AN ETHICAL lender is calling for more action to end the working poverty trap, as figures show the number of workers entering poverty is rising faster than employment, and 70% of children living under the poverty line have at least one parent in work.

North East-based credit provider Smarterbuys Store, which provides affordable loans to low income households, believes not enough is being done to help families where both parents are working and claiming benefits to which they are entitled, but are still officially classed as living in poverty.

The call comes as figures from the Child Poverty Action Group show the number of poor children in working families has risen from 67% to 70%, and that two million children classed as poor are aged under five. The latest data from the Joseph Rowntree Foundation shows that more than four million British workers are now classed as living in working poverty.

Headquartered in Durham, not-for-profit Smarterbuys Store, which is authorised and regulated by the Financial Conduct Authority, was set up in 2012 in a partnership between an ethical community bank and established housing association.

Originally designed to give social housing tenants access to cheaper credit for white goods, TVs and furniture, last year the business extended its offering to work with all consumers on lower incomes, sparking a 50% increase in demand for its service.

Vicky McCourt, chief executive of Smarterbuys Store, said: “The days when working families could manage on one parent’s wage are largely gone and we are now in a situation where even when both parents are working, families are still locked into poverty.

“We see clients coming to us who are both working and claiming benefits, yet still struggling every month to balance the budget. For some it can be a constant choice between eating, heating and paying rent, and the Government cannot keep ignoring that. As a society we need to make more progress on ending the trap that hardworking people find themselves in.”

Earlier this year a group of charities lobbied the Chancellor to end the four-year benefit freeze in his Spring Statement, but the bid was unsuccessful.

“The benefit freeze has already achieved its projected savings, and lifting it could have helped a lot of families. The austerity policy has left society’s poorest much worse off than the richest, which is unjust,” added Ms McCourt.

“As a not-for-profit charitable business we are able to make sure our rates are consistently cheaper than the market alternatives, and our Save as You Pay Scheme means our borrowers are guaranteed cashback at the end of the agreement, which for many is the first time they have been able to save even the smallest amounts.

“We currently have over 4000 clients on our books so while our mission is to help them manage on a practical, day to day level, society should be working together to tackle the problem at source too.

“It is particularly worrying to see how many young children are living in poverty, despite their parents’ best efforts. Children should not be living in straitened circumstances that could blight their health, their education and their prospects. Employment may be going up but the number of people living below the breadline is outstripping it, and we need measures to stop that trend in its tracks.”