A record 60% of British people in poverty live in a household where someone is in work, according to researchers, with the risk of falling into financial hardship especially high for families in private rented housing.
Although successive governments have maintained that work is the best route out of poverty, the study by Cardiff University academics says the risk of poverty for adults in working families grew by a quarter over the past decade.
Low pay is a trigger for in-work poverty but the primary determinant is the number of workers in a household, with single-earner families at a very significantly elevated risk of hardship, the study says.
Rod Hick, a social policy lecturer who led the research, said: “Tackling in-work poverty requires rethinking our approach – it’s about improving the circumstances of the whole household, not just those of an individual worker, and promoting employment is key.”
The findings had implications for low-income families where one adult partner in a household worked while the other looked after the children and home, he said. “It’s increasingly challenging to have that type of family structure. The poverty risks for families in that position are pretty high.”
The minimum wage could help to reduce poverty, but the relationship between low pay and in-work poverty was weaker than often assumed, Hick said. Most low-paid workers were not classified as poor while there were other earners in the household.
The study found in-work poverty was disproportionately concentrated in households in private rented housing, who have been hit by a combination of rising rents and caps on housing benefit. The continued growth of this form of housing tenure is projected to increase numbers facing in-work poverty.
Hick said: “If policy does not do more to tackle rising housing costs directly, then it seems likely that these will eat up gains made elsewhere – for example, in terms of the planned increases in the minimum wage.”
The rise of in-work poverty should be tackled through three main policies, the report says: greater provision of free and affordable childcare to enable both adults in a household to work; a reversal of cuts to tax credits and universal credit; and action to tackle high rents in the private rented housing sector.
Tax credits, which supplement income for people on low wages, had proved highly effective in reducing in-work poverty, the study found. Although cuts to tax credits and universal credit had proved controversial, Hick said cuts to a range of benefits, including housing and child benefit, were also significant.
“We need to think of social security as a whole and not just think the only thing that matters is tax credits,” he said.
The report analysed data from the Households below average income report for 2014-15, which is the most recent available. This was compared with reports for 2004-5, 2007-8 and 2010-11, along with looking at Understanding Society, a survey of about 40,000 UK households.
