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19 Aug 2013

Family living standards fall as minimum cost to raise a child up 4% in last year

As parents face back-to-school costs, new research published today by Child Poverty Action Group and co-funded by the Joseph Rowntree Foundation shows that parents face a growing struggle to provide a decent standard of living for their families in 2013.

Key findings from the research, carried out by the Centre for Research in Social Policy at Loughborough University, are:

  • It now costs a minimum of £148,000 in total to bring up a child to age 18 and meet their minimum needs, which is around £160 a week (averaged for a child across all ages and including childcare costs and housing).
  • The minimum necessary cost for raising a child rose by 4% in 2013, while safety net benefits for families and children only rose by 1%, the minimum wage rose by 1.8%, average earnings rose by 1.5%, and child benefit did not rise at all.
  • The value of both child benefit and child tax credit relative to the costs of raising a child has decreased in the last year. Many low-income families have also seen cuts in housing support with the introduction of changes such as the ‘bedroom tax’.
  • At the same time, working families have had to contend with rapidly increasing childcare costs (which have increased at 5.9% in the last year) while many non-working families are now required to pay council tax.
  • Minimum wage families face a growing shortfall for the spending their children need. Families working full time on the national minimum wage now have only 83% (couples) and 87% (lone parents) of the minimum income needed to support their families.
  • Families receiving out of work benefits face even greater shortfalls of income. Couple families receive only 58% of the income they require to cover minimum costs, while lone parents get 61%.
  • The introduction of universal credit from October this year will have mixed results for families. However, for both couple and lone parents working full time on the minimum wage, the new system will still leave them some way short of an acceptable standard of living.
  • Families with children tend to fall lower down the income distribution and be at higher risk of poverty than those without. This is partly explained by the costs set out in this report. These additional costs hit families at the same time as ‘time costs’ and childcare costs prevent parents from earning more.

Alison Garnham, Chief Executive of Child Poverty Action Group, said:

“This research paints a stark picture of families being squeezed by rising prices and stagnant wages, yet receiving ever-diminishing support from the government over the course of the last year.

“Every parent knows it’s getting harder to pay for the essentials their children need, and they don’t feel like politicians see them as a priority. Child benefit and child tax credit have been cut at the very time families need them most. Families are getting worse off and parents know it.

“If every child in Britain can grow up healthy, well-educated and an active participant in their community, we all benefit from a more prosperous economy. This was well understood by the post-war generation who prioritised universal benefits for all children despite being much deeper in debt than we are today.

“As we move towards a ‘living standards election’, now would be a good time to renew our national commitment to all our children.”

Katie Schmuecker, Policy and Research Manager at Joseph Rowntree Foundation, which co-funded the research study added:

“This research looks at how much it costs parents to give their children a standard of living that the public think is the minimum acceptable.  The task of making ends meet for families with children has always been hard, but is getting harder, and balancing family budgets has become a perilous and delicate act for hard-pressed parents.

“Flat lining wages, cuts to benefits and tax credits and the rising cost of essentials is creating a growing gap between income and needs.

“The next election is likely to be the first since the 1930s where living standards are lower than the last poll. All parties must go to the country with policies and a commitment to help the prospects of low-income families.

“The risk and costs otherwise are enormous. Child poverty costs the Treasury £29 billion a year – a price we can scarcely afford to pay, particularly in the current economic context.”

−ENDS−

Notes for editors

Article reference number: PR 13/160

  • Costs of a Child in 2013 draws on Joseph Rowntree Foundation’s Minimum Income Standards (MIS) project, which regularly asks members of the public what they regard as the essential items we should all be able to afford. Details can be found at http://www.jrf.org.uk/topic/mis
  • Scorecard for Cost of a Child 2013

The cost of a child in 2013

The following ‘scorecard’ summarises the cost of a child in 2013, its relationship to basic family incomes and the change in these figures since 2012.

