social stigma. The result is lower levels of mental wellbeing for low income households during periods of financial crisis, and also places families at increased risk of financial insecurity. Efforts need to be made to challenge this stigma, develop a positive culture surrounding welfare assistance, and ensure low income households receive the support they are entitled to.

The current cost of living crisis emphasizes a need for structural change. This crisis reminds policy makers and wider stakeholders that a long-term approach is necessary to tackle child poverty. While direct financial assistance and indirect support is welcomed across the evidence base in order to meet the short term needs of low income households during the current cost emergency, the evidence highlights the needs for longer term, systemic change. The challenges faced by families living in low income households are exacerbated during the current crisis and, thus, longer-term changes across a combination of areas (such as, labour market, childcare, education, mental health, social security) are required to reduce child poverty and sustain positive impacts.