Free school meals: Government reveals £600 ‘tax’ bombshell for poor families in work

08.06.10

A letter from Secretary of State for Education, Michael Gove, to Shadow Secretary Ed Balls has revealed that plans to give free school meals to children in working poor families have been shelved. Imran Hussain, Head of Policy, Rights and Advocacy at Child Poverty Action Group, said:

“The support of free school meals would have lifted 50,000 children out of poverty, according to the Treasury. Suspending this support is the same as an income tax hike of £600 a year for a working poor family with two children. This is the equivalent of at least a 1% income tax hike per child for the families it was meant to help.”

“We were told by the Work and Pensions Secretary it is wrong that families trying to move off benefits face effective tax rates up to 95 per cent, so we are stunned the Government is shelving plans to address this problem. It is completely at odds with the Coalition’s commitment to end child poverty by 2020.”

“Most families living below the poverty line have jobs and this measure would have helped guarantee work makes them better off. It would have been a very valuable work incentive for those on benefits seeking jobs. This decision must be urgently reviewed and securing the funds to reinstate the extension must be a top priority for the Chief Secretary to the Treasury in the spending review.”

Notes for editors

• Free school meal entitlement is currently usually ended when a family moves off benefits to low paid employment. This means a major extra cost of around £300 per child per year hits families when they are trying to make themselves better off through work. The scheme that is being shelved would have extended entitlement to around 500,000 families in work on low pay from September this year.
• The poverty line for a couple with two children (before housing costs and net of taxes) is £374 a week, or £19,500 a year (See HBAI table 2.3 from DWP: http://research.dwp.gov.uk/asd/hbai/hbai_2009/pdf_files/full_hbai10.pdf)
• The average cost of a primary school lunch is £1.66 a day, or £290 per year according to the School Food Trust:
• The effective tax rate for those moving into work was highlighted by the Work and Pensions Secretary, Iain Duncan Smith in a speech on 27th May 2010 in which he said: “For some people the move from welfare into work means they face losing more than 95 pence for every additional £1 they earn. As a result, the poor are in effect being taxed at an effective rate that far exceeds the wealthy.”
• Child Poverty Action Group’s manifesto, published in March 2009, can be found at: www.cpag.org.uk/manifesto
• For up-to-date background facts and stats on UK poverty, visit: www.cpag.org.uk/povertyfacts/
• CPAG is the leading charity campaigning for the abolition of child poverty in the UK and for a better deal for low-income families and children.
• CPAG is one of over 150 member organisations of the Campaign to End Child Poverty, campaigning for public and political commitment to ensure the goals of halving child poverty by 2010 and ending child poverty by 2020 are met.

For further information please contact:
Tim Nichols
CPAG Press Officer
Tel. 020 7812 5216 or 07816 909302 
tnichols@cpag.org.uk