March 2010

Removing barriers to work for parents in poverty Policy brief Our recent research into severe child poverty in the UK revealed that children who lived in single parent families or in families with no working adults were among those most at risk of living in poverty. Until now, the UK government’s strategy for tackling child poverty has focused on four broad themes – increasing employment and raising incomes; providing financial and material support; improving communities and improving poor children’s life chances.1 A key focus of the strategy has been getting more parents into paid employment. In particular, the government has seen getting single parents into work as a means of reducing poverty amongst lone parent families.

Dealing with recession and unemployment Since 1995 and until the start of the recent recession, unemployment rates had been on a downward curve. The impact of the recession has been stark and the unemployment rate for August to October 2009 stood at 7.9%, with 2.49 million people unemployed – the highest figure since the three months to March 1995. 2 We are aware that previous recessions hit the poorest hardest and longest. Government initiatives have shown that direct action can limit the impact of the economic downturn. We’re highlighting the importance of increasing employment to tackle child poverty, and of ensuring that families who have suffered during the recession aren’t left behind. We’re calling for a number of initiatives to ensure that low-income parents are helped to find suitable and sustainable employment.

Our approach – support not sanctions Recent welfare policy has focused on reforming benefits to increase the pressure on people to take up employment. Measures include attaching more conditions to benefits for single parents.

From 2010, all single parents with a youngest child aged seven or over will have to claim Jobseeker’s Allowance and ‘actively seek work’ if they wish to receive financial support. The Welfare Reform Bill, which gained royal assent in November 2009, also allows the government to pilot asking single parents with children aged between three and seven to take part in ‘work related activity’. These provisions can also be applied to partners in families where both parents are out of work, meaning that both parents will need to be either looking or preparing for work. The justification from the government has been that this approach increases moves into employment and thereby reduces poverty. We see little evidence that sanctions are effective in encouraging single parents in the UK to seek employment: in fact, Department of Work and Pensions research has concluded that their impact is ‘negligible’.3 Our research shows that single parents are concerned that they will be forced into jobs – as a result of welfare reforms and the introduction of conditions – regardless of the negative impact it may have on their children. In 2008/09, together with the employment agency Reed in Partnership, we commissioned The Centre for Economic and Social Inclusion to undertake a case study of Reed in Partnership's welfare to work support programme for single parents. The research explored barriers to entering and remaining in employment with participants and found that barriers can be grouped under three headings – personal or individual (i.e. confidence); cultural (i.e. employer attitudes); and structural (i.e. childcare and the complexities of the benefits system). The research identified a number of individual and external barriers that prevent single parents entering work:       

The availability of jobs with flexible working/ suitable hours The cost and quality of childcare Low pay Skills and qualifications Lack of recent work experience Employer attitudes Lack of confidence

The research suggested that providing tailored support for people looking for work is a much more effective mechanism for increasing employment. We know that many barriers exist for out-of-work parents looking to move into employment and that these people need support to overcome these barriers.

Addressing skill shortages among out-of-work or low-paid parents Two million British children currently have no parent in work and the number of children in families having to survive on benefits jumped by 170,000 in just twelve months between 2008 and 2009. 4 Though the economy is now starting to see growth, unemployment is not expected to peak until later in 2010 or even 2011. 5 The recession has shown that it is the lowest paid and the lowest skilled who will feel the longer term impacts of the economic downturn. 6 The government needs to focus on parents of children living in poverty to ensure low income families aren’t left behind as the economy starts to recover. We are concerned that low-skilled parents, particularly single parents, will be left behind as the economy begins to recover. Unless there are concerted efforts to build on and expand support for parents to train and develop skills, hundreds of thousands of parents will remain unable to enter, remain and progress in employment. To make it possible for parents to attend training courses, and to help make work pay, supporting them by covering childcare costs is essential..

Supporting parents in work Parents considering entering employment will see that the childcare element of the Working Tax Credit meets 80% of the costs of childcare; for many, the remaining 20% funding could make the crucial difference in terms of being better off in work rather than on benefits. 7 Covering 100% of childcare costs would cost around £420 million8 but would have a much lower net cost to government as it would result in extra tax revenue. We are calling on the government to: 

Meet 100% of the costs of childcare through the childcare element of Working Tax Credit.

Childcare support for parents entering education or training For out-of-work parents, gaining extra qualifications through training is vital if they are to be able to move into sustainable and suitable employment. In England, eligible learners in higher education can claim the Childcare Grant, which covers up to 85% of childcare costs, up to a maximum of £175 a week, or £300 a week for two or more children. In addition, they can claim the Parent’s Allowance of up to £1,435 a year. Access to Learning Funds can also be used to top up childcare costs. The Daycare Trust and others have reported that there is better funding available for childcare for those in higher education than in further education. 9 However, provision is unevenly spread across the UK. We are calling on all the government and devolved administrations to:

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Target support for childcare costs for out-of-work parents moving into education or training. Look at the evaluation of the Work for Families (Scotland) and Genesis Project (Wales) to understand the effectiveness of targeting support for childcare costs in deprived areas.

We are also calling on government to: 

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Immediately review the ability of the Free Childcare for Training and Learning for Work Scheme in England to meet increased need brought about by the rising unemployment rate. Extend eligibility to the Free Childcare for Training and Learning for Work Scheme to out-of-work couples where one or both are in training and/or where the couple have additional childcare support needs (perhaps because of illness or disability).

