Tackling child poverty delivery plan 2018-2022: annex 2

Who is at the highest risk of child poverty?

To support the evidence base for this delivery plan, we have produced focused analysis on priority groups, which are households with children that are known to be at high risk of poverty. These groups have been identified using available data but we know this does not cover all groups at higher risk of poverty. These groups, taken together, do cover the majority of households in poverty.

• Having a lone parent (mainly women)
• Having two or more siblings (3+ children)
• Being disabled or having a disabled sibling or parent
• Being from a minority ethnic background
• Having a young child in the household (<1 years old)
• Having young parents (using data for households where the mother is aged <25)

Every household circumstance is different. There will be some children experiencing poverty even though none of the above apply to their situation. There will also be children living in families where many of these factors apply, yet they do not live in poverty.

We have conclusive evidence that poverty and gender are inextricably linked. However, this can be hard to understand by purely looking at poverty statistics produced from Family Resources Survey data, because income is measured at a household level. It is difficult to devise a robust means of dividing data between members of a household, particularly when eligibility for social security is usually dependent on all members of the household and is not due to individual circumstances. However, this can mask many structural issues such as the fact that the causes and consequences of poverty, and the routes in and out of poverty, are profoundly affected by gender.

This can be simply illustrated by the evidence of the gender pay gap. Income from employment is the most sustainable route out of poverty, so barriers for women in the labour market which lead to the existence of the gender pay gap also contribute to the existence of poverty. This is even more acute for child poverty, as it is women who typically take on the bulk of childcare responsibilities.

However, this issue is about much more than earnings. Wider social structures and power imbalances mean that we cannot simply assume that women share the same access to resources as men when they are in the same household. This can lead to hidden poverty within households, which may also affect children.

Whilst data limitations mean we cannot include women as a ‘priority’ group in the same way as we can for some of the other protected characteristics, the ‘lone parent’ priority group encapsulates many of the issues affecting women – for example, the fact that for some, their prior role as (unpaid) primary carer means that their ability to earn a sufficient wage on return to the formal labour market is harder. Some factors are unique to lone parents – for example, the inability of some to access sufficient resources from ex-partners via child maintenance. Many of our interventions are directly targeted at alleviating women’s poverty, whether lone parents or cohabiting parents, and we make explicit reference to this in introductory sections and where applicable in the analysis of each intervention.

Statistical summary of poverty in high risk groups

When considering the priority groups, we need to look at both risk of poverty (poverty rates) and the size of group. For example, children from minority ethnic communities and children of mothers aged less than 25 are the two groups with the highest relative poverty rates, but the numbers in these groups are the smallest. Policies to eradicate poverty need to be proportionate to both poverty risk and the size of the group.

Charts 2 to 5 summarise poverty rates and the size of each group for the different priority groups for each of the target measures. As with all data in this analysis, the FRS dataset used is for the period 2013/14 – 2015/16. Understanding Society, that is used for the persistent poverty measure, is based on the four years 2011 – 2015 ^[8] .

The pages following Charts 2 to 5 look at each priority group in more detail.

Chart 2: Relative Poverty

Source: Family Resources Survey

Chart 3: Absolute Poverty

Source: Family Resources Survey

Chart 4: Low Income and Material Deprivation

Chart 5: Persistent Poverty

Source: Understanding Society (University of Essex & DWP analysis ^[9] )

Lone parents

Lone parents are at much higher risk of poverty than the average household. Rates of material deprivation are the highest out of all the priority groups, which means this group struggles most to buy essential goods and services. This may be because it is less likely that this group have other financial resources, such as savings, to rely on.

Chart 6: Child Poverty Rates - Lone parents

Research has found that the transition to lone parenthood is a time when

poverty entry can be at its highest – this transition may be due to separation or due to bereavement ^[10] .

Income

The size of this group means we can look in detail at their income data. Lone parents, regardless of income, rely on social security payments for nearly half of their income. For lone parents in poverty, social security income accounts for more than three quarters of their income.

Chart 7: Income Sources – Lone parents

Chart 8: Employment status – Lone parents in poverty

Earnings account for only a fifth of income, and less than a half of lone parents in poverty are in work. Over a fifth are inactive (not in work and not looking for work) due to ‘looking after children/the home’, and around one in seven are inactive due to ‘permanent sickness or disability’. Around one in seven are unemployed (and therefore are looking for work).

