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Record levels of poverty among families with wages

Report challenges Government's line that the work-shy are the problem

A record number of children in the UK are living in poverty despite the fact that one or both of their parents work, according to a new report to be published tomorrow. The figure of 2.1 million is the highest on record – up 400,000 in the past five years, undermining the oft-repeated claim that people simply have to work their way out of poverty.

The new figure accounts for more than half of the 3.7 million children living in poverty in Britain today, according to researchers from the New Policy Institute (NPI) who produced the report for the Joseph Rowntree Foundation (JRF).

It is perhaps the most damning element of an analysis of the past decade, showing how initial progress in some areas has halted or been reversed.

In the past five years, 30 out of 47 poverty indicators examined in the JRF's Monitoring Poverty and Social Exclusion report – including child poverty, inequality and well-being – have stalled or worsened. Twelve of the indicators that have declined concern low income, employment or debt.

Poverty campaigners reacted angrily this weekend to what they described as the grim reality of life for families on low incomes, who have to choose between spending money on keeping their children warm and feeding them. Yet this is expected to worsen next year as cuts in public services and spending begin to bite.

More than 13 million Britons, 22 per cent of the population, are now living on less than 60 per cent of the median (average) income despite at least one parent bringing a wage home. That translates to a couple with two children under 14 who exist on less than £288 per week after income tax, council tax and housing costs have been paid.

Of these, 5.8 million are in "deep poverty" – surviving on less than 40 per cent of the median income (under £192 a week for a couple with two children under 14). This is the highest proportion on record.

The rise in poverty in families where one or both parents work is in contrast to a drop in the number of children in poverty in workless households. This now stands at 1.6 million, the lowest level since 1984. Tax credits are cited as helping to achieve this, taking 100,000 children out of poverty in 2008-09 alone.

Tom MacInnes, NPI's research director and co-author of the report, said: "Many politicians are still under the illusion that poverty is largely confined to people who don't work. It is simply not possible to base anti-poverty policies on the idea that work alone is a route out of poverty. Child poverty in working households must be given the same focus as out-of-work poverty."

Unemployment among young people is at 20 per cent – the highest level for nearly 20 years, according to the report. And some six million Britons are "underemployed" (this includes those out of work or trapped in poorly paid part-time jobs).

With rising unemployment, worse is to come, predicted one of the report's authors, Anushree Parekh, last night: "It is impossible to see how anything other than another large rise in poverty can be expected next year."

The findings come after the former Labour welfare minister Frank Field released his report last Friday for the Independent Review on Poverty and Life Chances. He proposes parenting lessons in schools and diverting increases in benefits to new services to support under-fives. In a shift away from using income to measure poverty, Mr Field wants a set of "life chances indicators" to monitor the progress of young children.

But David Bull, UK executive director for Unicef, which produced a report on Friday showing that the well-being of British children is lagging behind those in many other European countries said: "Tackling income poverty should remain the number one priority to reduce child inequality."

Commenting on the number of children in poverty-stricken working households, Helen Longworth, acting director of UK Poverty for Oxfam, said: "This underlines the reality of life in the poverty trap – being forced to make choices between whether to eat, heat their homes or clothe their families."

Alison Garnham, chief executive of the Child Poverty Action Group, said: "By anyone's standards, this is a failure of the fairness test. We cannot hope to end child poverty when more and more children whose parents are in work find their lives damaged by poverty regardless." She called for "decisive action" by the Government and employers to raise incomes of working families.

Working families could be "pushed further into poverty" by proposed welfare reforms, warned Rhian Beynon, head of policy at Family Action: "Changes to tax credits alone could mean a family losing £50 per week, the equivalent to the weekly food shop... for those on the lowest income, it could mean families going hungry and more children, not less, growing up in poverty."

The report has promoted renewed calls for the minimum wage of £5.93 an hour to be replaced by a national "living wage" of £7.50 per hour.

A spokesman for Unison said: "This more than makes the case that the minimum wage must be raised to a living wage without delay. Unless the Government rethinks its policies, a huge social chasm will open up rapidly in our nation."

A denial of rights at work, including the minimum wage, holiday and sick pay, are significant causes of poverty, campaigners say.

Case studies provided by Community Links, London; Mustard Tree, Manchester; TAG, London; Haverhill Foodbank, Suffolk; Barnardo's; Age UK; additional research by Frances Perraudin and Dominic Browne

The working family

Adam Ballard, 25: Works as a fitness instructor and lives with his family in London. Mr Ballard earns around £6 per hour, which works out at approximately £800 a month. The family receives some housing benefit, but still pays £290 in rent.

"My wife doesn't work, but she wants to. We just can't afford childcare. I'm working all the hours God sends, and hardly see my kids. It feels crap. I get paid and then it all goes in taxes. It feels like a dead end. The main thing the Government could do is provide more funding for childcare. I wish they'd help people who really want to work, instead of those who don't. I spent six years in the Army; coming back to this is hard."

The workless family

Raymond Earls, 39: Gave up his job making catalytic converters to look after his wife, who suffers with depression. The family's home in Haverhill, Suffolk, is paid for by housing benefit; other costs must be met from £160 benefits a week.

"Our benefits were cut off when my wife missed an appointment. We had four weeks of absolutely no money at all and had to get help with Foodbank [a charity that provides food to those in poverty]. We had to sacrifice everything to feed the children. I wish people would be more vocal about the fact that poverty is on our doorstep and is getting worse. I don't think the Government realises how poor people are."

The single parent

Kim Coney, 20: Living in Wakefield with her three-year-old son, Reece. Ms Coney is on an apprenticeship scheme, which, together with child benefit, gives her an income of £430 a month; of this she has to pay £280 in rent.

"It's not about whether I can manage; I have to make myself manage. I am always sacrificing things to feed my son. I really don't want to be on benefits. It makes you feel so inadequate. I go to bed thinking, 'Oh, I've got this to pay and that to pay'. In the morning it's never as bad, but it can be scary. I've got Reece into a very nice school. I'm so proud of him in his little uniform. But that's a cost as well. I've got him two jumpers now but I still need to save to get him another pair of grey trousers."

The new generation of unemployed

Darren Murthy, 19: Mr Murthy's supported accommodation costs £15 of his £51.85 weekly jobseeker's allowance. He starts a business enterprise scheme with the Prince's Trust in January. He hopes to sell and service computers.

"I have never been employed. I tried college twice but it didn't work out. I have been looking for work. I don't want to stay on benefits; I want to work for my money but jobs are hard to get. Young people need to be given a chance. They need support.

The pensioner

Mary Phillips, 74: Ms Phillips lives in London. She is eligible for pension credits. Her income is around £160 a week.

"I do manage, but with real difficulty. I try to buy as cheaply as I can, which has been difficult since the recession – the prices of food and drink seem to have gone up. It's made a real difference to me. At the moment it's very cold, but I'm frightened that if I keep the heating on all the time it'll cost too much."

The underemployed

Charlotte Elmes, 19: After finishing an NVQ in business and administration, Ms Elmes was unemployed for a year. Now she has a job, but it's only one day a week.

"It's so hard to keep getting rejected, your confidence keeps getting lower. I earn about £60 a week. I couldn't live without my grandfather's support. I live with him and help him out. Politicians should change how they think – they think we're all lazy, and then they try to cut benefits."