“The UK has in place one of the least generous social security systems in the developed world” warns report titled: A Family Stimulus: Supporting children, families and the economy through the pandemic recently released by Institute for Public Policy Research (IPPR) in collaboration with Trades Union Congress (TUC).
The paper makes the case for a “family stimulus” in the UK, advising the government to urgently boost the income of families hard-hit by the pandemic through the social security system, as well as targeting investment in childcare to ensure this sector keeps operating. By providing income transfers to British destitute families who were already struggling on low incomes and are now jobless, they can provide for their children, as well as increasingly contribute to the national economy. Indeed, the report focuses heavily on the effects of poverty on children’s development, worsening their education attainment and impacting on their mental and physical health. Yet also, poverty affects the ability of parents to properly care for their children and carry out their parental duties.
The paper warns that numerous parents in the UK are facing unemployment, as well as being challenged by the drastic reduction in childcare supplies. According to the authors, at the national level, this could limit labour market participation for parents, reducing their disposable income. Additionally, it would reverse the progress made on reducing the national gender pay gap. IPPR and TUC warn how such job insecurity can undermine children’s development, who are deprived of care in the crucial years of early childhood. In fact, childcare in the UK is not given the same support as schools, despite its equally critical influence on children’s development. As stated in the report, “COVID-19 has placed a significant strain on the childcare sector, which was already struggling pre-crisis. There is a long history of underfunding in the sector”.
The authors set clear actions for the UK Government to act upon, to support families facing hardship and ensure appropriate development of children living in destitution, the new generations leading the country one day. For childcare providers, the authors argue that the government should continue to provide them free entitlement funding, as done previously to the start of COVID-19, until these return to normal levels. Lastly, the UK government should be investing more thoroughly into this sector, enhancing the creation of new quality jobs and better work and pay conditions.
Therefore, IPPR and TUC propose the following solutions for families: “Increasing the child element of universal credit (UC) and child tax credit (CTC) by GBP 20 per week per child and removing the two-child limit would inject GBP 11 billion into the economy or increase GDP by GBP 14 billion (corresponding to about 0.5 per cent of GDP), lifting 700,000 children out of poverty”.
Despite UC and CTC can better target low-income families, other research highlights how child benefits can encourage people working in the informal economy to enter the formal labour market and the tax system. The authors suggest that child benefits (CB) represent a more desirable option, due to its reliability, widespread coverage, as well as the fact that it is paid directly to the primary carer. Existing evidence supports this, as “universal child benefits can build a fairer, more inclusive and resilient future”, and that they are the most successful tool for lifting children out of poverty, as well as being politically advantageous. On the other hand, targeting does not necessarily work to the benefit of the most vulnerable, “targeting child benefits to poor families creates poverty traps since parents may fear that a higher income will mean that they lose their benefit”.
There is also mounting evidence showing that universal child benefits can be transformational in the global south, therefore, shouldn’t these policies be within reach for a high-income country such as the UK?