Costs of living

Having only one parent in the household does not necessarily lead to lower costs than for two parent households. An annual report published by the Child Poverty Action Group ( CPAG) indicates that the cost of raising a child is higher for single parents than couples. Whereas the 18-year cost of raising a child in 2017 was estimated to be £75,000 for a couple, the figure was £103,000 for a lone parent, or £187,000 including childcare and housing costs as compared to £155,000 for a couple. Principally this is due to less scope for cost saving to offset the additional costs of a child ^[11] . Similarly, figures compiled by the Centre for Economic & Business Research ( CEBR) indicate that whereas parents as a whole were estimated to spend 28% of their income on bringing up their child each year in 2014, the figure was 54% for single parents. The CEBR research also reports that single parents have been hit the hardest by inflation in recent years, particularly on essential goods and services whose prices have risen disproportionately ^[12] .

Disabled person in household

Our published statistics include poverty rates for households where there is a disabled person. This could be either a disabled adult or child.

Chart 9: Child Poverty Rates – Disabled households

There is debate surrounding how disability poverty should be measured, and whether Scottish Government’s published figures adequately account for the additional costs of living in poverty. Cost of living is currently only reflected in the low income and material deprivation measure, and although there is no consensus of how to calculate additional costs of disability, we are looking at ways of providing additional breakdowns of income and poverty for households where there is a disabled person ^[13] . Even without this additional breakdown, it is still apparent that households with a disabled person have much higher child poverty rates than the average population.

Income

We are able to look at the breakdown of income sources for households with a disabled person where there are children in poverty. Here, we see that earnings are far below average, and social security makes up a much greater proportion of their income – this will be a mix of non-means tested disability benefits and means-tested benefits such as tax credits and universal credit.

Like most households in poverty, a large proportion of children have at least one adult in work. However, only a small proportion of those households have all adults in work.

There are many factors that may limit ability to work, and hours worked, including additional caring responsibilities, need for flexibilities for hospital/medical appointments and adaptations required in the workplace.

Chart 10: Income Sources – Disabled households

Chart 11 – Employment Status – Disabled households in poverty

We know that disability employment rates are much lower than on average. There were 285,000 people of working age (16-64) with disabilities in employment in the year Jul 2016-Jun 2017, with an employment rate of 43.4%. The employment rate for people without disabilities was 80.8% ^[14] .

32,600 people with disabilities of working age were unemployed , an unemployment rate of 10%. The unemployment rate for people without disabilities was 3.8%.

Social security provides some additional non-means tested support to households with a disabled person. This means that income from benefits is slightly higher on average for households with a disabled person.

Costs of living

Many studies document the additional costs of disability ^[15] . These costs are likely to represent a combination of special costs (which are specific to the disability) and enhanced costs (which would be incurred regardless but not to the same extent). For example, a disabled person who spends more time at home may incur special costs in the form of adaptive equipment, in addition to enhanced costs due to higher energy usage ^[16] .

According to research by Scope, on average, disabled people face extra costs of £570 a month related to their impairment or condition. This is on top of welfare payments designed to help meet these costs. For one in five disabled people, extra costs amount to over £1,000 per month ^[17] . As a result of this heightened cost, families with disabled children are more likely to be in debt ^[18] .

Disabled people requiring personal assistants are likely to see the highest additional costs of living ^[19] . Hospitalisation can represent another particularly significant source of costs for families with disabled members. For example, a parent staying with a hospitalised child may need to organise care for other children, in addition to potentially paying other expenses like transport. The costs of living in remote areas are often compounded for families with disabled members. For example, accessing specialist services can require travelling particularly long distances, sometimes including an overnight stay. A report by Contact a Family found that transport costs were the second largest additional cost for families with disabled children ^[20] .

Households with 3+ children

Larger families require higher levels of income to achieve an adequate standard of living, and hence their ‘equivalised’ income is lower – pushing them towards the poverty line.

Chart 12: Child Poverty Rates – 3+ children

Previous research has shown that children in larger families are more likely to

• have older parents
• have the youngest child under five years of age
• be from a Pakistani, Indian or Bangladeshi background
• have lower levels of employment
• have higher levels of hardship both in and out of work
• receive social security benefits.

