Who’s paying the price for austerity?
After six years of post-crash belt-tightening, most families will tell you they’ve felt the impact of austerity. Food, energy and clothing costs are rising while wages are stagnant and both in and out of work benefits cut or frozen below inflation.
The Chancellor says his economic plan is working, but it’s a sentiment that won’t ring true with many who are feeling their family finances worsening, not improving.
This week at Gingerbread we have published new research into how single parent families are faring in austerity. Our report, Paying the Price, brings together in-depth panel interviews and polling data from hundreds of single parents, alongside fresh analysis of national data, to create a detailed picture of how single parent families are being affected.
The government’s own impact assessments for the wave of welfare changes which started in April 2013 show that single parents are expected to make up from 20 to 50 per cent of those affected by cuts – yet single parents only make up seven per cent of all households.
Our report shows the harsh reality of these changes. Around 40 per cent of single parents we surveyed are paying extra council tax since the localisation of council tax support in April this year. Around one in eight single parents surveyed said they had already been affected by the benefit cap. And over a fifth of single parents said they had lost at least £100 per month due to the April 2013 reforms.
For those already living “down to the pounds and pence”, as one single parent put it, these are not insignificant sums. Single parents’ finances are already stretched to the limit – nearly eight out of ten single parents surveyed find managing household finances a constant struggle at best. Rising living costs affect single parents more than couples, as single parents on average spend a greater proportion of their budget on essential bills.
And despite recent ‘green shoots’ of economic growth, the logical response to tighter budgets – earning more – is not an option for many single parents. Out-of-work single parents are keen to find jobs, yet interviews revealed a lack of employment support and understanding among both employers and Jobcentre Plus advisers of single parents’ need for flexible work. And those in work often do not fare much better – nearly a fifth of single parents surveyed said they had lost employment income in the last year due to falling wages or hours, or redundancy.
Managing the downturn
Our research shows how single parents are working hard to manage within tighter finances. Micro-managing household budgets, cutting back on spending (particularly on themselves), scouring shops for the best prices, selling items online – these are just some of the strategies single parents are using to make ends meet.
But it’s clear that careful budgeting is simply not enough to weather the financial storm for many single parents. In our survey, 40 per cent of single parents were in arrears on regular payments; and many had slipped far behind on payments. Nearly 90 per cent of single parents surveyed have had to borrow money or seek welfare assistance when they ran out of money in the past 12 months. Around half of those surveyed had to rely on credit cards or overdrafts when they ran out of money; and one in eight had turned to payday or doorstep lenders. Worryingly, the single parents involved in our research suggest that this reliance on borrowed money is on the rise.
A call for caution
It is, of course, welcome news that there are emerging signs of economic recovery in the UK. But this research serves as a timely reminder that not everyone is getting an equal share in these gains.
What is more, the financial situation for many single parents is only likely to get worse. The current welfare reform programme will be less than 60 per cent complete by the end of 2013/14. We do not yet know how universal credit will affect single parents, but recent analysis by the Institute of Social and Economic Research at the University of Essex suggests they will lose out in cash terms, whether in or out of work. And the Chancellor has recently warned of further fiscal consolidation – and therefore more cuts – until 2020. It is clear that for those single parents already struggling, there is much more financial pain to come.
Gingerbread will continue to track how single parent families fare under austerity as part of our Paying the Price project. We would, however, urge policy-makers to think hard before embarking on further reforms, particularly to the tax and benefit system. The government’s stated aims for their welfare reforms are fairness and affordability. Pushing single parents to the brink financially, increasing the risk of debt and demand for emergency financial support in the process, risks failing on both counts.
Read the first report tracking single parents under austerity at www.gingerbread.org.uk/payingtheprice.