The Work and Pensions Committee published a call for evidence into delivering the Government’s Child Poverty Strategy. StepChange responded setting out that:
- The Child Poverty Strategy will deliver a substantial short-term reduction in child poverty and creates an important foundation for further reductions. However, child poverty reduction targets are essential to make the Strategy effective over the long-term. Those targets should be accompanied by measures assessing progress in addressing drivers of child poverty including problem debt and low financial resilience.
- Problem debt and child poverty are closely connected. The Child Poverty Taskforce terms of reference rightly highlighted problem debt as a driver of child poverty but that has not translated into a clear set of policy actions in the Strategy itself.
- Increasing family incomes and reducing essential costs is crucial to reduce dependence on using credit to make ends meet, as this leads to problem debt which causes and compounds poverty. Building on the measures already announced by the Government, key priorities include:
- uprating working-age benefits to maintain and increase the value of support to reverse the long-term erosion in the value of support for families;
- taking ’quick win’ actions, such as further reforms to the system of debt deductions from Universal Credit and updating regulations so councils can automatically enrol eligible residents in local council tax support schemes; and
- making cost-effective investments targeted to reduce child poverty as soon as possible, including ending the benefit cap, increasing housing support by re-linking Local Housing Allowance to the 30th percentile of local rents and ensuring councils are funded to provide 100% council tax reductions.
- The Government should also take action to reduce child poverty by addressing problem debt and supporting parents to build financial resilience, including:
- further improvements to the Help to Save scheme to support parents who can afford to do so to maintain a rainy day savings pot;
- addressing the gap in credit alternatives so those who cannot meet essential ‘lumpy’ costs are not driven into unaffordable borrowing; and
- reforming government debt collection practices including council tax to replace aggressive debt collection with effective support for those who fall behind.