Sharks continue to circle

We will all be celebrating the fall in the number of children in
low income households, and of those failing to achieve basic
educational qualifications, but as the Joseph Rowntree Foundation
points out there is no room for complacency.

The drop of 500,000 in the number of children in poverty has
been just enough to bring the numbers back to the 1995-6 level.
There is also evidence that many low income families are heavily in
debt, and are being exploited by very profitable, legal and
licensed finance companies which charge interest rates many times
greater than banks or credit cards charge.

One in three low income families is in debt, with debts
averaging more than £3,500. The £90m injection into the
Social Fund is welcome, but the fact that there are so many
families in financial trouble – and experiencing stress and
deprivation as a result – adds weight to the case for a total
reform of the Social Fund to ensure that people don’t face a
crisis when they need to replace a cooker or bed.

The Child Trust Fund is intended to encourage good saving habits
from early in life, and to make sure every young person enters
adulthood with a nest egg. Although it will be a universal scheme,
it will be designed to appeal especially to low income families,
with parents and other family members encouraged to invest for
their child’s future in commercially promoted funds.

But with evidence that so many families cannot manage on their
incomes there is a danger that some children could go without basic
necessities if their parents are persuaded to tie up badly needed
cash in a trust fund which they cannot access. Encouraging people
to save is only sensible if they have got enough to live on the
first place.