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  • Writer's pictureHugh O'Reilly

Understanding the effects of Covid-19 and the cost-of-living crisis on child poverty

Updated: May 26, 2022

By Hugh O'Reilly, Regional Inequality Researcher

However you think the country should be run, we can all agree that a fair society grants all children a respectable standard of living. This is not just because they represent the next generation and are therefore an investment into the future, but simply because it is the ‘right’ thing to do. Unfortunately, these basic values which are the building blocks of policy at a national and local level, are being challenged.

Research conducted by the Centre for Research in Social Policy at Loughborough has revealed that in 2020 almost one in three (31%) children in the UK were living in poverty after accounting for housing costs. Surprisingly, this represents the highest poverty rate for any age group within the UK. To make matters worse, these findings occurred before the pandemic, an event which has affected poorer families disproportionately, exacerbating the depth and extent of child poverty.

Generally, the situation is worse in urban areas, and Greater Manchester is no exception. Among the ten boroughs, only three have child poverty rates below the UK average. Manchester (41.8%), Oldham (37.5%) and Bolton (37.0%) fare the worst, with rates above one-in-three children. That said, since 2015, child poverty has increased in all areas aside from Trafford and Greater Manchester Poverty Action estimates that a total of 200,000 children live in poverty across the city-region. Unfortunately, it is unlikely these figures will fall anytime soon. As the full impacts of the pandemic and the cost-of-living crisis become apparent, in all probability, the situation is likely to worsen.

For anyone who believes that all children should be granted a level playing field, these statistics will have been concerning. But as child poverty continues to escalate in this country, we must ask ourselves; how much child poverty are we willing to tolerate?

The article to follow will examine why these events are disproportionately impacting poor families, how devastating they are estimated to be, and what can be done to help impoverished children and families across Greater Manchester.

The Impact of Covid-19 on Child Poverty

The pandemic has had a particularly damaging impact on children from deprived backgrounds. Early into the first lockdown, for example, it became clear that children from lower-income backgrounds had less access to learning material and classes than children from higher-income homes. As was found by the Institute of Health Equity, the closure of schools and care facilities stifled development and increased the educational attainment disparities between children from different income brackets, as children from lower-income families are more dependent on them for development.

One knock-on effect of the differing extent children had to education during lockdown is expected to be a widening of the already significant GCSE grade gap between pupils eligible for free school meals (FSM) and all others. Indeed, non-FSM students averaged 33% higher GCSE grades than FSM students in the North West in the 2019/2020 academic year.

To put it simply, the Government has not done enough to prevent the disparities from increasing further. Repeatedly, attempts to support the poorest households throughout the pandemic have been lacklustre. If it was not for the seriousness of the consequences that have ensued, on the back of already declining social security support per person, I'd go as far to say they were comical. These half-hearted attempts are perhaps epitomised best by the COVID-19 food parcel scandal, whereby insufficient government support meant that families were receiving less than £6 worth of food for an entire week instead of £15 food vouchers.

Such failures of government culminated in UNICEF intervention in the winter of 2020 to boost nutritional food provision to children in the UK, an action the organisation had hitherto done for a rich nation.

The Impact of the Cost-of-living Crisis

As one economic shock drifts out of the picture, a more subtle one has already begun to take hold. The cost-of-living crisis is expected to accelerate pre-existing trends of greater poverty and inequality within the UK and Greater Manchester.

Recently, the Office for National Statistics announced that inflation from April 2021 to April 2022 was 9%. This is the highest inflation in four decades, and there’s no sign of it stopping. The deleterious effects of restrictions and lockdowns on global supply chains, the surge in the wholesale prices of oil and gas, and the ongoing war in Ukraine (which is a major exporter of essential commodities) have all played a part. This, alongside a 30% increase in the M1 money supply from January 2020 to December 2021 (caused by the Bank of England’s money printing response to the pandemic) has left more cash chasing fewer goods and services.

Source: Office for National Statistics (UK)

Without appropriate support from the government and local authorities, inflation is bound to harm poor families the most, since essential goods and services such as food and energy bills make up a larger proportion of poorer households’ expenditure than those with more disposable income. This is particularly concerning for Greater Manchester, which already has relatively high rates of poverty.