Support single parents in education and training The Free Childcare for Training and Learning for Work scheme in England allocated £75 million of funding to support around 50,000 parents. The scheme is meanstested and aimed at parents (over 20) who are out-of-work and with a partner in work. Single parents are not eligible to participate in the scheme. For single parents, it is assumed that support is provided through Jobcentre Plus but access to such funding for single parents looking to take up training is very limited; funding is discretionary and limited to those with few qualifications. They must get prior approval from their New Deal advisor, so parents who have taken the initiative and found a course first will not necessarily be funded by Jobcentre Plus. CAB evidence highlights the limitations of the current New Deal programmes in addressing the specific needs of jobseekers. In their 2008 report, CAB reported that some single parents found it difficult to get help from their New Deal adviser to go on training courses and develop their skills in order to widen their job opportunities.10 It is crucial that support to meet the costs of childcare is more readily available for those single parents in education and training. We are calling on the government to consider increasing the amount of childcare funding available to single parents in or looking to take up training. A number of approaches could be taken to achieving this including:  

Broadening the eligibility criteria under New Deal for lone parents so that funding for childcare whilst training is much more readily available. Extending eligibility for the Free Childcare for Training and Learning for Work scheme to single parents.

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Introducing new support for single parents in education or training based on the ‘Care to Learn’ programme currently available for parents aged 20 or under.

For those single parents in employment we are asking the government to: 

Provide ongoing training and skills development opportunities to ensure that single parents can maximise their chances to access work with improved pay, conditions and longer term prospects

Enable parents to work 16 hours without losing benefits The government has promised to pilot a system to help single parents who want to work in jobs of less than 16 hours but still retain their means tested benefits. . Currently, families who want to take these jobs cannot receive support through Working Tax Credit and we think government needs to roll out the pilot nationally. Research in 2007 suggested that allowing single parents to work up to 16 hours at the National Minimum Wage would cost government £791 million, but increase single parents’ incomes by £1.1 billion and have a significant impact on child poverty. 11 The government reiterated its commitment to looking into this issue in the ‘Building Britain’s Recovery’ White Paper. We are calling on the government to enable parents to work up to 16 hours by: 

Disregarding earnings of £50 a week to help single parents on benefits who can only get jobs of 16 hours or less.

Tackling negative employer attitudes Changes in employer practices – rather than attaching more conditions to benefits for single parents – are key to breaking down the barriers which prevent more single parents combining paid work with bringing up their families. Our research with employment agency ‘Reed in Partnership’ found that the negative attitudes of employers can act as a real barrier to single parents entering employment. There is still a stigma attached to single parents with employers unfairly tending to view them as unreliable employees. We believe the government can act to change employer attitudes by: 

Increasing investment in campaigns and employer engagement activities to inform employers and promote the benefits of employing single parents and flexible working or job shares..

Parents with children up to 16 can ask their employers if they can work flexible hours after they have been in a post for six months but employers can refuse for business

reasons. There is some evidence that parents in low paying jobs have less access to policies promoting work-life balance. 12 Therefore, in addition to the above demands, we are calling on the government to:  Enable parents to ask for flexible working when they start a job rather than after 6 months as is currently the case.

Removing barriers to employment for parents in poverty We are calling for actions across a number of policy areas to make sure parents are helped into secure and sustainable employment as the economy begins to recover. Our priorities for tackling the barriers to employment faced by parents in poverty can be summarised as follows:  Support low income families to meet the costs of child care, and  Address the low skills of parents who are out of work or in low-paid jobs by: o Meeting 100% of childcare costs through Working Tax Credit o Supporting out-of-work parents with childcare costs while they train o Immediately reviewing the ability of the Free Childcare for Training and Learning for Work scheme in England to meet increased need brought about by the rising unemployment rate; increasing funding and widening eligibility where appropriate.

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Enable parents to work up to 16 hours by: o Disregarding earnings of £50 a week to help single parents on benefits who can only get jobs of 16 hours or less.

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Ensure employers provide tailored support to single parents to enable them to enter into and remain in work.

HM Treasury (2008). Ending child poverty: everybody’s business. HM Treasury. Office for National Statistics: http://www.statistics.gov.uk/cci/nugget.asp?ID=12 3 Goodwin (2008). The effects of benefit sanctions on single parents’ employment decisions and moves into employment. DWP 4 End Child Poverty, “Through Thick and Thin: Tackling Child Poverty in Hard Times” 5 OECD “Economic Outlook No. 86”, November 2009 http://www.oecd.org/document/9/0,3343,en_2649_34109_44083593_1_1_1_37443,00.html 6 TUC “Recession Report #10: One million people out of work for over six months”, http://www.tuc.org.uk/economy/tuc-17188-f0.cfm 7 Based on the average amount claimed by families in receipt of the childcare element of Working Tax Credit, families have to found over £700 a year more to meet all their childcare costs. The average amount claimed for the childcare element of Working Tax Credit is now £68.69. Childcare Costs Survey 2010, Daycare Trust, January 2010. 8 This estimate assumes no eligibility changes, and is factored up from existing tax credit spending, see HM Revenue and Customs, Child and Working Tax Credit statistics, April 2009, 2009. 9 Childcare for adult learners in further education, Daycare Trust, 2007 10 Barriers to work: Single parents and the challenges of working, Citizens Advice, October 2008 11 K. Bell, M Brewer and D Phillips, Single parents and ‘mini-jobs’, Joseph Rowntree Foundation 2007 12 Ref: 78 Dean, H. (2007), ‘Tipping the balance: The problematic nature of work life balance in a low income neighbourhood’ in Journal of Social Policy36, 4, 519–537 2