They conclude that children in large families are associated with a higher risk of child poverty and that a ‘large family effect’ exists independent of these characteristics ^[21] . Understanding Society data has been used to show that having a third child was linked to poverty entry. Of those entering poverty two in five children (42 per cent) lived in families with three or more children. Moving from 3 to 4 children carried a higher risk of entering poverty and families with four or more children had the lowest ‘poverty exit’ rate ^[22] .

Income

Overwhelmingly, children in poverty in 3+ child families have at least one adult in the household in work. However, only 10% of households in in-work poverty have all adults working full-time. The challenges of organising care for children, both pre-school and after school, increases with more children, potentially limiting hours worked.

Chart 13: Economic Status – 3+ children in poverty

Social security payments typically increase with additional children, and on average, households with 3+ children receive a slightly higher proportion of their income from benefits than the population average. However, the amount paid does not increase sequentially with the number of children in the family - the rate paid may reduce for each additional child, and recent changes to tax credits/ UC limit some elements of benefits to 2 children only.

Costs of living

The larger the family, the more goods and services need to be purchased and the rate of combined low income and material deprivation is considerably higher than average for households with 3+ children.

Housing costs for children living in poverty are only marginally higher than the average for all households with children. Whilst surprising to some extent, there is evidence that overcrowding is a serious issue for children in Scotland, with a report published in 2011 showing that one in ten children in Scotland were living in overcrowded homes ^[23] . The likelihood is that overcrowding will be higher for larger families, and this may mean that housing costs are less likely to represent an adequate standard of living.

Although research suggests that each additional child tends to incur less costs (including childcare and housing) than the previous child for single parents, this relationship is reversed for couples until the fourth child is reached ^[24] . In part this is because any lifestyle savings on behalf of parents will already be achieved when second and third children are born, and also because expenditure on items like washing machines and larger cars will be required as the family size increases.

Minority ethnic households

Relative and absolute poverty rates for this group are higher than most of the other priority groups we have considered. However, low income and material deprivation is amongst the lowest. This suggests that this group have a slightly different experience of poverty, and are more likely to be in poverty, but less likely to be unable to afford basic goods and services. This could be due to reliance on savings or other forms of wealth.

Chart 14: Child Poverty Rates – Minority ethnic households ^[25]

Income

The vast majority (over three quarters) of parents in these households are in work. There is evidence of several factors that may limit career progression. For example, there is evidence that this group are overqualified for their jobs ^[26] , and over a third have someone in the household with degree level qualifications, much higher than any of the other priority groups we have looked at.

According to the Wood Commission report in 2014, young people from minority ethnic groups are more likely to be unemployed and enter a narrower range of career pathways ^[27] . There is evidence of clustering in certain industries, and this differs depending on different ethnicities. For example, according to labour market statistics for Scotland there appears to be strong clustering of Chinese workers in ‘accommodation and food services’; Pakistani employment is clustered in ‘wholesale and retail trade’, ‘transport and storage’ and ‘accommodation and food services’ whereas Black/African/Caribbean/Black British are clustered in ‘Human health and Social Work activities’ ^[28] . A Joseph Rowntree Foundation paper looking at caring and earning suggests that some minority ethnic groups are more likely to work irregular, night or weekend hours (e.g. in restaurants or hotels or as taxi drivers) and therefore require more flexible childcare ^[29] .

Chart 15: Economic Status – Minority ethnic households in poverty

Cultural factors may also have a role, with employment rates for minority ethnic women substantially lower than for white ethnic women ^[30] . However, this decreases by age and it is not the case for all minority ethnic groups.

Lastly, there is also evidence of discrimination and racism ^[31] , which again may limit employment opportunities and progression.

In terms of social security, overall, minority ethnic groups have a lower reliance on social security payments than the population average. We do not have a large enough sample size to look at minority ethnic poverty in isolation, or to look at the different Scottish minority ethnic groups.

However, UK data supports the fact that, on average, minority ethnic groups are most reliant on earned income, but suggests that Pakistani and Bangladeshi groups are more reliant on tax credits and other working age (non-disability) benefits than the average, and other research suggests that this may be due to larger family size amongst these groups ^[32] .