There are many avenues in which families living in poverty will be hurt by rising costs. Last month, Rightmove published research which found that the average asking price of monthly rent in the North West has increased by 12.8%, higher than any area in England outside of London. Food prices have increased by 5.9%, and petrol by a staggering 33.3%. Perhaps more frightening is the surge in wholesale gas prices, which caused a 54% price cap increase for energy prices in April, with another large price cap rise looming in October.

Shockingly, the situation has deteriorated to such an extent that in the last month, 2.4 million people have not eaten for an entire day because they cannot access or afford food.

For families, these price rises are alongside the costs of childcare, representing a bigger cost than rent or mortgage payments for 1 in 3 parents. The survey of over 20,000 parents by Mumsnet also found that 43% of working mothers are considering leaving their work to look after their children, since the income was unable to cover other essentials on top of childcare costs.

The result of this crisis? The largest drop in living standards since records began. The issue is particularly pressing for Greater Manchester, which is more financially vulnerable to the cost-of-living crisis than the average region in the UK. The Resolution Foundation estimates that 1.3 million people, including half a million children, are set to be pushed into absolute poverty, whereby household income is so low it is impossible for the person or family to meet basic needs such as food, shelter, safe drinking water, education and healthcare, by next year.

Proportionately, this represents 21,000 more children in poverty in Greater Manchester, an increase by 10.5% in just one year. Given that the area is more vulnerable than the average, this is a conservative estimate.

We are living through an increasingly precarious time, where the fallout of the pandemic and the cost-of-living crisis are exacerbating pre-existing trends of growing inequality and poverty. From an economic standpoint, this will result in lower social mobility, a less-skilled workforce, less income tax, more benefit expenditure and higher crime rates. From a more ethical perspective, this represents an eschewal of the responsibilities our government to provide our next generation an adequate chance to develop without having to worry about basic needs.The impacts will be felt across the country, but the issue is particularly critical in vulnerable places such as Greater Manchester.

What can be done?

Politicians often sound hopeless, asserting that the issues are from global forces beyond their control. To an extent, this is true; we can’t stop the war in Ukraine or China’s lockdowns, which are having tremendous ripple effects on global supply chains, nor can we stop the heatwaves in North India which have induced an export ban on wheat and a surge in wholesale prices. It is possible, however, to minimise the extent to which these global affairs harm the most vulnerable in the UK. It boils down to appropriate government action.

One policy which would not come at the expense of the taxpayer would be a short-term rent-price freeze. Andy Burnham, Mayor of Greater Manchester, has been an advocate for rent control for years, and given the current state of the housing market, calls for such measures are more plausible. Such a move at a regional level would require further devolution of power from national government to Greater Manchester, something the Conservatives would be extremely reluctant to do..

A lot of effective solutions would require government spending. One way could be to increase financial support for childcare. Currently, families can receive £2000 per year for each child, whilst a minority are eligible for further support. Given that the average family spends over £7000 a year on part-time childcare alone, this support clearly does not extend far enough for working families. Extra support may also uplift the sector, which is evidently at breaking point in Greater Manchester; one in every three providers fear they may face closure in the near future.

A direct way to prevent more children growing up in poverty would be to increase child benefits. Alternatively, food voucher schemes in Greater Manchester could be extended to ensure that the money directly addresses food poverty.

Of course, this is much easier said than done; a lot of these policies need to be funded. A windfall tax on companies with abnormally large profits could be a simple solution. BP’s profits doubled to £5bn in the first quarter of this year, whilst Shell’s almost tripled to £7.2bn. Many politicians, even senior Conservatives such as former cabinet minister Robert Halfon, argue that it is not fair for these companies to be making huge profits for the same reasons that millions of normal people are seeing their utility bills soar to unsustainably high levels. A one-off tax on these excessive corporate profits could be used to ease energy costs for millions at the expense of a relatively small group of comfortably-living shareholders.

Regional policies, such as rent control in the Greater Manchester area, would require more power and independence from national government. Increased devolution of the city-region would lead to more appropriate policy at a local level, helping to mitigate the impacts of the pandemic and the cost-of-living crisis on child poverty.

With fears of an imminent recession, we are in the privileged position to adjust policy before the cost-of-living crisis reaches full effect. Action must be taken immediately if we are to prevent countless families and children from falling deeper into poverty in the Greater Manchester area.

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