Coronavirus: Half of Scottish families with children are financially struggling

The leading think tank IPPR Scotland, which carried out the research is calling on the Scottish Government and the UK government to step in to provide new payments to financially-starved households.

It comes as over 100 campaigners signed an open letter urging the First Minister to fund an “emergency” package to prevent a child poverty crisis.

The key demand is for the Scottish Government to put the equivalent of £40 a month into the pockets of low income families for every child.

Child poverty in Scotland stands at around 240,000, but fears exist the Covid-19 crisis will increase unemployment and plunge more families into hardship.

READ MORE: Coronavirus in Scotland - Poverty warning for Scots hit by increased household bills

And the IPPR Scotland's poverty survey of 500 households using the Standard Life Foundation’s Covid-19 Financial Impact Tracker created discovered what it described as a "very worrying picture" in the midst of the pandemic.

The think tank extrapolated that around one in five families described themselves as being in "serious financial difficulty" while a further 29% said they were "struggling to make ends meet".

Another 36% said they were "potentially exposed financially" while just 15% admitted that they were financially secure.

Russell Gunson, director of IPPR Scotland said that despite current government support, including furloughing schemes which aim to protect up to 80% of workers' earnings until at least the end of July, familes across Scotland were facing a "significant reduction in their income" with many going into the crisis already struggling financially and without savings to cushion the blow.

He said that meant a 20% reduction in earnings, and a potentially drastic drop in income to the levels of support offered by Universal Credit, would be "impossible to absorb".

"Our analysis shows that without question, hundreds of thousands of families with children in Scotland are struggling to make ends meet right now and we must look at what the UK and Scottish governments can do to help them with urgent support immediately," said Mr Gunson.

"The UK government has taken some steps to at least temporarily improve the Universal Credit system. However, there has been little to no support specifically for families with children.

"The Scottish Government cannot shield low income families from the full financial hit many will face.

"Using the powers it has, the Scottish Government has moved to provide welcome additional funding to carers and to people in crisis through increased welfare funds, although more is needed.

"While the Scottish Government cannot do it all, it can do more.

"At the same time, and arguably to a greater extent, we must see action from the UK government to protect families with children in Scotland and across the UK. Most of the social security system is still reserved to Westminster, and the financial stress experienced by families in Scotland is being felt across the UK. So the UK government must act quickly to provide additional support to families with children."

He said that in Scotland, the Covid-19 crisis has "unfortunately" forced the delay of one of the crucial measures that could have been used to help low income families in Scotland – the new Scottish Child Payment. The payment will see £10 per week paid to low income families with children and was due to begin to be paid in late 2020, starting with low income families with children under-6 before rolling out to all children under-16 by 2022.

He said this has now been delayed at least by months, while the crisis unfolds and limited administrative capacity becomes even more constrained.

IPPR are now calling on the Scottish Government to urgently provide lump-sum payments of £250 per child to low-income families this summer.

This would get support equivalent to £10 per week for the next six months to families now. It said it could be paid to families in receipt of Best Start Grant (for under 5s) and through local authorities to those in receipt of the School Clothing Grant (for over 5s) using existing application, administration and payment routes to "ensure payment is quick and the calls on administrative capacity are low".

It said the UK government should urgently increase the child supplements paid through Universal Credit by £10 per week and provide a £5 uplift in Child Benefit for the duration of the crisis. It said they should also end the two-child limit and benefit cap.

"We need to see the UK government act to support families with children," said Mr Gunson. "To date this has been a key gap in its financial response to the crisis. By boosting child supplements paid through Universal Credit, by ending the two-child limit and Benefit Cap, and by providing an uplift in Child Benefit we could see at least some help provided to families at this point of crisis.

"As necessary as this action is, even this would unlikely be enough to prevent families’ levels of financial stress increasing. However, it would certainly help those facing the worst of the crisis so far.

"Governments across the UK have shown willingness to protect businesses and the wider economy through unprecedented levels of support. We must ensure we act to support families facing serious financial stress through higher levels of support, to ease some of the pressure on families now and to avoid some of the worst damage to children and families’ prospects in the future."

Signatories to the open letter to the First Minister, which included Barnardo's, Poverty Alliance, the Child Poverty Action Group in Scotland and Scottish Women's Aid, say the families they work with “are reporting increased financial stress and associated anxiety, loneliness, and more complex mental health problems,” and that the charitable hardship funds many of them operate have come under massively increased pressure. Aberlour’s Urgent Assistance Fund alone has, they say, seen a 1400% increase in demand.

The group urges the First Minster to use “every tool at your government’s disposal to deliver an emergency package of financial support to all low income families".

John Dickie, director of the Child Poverty Action Group (CPAG) in Scotland, added: “Families are already being pulled under by the financial impact of coronavirus, undermining children’s education, health and life chances, and putting progress on child poverty at real risk. It’s right that government at every level should use every power at its disposal to provide an anchor of financial security through these extraordinary times. Boosting family incomes now is vital to shore up the foundations on which the recovery from coronavirus can be built and future progress on child poverty made.”

Peter Kelly, director of Poverty Alliance, said: “Even before the current crisis, one in four children in Scotland were growing up in poverty. But in the last month we have seen record levels of applications for Universal Credit as people lose their jobs or see their working hours reduced.

“While many of us are struggling, families who were already getting by on low incomes have been hardest hit. Women have been particularly affected because they are more likely to live in poverty, have disproportionate responsibility for childcare and account for 91% of lone parents.

“Unless we take action now, there can be no doubt we are facing a child poverty crisis. The Scottish Government needs to use every tool in its box to protect children and families by putting money in people’s pockets.”

A Scottish Government spokesman said: “We understand that this is difficult time for many families. That is why we are working on introducing the new Scottish Child Payment and will be paying carers in receipt of Carers Allowance an additional supplement this year.

“We have invested more than £2.3 billion of support for businesses, which will enable them to keep people employed, and also specific targeted intervention for self-employed people experiencing hardship so we can ensure people are supported.

"In addition we have committed £350 million of additional funding to support those most at risk, including more than doubling the Scottish Welfare Fund with £45 million of new investment and over £100 million to local authorities, with £30 million targeted at food insecurity – investment which is supporting over 150,000 children to access Free School Meals. In addition, our social security benefits provide a higher level of support than the DWP benefits they replace."