Many families think that benefit levels are simply not adequate for bringing up children

Dr Owen Gill

Dr Owen Gill, who carried out the research for Barnardo's, is campaigning for the Social Fund to be made up completely of grants.

He said: "Far too many families across the country on income support are simply surviving because they have to pay back money.

"Right across our services, the majority of really hard-pressed families are struggling to repay Social Fund loans.

"That means they are living �10 or more below the rock bottom poverty line.

Social funds

"Our research has shown clearly that many families think that benefit levels are simply not adequate for bringing up children."

Social funds are made up of a combination of loans and grants: funeral payment loans, maternity grants, crisis loans and community care grants.

Wider welfare reforms are concentrated on making work pay

Alistair Darling Work and pensions secretary

More than 2.5 million families in Britain take advantage of this.

He said: "The single thing that would have the greatest immediate impact on children's poverty would be placing loans with grants."

Welfare reforms

Alistair Darling, Secretary of State for Work and Pensions, said: "The Social Fund is designed to complement other measures to help the poorest and most vulnerable in our society, but alone it cannot lift people from poverty.

"That is why the government's wider welfare reforms are concentrated on making work pay and encouraging responsibility and independence for those who can work, whilst also ensuring support for those who cannot."

More than two million families in Britain rely on income support according to government figures.

A further million receive job-seekers allowance.

The study was conducted on children and families in affluent areas of the south west - Bristol, Bath, Gloucestershire, Somerset and Wiltshire.

Support levels

It shows that a quarter of all families in both the urban and rural areas do not have enough money to live on and to provide for their children's development, because of the reductions to their benefits.

Income support levels vary according to the size of the family and the number of adults.

I get by - it's just the extras you've never got

Becky Knight Lone parent

The report showed that Becky Knight, a lone parent with one child, on a benefit of �100.40 a week was having that benefit cut to �89.40 as she had to pay �11 a week for her Social Fund loan.

She said the deduction deprived her of non-prescription medicine for her daughter Toni.

Ms Knight said: "I get by. It's just the extras you've never got.

Psychological effects

"Like if Toni is ill, I've never got any money for Calpol, and things like that."

Dr Gill believes that poverty has damaging psychological effects on children.

He said: "Children and parents need to feel there is some leeway, and some scope for the occasional treat. But there isn't.

"As one parent said to me, 'Kids lose their childhood when money is short - there is never anything to look forward to."'