Hundreds of thousands of children could be put into financial difficulty as benefit numbers soar

As the number of people on the benefit soars, there's a warning that hundreds of thousands of children could be put into financial difficulty.

Nearly 400,000 people were on some form of benefit in the most recent statistics, about the same proportion of the population after the Global Financial Crisis.

But one researcher is warning that the loss of employment can mean more than just the loss of income from work for some families.

The Working for Families scheme's in-work tax credit is paid to families who have some income from paid work each week. It pays up to about

$100 a week for families with up to three children and an extra $30 for each additional child.

Susan St John, an associate professor at the University of Auckland, said people did not have to meet the hours of work criteria to access the payment anymore but still had to have some attachment to the paid workforce, and not be receiving a benefit.

"For those families in a low-income bracket, instead of Working for Families increasing like a cushion when they lose a job, you get a whammy of a loss of nearly $100 a week from the in-work tax credit."

She said it was part of the "obsession" with needing to provide an incentive to work but that was not realistic in an environment in which many businesses were cutting jobs and unemployment was increasing.

"It's acting as a punishment for those people who through no fault of their own, through the state of the economy, are thrown on the scrap heap.

Their children get penalised as a result, to give them an incentive to get work which is exactly what they would love but it's not there."

She said, after the Christchurch earthquake, there was an amendment that allowed the in-work tax credit to be paid for 16 weeks to people who were out of a job.

"Since then it doesn't matter what the disaster or recessions have been, they haven't returned to that interim arrangement to allow for people thrown out of work."

She said some people might not even realise they were not meant to receive the payment and could end up with a debt to Inland Revenue as a result.

St John said there were 228,000 children in families supported by a benefit.

Green Party MP Ricardo Menedez March said he would support something like the return of the leeway offered in 2011, as a first step.

"Families facing unemployment risk not being able to cover basic essentials, particularly if they lose their ability to qualify for the full Working for Families package.

"Caregiving is hard work and should be treated as such. Giving access to the in-work tax credit to parents who lose their jobs will help recognise this.

"Every child in Aotearoa deserves a decent standard of living, whether their parents are in or out of work. Right now, with high unemployment, these unfair settings need to change. The Government is punishing the already worst off instead of helping whānau who need it."

Graham Allpress, acting group general manager for client service delivery at the Ministry for Social Development, said the ministry understood it could be disruptive and stressful to be out of work unexpectedly. "Especially for people with children".

"While parents who aren't working are no longer eligible for the in-work tax credit, there are other supports available.

"We provide a range of non-financial support to help people get back into work or into training and education. We can support with developing CVs and cover letters and supporting people through the job interview process.

"There are a range of products available to all people who aren't working, in particular we can offer support to people newly out of work. We encourage anyone who needs support to come and see us to find out how we might be able to help. Our Check What You Might Get tool is one that anyone can use to get an idea of the support MSD can offer.

"Through Working For Families, parents may also be eligible for extra help with assistance for childcare costs both for pre school and before and after school care. Families on benefit are also eligible for the Best Start tax credit for the first three years of their child life, regardless of their employment status.

"There is additional help for sole parents and costs associated with children to help parents cover additional expenses."

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