Coronavirus: 80% of low-income families financially worse off since pandemic, new report finds

More than three-quarters of surveyed families say Covid-19 crisis has affected ability to pay for food

The coronavirus pandemic has left 80 per cent of low-income families in a worse financial position than before the crisis, a new report has found.

Child Poverty Action Group, which conducted the research alongside the Church of England, said that parents “have been living under a cloud of anxiety in lockdown” and warned of greater hardships to come if the government failed to take immediate action.

The report was based on a survey of 285 low-income families with children who are eligible for free school meals, and supplemented by 21 in-depth interviews.

Eight in 10 of respondents said they were worse off than before the pandemic because their income had fallen, or been lost due to job losses, while general living costs have risen. Half said they were “much worse off”.

More than three-quarters of families said the Covid-19 crisis has affected their ability to pay for food (83 per cent) and utilities (76 per cent), while around half said it has affected their ability to pay for housing (47 per cent) and child-related costs.

Even among those families whose employment had not been affected – including those who were not working prior to the pandemic – around two-thirds reported a significant worsening in their financial situation.

Although some respondents were positive about changes made to the benefit-claiming system, such as the temporary £20 uplift in universal credit, many reported that they did not feel better off as the new measures did not take into account the additional needs of children and was offset by increased living costs.

The Institute for Fiscal Studies has shown that grocery prices rose by 2.4 per cent in the first month of lockdown (over 10 times the rate in preceding months), though more recent analysis, based on data from the Office for National Statistics, suggests that the average price of all food and household items had fallen back to normal by early July.

Outside of matters of finance, almost half (48 per cent) of respondents said they had experienced physical or mental health problems during the pandemic, often because of money worries. Almost a quarter (23 per cent) had experienced relationship issues at home.

In light of the findings, Child Poverty Action Group and the Church of England called on the government to increase child benefit by £10 a week, extend free meals to all families who are in receipt of universal credit or working tax credit and to abolish the benefit cap.

Alison Garnham, chief executive of Child Poverty Action Group, said that the financial and emotional strain of the pandemic had “taken a very heavy toll” on the health and well-being of the worst-affected families.

“The support we offer low-income parents just doesn’t meet the additional costs of raising children and there was nothing in the government’s emergency support schemes to correct this shortfall,” she said.

“As the Government’s Covid-19 emergency support schemes are tapered away in the coming months, more help will be needed for struggling families who have lost jobs or taken income drops.”

The Bishop of Durham, Paul Butler, who speaks for the Church of England on matters relating to children and families, said: “Although some commentators have talked about the last few months as an opportunity to live a simpler lifestyle, this report sets out in stark detail how for many families it has been a constant struggle.

“It bears out what churches have experienced first-hand in every community: that families have been placed under huge strain; that the worst off have again been worst hit and, for many, things now could get worse rather than better.”