Clearly, there are different factors that affect different households, and merging minority ethnic groups into one category is problematic for many reasons and the policy response will need to be cognisant of that. However, our data on poverty in Scotland, and the wider literature support looking at all minority ethnic groups, and hence, supports the identification of all of minority ethnic households as a priority group.

Costs of living

We have not found evidence of significant differences in cost of living for minority ethnic groups.

Households with a child aged <1

Households with children aged 0-4 are at high risk of poverty, but the risk is much higher when the youngest child is aged less than one year old.

Chart 16: Child Poverty Rates – Households with child aged <1 ^[33]

Families with a new child are more likely to enter poverty, even when controlling for other factors. Research from 2015 found a quarter of ‘new families’ are in poverty in the year after having their first child. For new lone parents, this figure was much higher ^[34] .

Income

The vast majority of these households who are in poverty have at least one adult working. One of the main factors that could explain the drop in income is a fall in earnings as a result of at least one earner relying on maternity/paternity pay and/or maternity benefits.

Unsurprisingly, most new mothers who were not working, nor looking for work, stated ‘looking after children/the home’ as the main reason for not working. This was true for both mothers in low income households and those above the poverty threshold.

Chart 17: Economic Status – Households with a child aged <1 in poverty

The support for new parents through the social security system guarantees some support, but the system is complex, and the amount you receive depends to some extent on previous work status. A new child will increase eligibility for a variety of other social security benefits. However, a one-off payment for babies, via the child tax credits system, was abolished by the UK Government from 2011/12.

Costs of living

The first year of a child’s life can require substantial additional expenditure, especially for the first child, for example in the form of equipment, clothing, furniture, and possibly a car. A family may also have to consider moving to a larger property to accommodate a growing family.

Childcare is perhaps the most critical cost of raising young children ^[35] . For families without childcare costs, the costs of raising a child are greater when the child is older, whereas for those paying for their own childcare the relationship is reversed ^[36] .

Young mothers (aged <25)

Due to data availability, we have chosen the young mothers group as a proxy for young parents. This group has particularly high relative and absolute poverty rates, and this is likely to be for a range of factors – for example, less labour market experience, potential interruptions to education.

Chart 18: Child Poverty Rates – Young Mothers

Income

Due to the relatively small size of this group, it isn’t possible to do extensive statistical analysis on this group, but we have looked at the wider literature to help understand some of the reasons why young mothers are at higher risk of poverty.

Young mums who are in employment are more likely to be on low pay, particularly as they are not entitled to the national living wage. According to a report from the Young Woman’s Trust ( YWT), most young mothers had done or were doing roles within the ‘so-called 5 C’s of women’s work– caring, cashiering, catering, cleaning or clerical’. Many had encountered unhelpful attitudes and discriminatory or unlawful practices from employers.

• 25% had experienced discrimination when their employer found out they were pregnant.
• 39% had been illegally questioned in an interview about how being a mother affects their ability to work.
• 26% had requests for flexible working related to their pregnancy or child turned down. ^[37]

Younger mums tend to have lower levels of education and will have less work experience, and the research also found that young mothers are more likely than older mothers to be living in ‘less advantaged socio-economic circumstances’ ^[38] . The level of a mother’s education was an important predictor of whether or not mothers gave up work after having a child.

Although we can’t be certain how many young mums this includes, evidence shows that young women (aged 16-25) are more likely to work part time (39.3%) than young men (60.7%) and earn less than their male counterparts. Scottish figures for 2017 reveal that median weekly income for men was £535.40 compared with £362.10 for women (£173.30 less) ^[39] .

We do not have enough data to look at income sources for children with young mothers in poverty, but we can look at the average for all children with young mothers. This finds that a slightly higher proportion of income comes from benefits rather than earnings. However, age restrictions on some UK Government benefits (such as housing benefit) mean that benefits levels are lower than would be the case if the parent was older.

A recent survey commissioned by the Young Women’s Trust asked young mothers about finances, employment, social networks and childcare. The report found 27% of mothers aged 16-24 were using foodbanks or had used them in the past. The same report found that, of more than 300 mothers aged under 25, 45 per cent said they refrain from eating proper meals in order to ensure their children are fed and 61 per cent said they were only just managing financially ^[40] .

Costs of living

We have not found any evidence that the cost of living is significantly different for young mothers.