We tend to think of the ‘bank of mum and dad’ as being about better-off families helping their children through university or with the cost of a wedding. This is certainly widespread. But a report launched today by the Social Market Foundation reveals that it is a prevalent and often forgotten source of support among low income families too.
In our study, Family Fortunes, we draw on a national poll, conducted with ComRes, which found that 52% of low income people who answered had received financial support as an adult from their parents and 35% received regular practical support, most commonly lifts in a car, the provision of cooked meals, and help with decorating, gardening and house repairs. Typically these transfers help families to make ends meet and avoid formal debt, and are therefore small in size: 66% of all money received in the past five years was below £2,000. The giving and receiving of financial and practical support is generally a positive experience. In fact, over three-quarters of low income donors agreed that giving made them happy or brought their family closer together. But almost a quarter of low income recipients said that they wouldn’t be able to survive without the bank of mum and dad.
Two main conclusions can be drawn from these findings. First, policymakers need to find ways to maximise opportunities for families to support one another. Second, government should do more to identify and support those without familial support, since they have fewer opportunities to sustain employment and to afford experiences for their children. Such social isolation should be seen as a key driver of poverty.
Two principal barriers are identified in the research for why those on low incomes cannot donate to other family members: time and money. A collection of imaginative policies could help.
Working grandparents for example could be entitled to unpaid leave, enabling them to better balance their work and family commitments. For grandparents who step out of the labour market to look after grandchildren, enabling them to transfer their personal tax allowance to their adult child would help provide recognition for the role family member’s play in caring for young children.
Establishing tax-efficient Family Trust Funds, where contributions by low income families – perhaps automatically triggered when receiving Child Benefit – could be matched to some degree by government funding, would incentivise families to pool resources across generations and enable them to support one another through troublesome times. It could also help financial transfers from low income parents become real drivers of social mobility.
Government must also do more to identify and support people who cannot always turn to their families. Any existing or new indicators of poverty should take into account the breadth of financial and in-kind support families receive from their parents, so we have a deeper understanding of the experiences of those living in poverty. And public bodies should treat non-recipients as an at-risk group, requiring special consideration, for example in the allocation of the Social Fund now administered by Local Authorities.
The bank of mum and dad is an essential tool in the battle to boost the living standards of low income families. Its prevalence and impact should not be forgotten; nor should the real difficulties encountered by those who are not so lucky to benefit from it.