Scorecard: cost of a child in 2013
A. How much extra a child adds to family costs, and how much benefits contribute to thisMinimum additional cost of a child (averaged for first and second child)*
  CoupleLone parent
1. Basic cost** over 18 years £81,772 (+2%) £90,980 (+3%)
2. Cost over 18 years, including childcare £148,105 (+4%) £161,260 (+4%)
3. Percentage of basic cost covered by child benefit 19% (-1ppt) 17%(-1ppt)
4. Percentage of basic cost covered by child benefit plus maximum child tax credit 85% (-2ppt) 77%(-1ppt)
B. The extent to which families have enough to cover the minimum cost of livingNet income** as a percentage of minimum family costs (family with two children aged 3 and 7
  CoupleLone parent
5. Not working 58% (-2ppt) 61% (-2ppt)
6. Working full time on the national minimum wage (£6.19 hour) 83% (-1ppt) 87% (-3ppt)
7. Working full time on the median wage (£11.26 hour) 106% (-2ppt) 92% (-2ppt)

* The change in Indicators 3-7 are expressed in percentage points (ppt). For example, if child benefit falls from 20% to 18% of the cost of a child, this is shown as a 2 point fall, even though it represents a 10% fall in the value of the benefit, relative to costs.

**Net of rent, childcare and council tax.

  • Obtaining embargoed copies of the The Cost of a Child in the 2st Century (2013): copies are attached with the email distribution of the press release; they may also be obtained under embargo on request to Tim Nichols – tnichols@cpag.org.uk.
  • Cost of a Child (2013) is the second in a series of annual reportsthat allows tracking of annual changes to:
    • the minimum basic cost requirements for children
    • the different drivers of  childhood costs (e.g. childcare, transport, housing, education, social participation)
    • the adequacy of social support for ensuring basic costs are met
    • the relationship between children’s costs and headline inflation
    • parental attitudes on family spending requirements

It will be published by Child Poverty Action Group each August/September so please note in your future planning.

  • After years of significant progress reducing UK child poverty, it is now predicted by the IFS to rise substantially, as per the table below:
  Before housing costsAfter housing costs
Baseline year  1998/99 3.4 million 4.4 million
Latest official figures 2011/12 2.3 million 3.5 million
IFS estimate for  2014/15 2.9 million 4.1 million
IFS estimate for  2020/21 3.4 million 4.7 million
Govt target for  2020/21    1.3 million*   N/A

* 10% of children based on 2010/12 population count
Sources: HBAI 1998/99-2011/12; Child and Working-Age poverty in Northern Ireland (and UK) from 2010 to 2020, IFS 2013.

For more details on the IFS predictions of sharp rises in child poverty as a consequence of the Coalition’s policies, see their report Child and Working-Age Poverty in Northern Ireland [and UK] from 2010 to 2020: (http://www.ifs.org.uk/comms/r78.pdf).

  • CPAG recently published research suggesting that the annualised cost to the UK economy of Britain’s high rate of child poverty is £29 billion. This research can be found in full here
  • 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 the host organisation for the Campaign to End Child Poverty, which has over 150 member organisations and is campaigning for public and political commitment to ensure the goal of ending child poverty by 2020 is met.

- Loughborough is one of the country’s leading universities, with an international reputation for research that matters, excellence in teaching, strong links with industry, and unrivalled achievement in sport and its underpinning academic disciplines.

It was awarded the coveted Sunday Times University of the Year 2008-09 title, and is consistently ranked in the top twenty of UK universities in national newspaper league tables. It has been voted England's Best Student Experience for six years running in the Times Higher Education league, and in recognition of its contribution to the sector, the University has been awarded six Queen's Anniversary Prizes.

It is a member of the 1994 Group of 11 leading research-intensive universities. The Group was established in 1994 to promote excellence in university research and teaching. Each member undertakes diverse and high-quality research, while ensuring excellent levels of teaching and student experience.

- The Centre for Research in Social Policy (CRSP) is an independent research centre based in the Department of Social Sciences. Over the past 30 years it has built a national and international reputation for high quality applied policy research.

Contact for all media enquiries

Alison Barlow
Senior PR Officer
Loughborough University
T: 01509 228696
E: A.J.Barlow@lboro.ac.uk 

Additional contact information

Tim Nichols
CPAG Press Office
T: 020 7812 5216 or 07816 909302 
tnichols@cpag.org.uk
www.cpag.org.uk

JRF Press Office
01904 615950 or 07800 615105
pressoffice@jrf.org.uk
www.jrf.org.uk