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12 Aug 2014

Families continue to struggle as cost of a child increases

Research carried out by Loughborough University shows that families working full time at the national minimum wage are 18 per cent short of the basic amount needed to provide themselves a minimum standard of living.  The shortfall for out-of-work families is even more stark, standing at 43 per cent.

The research is published today (Tuesday 12 August) in a new report ‘The Cost of a Child in 2014’ published today by Child Poverty Action Group (CPAG) and funded by Joseph Rowntree Foundation (JRF).

Since 2012, the minimum cost of a child (based on the average costs of the first and second child – the cost of a first child are higher):

  • Has risen by nearly 8% for a couple to £164.19 per week (£153,679 overall); and,
  • Has risen by more than 11% for a lone parent to £184.50 per week (£172,694 overall). It costs a lone parent more than a couple to bring up a child because there is only one adult to make offsetting savings from their own living expenses.

Now in its third year, the report, by Donald Hirsch from the University’s Centre for Research in Social Policy, draws on what the public says every family requires to meet its basic needs and participate in society. It examines the costs associated with raising children, and the extent to which parents struggle to meet them even when they work.

The cost of bringing up a child has risen much faster than earnings and families have become less able to afford an adequate living standard. Even as wages are forecast to start growing, family benefits have been capped to below inflation rises so the real living standards of low income families will stay persistently inadequate and may get worse.

The key findings of the report include that:

  • Excluding childcare, rent and council tax costs, the basic cost of raising a child for a couple is £88.84 per week (totalling £83,155 from birth to 18 years). This is a 4.3% rise since 2012. For a lone parent, the basic cost of raising a child is £103.53 a week (totalling £96,905 from birth to 18 years). This is a 9.7% rise since 2012.
  • Including childcare, rent and council tax costs the cost of a child rose significantly, to £164.19 per week (£153,679 from birth to 18 years) for a couple. This is a 7.7% rise since 2012. For a lone parent, the figure is £184.50 per week (£172,694 from birth to 18 years). This is a rise of 11.4% since 2012.
  • The cost of childcare, the most expensive item purchased by many families with small children, jumped up by 42 per cent between 2008-2014, over twice the official inflation rate.
  • Between 2008-2014, inflation rose by 19% and the minimum cost of living by 27-28% - but wages grew by only 9%.
  • Many working families face a significant shortfall in income to meet their basic needs. Families in which all parents work full-time on the national minimum wage now have only 82% (couples) or 87% (lone parents) of the minimum income required to meet their needs.
  • Families receiving out-of-work benefits face even greater shortfalls of income. They receive only 57% (couples) or 60% (lone parents) of the income required to meet basic needs.
  • The extent to which the state helps families with the cost of a child is in decline. Child benefit now covers 19.2% of the cost of a child for a couple (2012: 20%), and 16.5% for a lone parent (2012: 18%).
  • Child benefit and the maximum amount of child tax credit now covers 84.6% of the cost of a child for a couple (2012: 86.7%), and 72.6% for a lone parent (2012: 78.3%).
  • Government action is defraying some of the costs of children (e.g. through the provision of free school meals) but also increasing costs (e.g. through the policy of allowing social rents to converge with private sector rents).

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

“This new research reveals that meeting the ‘no frills’ needs of families is becoming tougher as the cost of a child rises while wages flat-line and support from Government is cut. It’s a picture many hard-pressed parents will recognise.

“Children cost. That is why families with children have a higher risk of poverty than those without. The most recent statistics show 27% of children live in poverty in the UK, and with declining levels of support for families, child poverty can only increase.

“The cumulative impact of low pay and cuts to family support contribute to the remarkable finding that the combined wages and benefits of a family with both parents working full time on the minimum wage are still insufficient to meet the basic needs of that family.

“It is difficult to see how this can be justified or why no political party has set out policies to address this as a matter of urgency. We need a government prepared to work flat out to help parents if we are to protect children’s childhoods and life chances from poverty.”

Donald Hirsch, Director of the Centre for Research in Social Policy, Loughborough University, the report’s author, said:

“This evidence shows unequivocally that families have found it progressively harder to make ends meet. The forecast increase in wages in the next few years should help, but may not reverse this trend for the worst-off working families. This is because the support they get from the state will continue to decline in real terms. So if items such as food, social housing and childcare continue to become more expensive, it is unlikely that these families’ overall incomes will keep up.”

Katie Schmuecker, Policy and Research Manager at JRF said:

“With economic indicators beginning to point to recovery, we need to make sure families feel the benefit of growth following the lost ground of the downturn. Otherwise we risk seeing poor children becoming poor adults, which has enormous costs for their life chances and the public purse.

“The rising cost of a raising a family is forcing parents into making difficult decisions. This isn’t just about balancing the high cost of housing, childcare and energy: it includes a families’ need to be part of society, by being able to participate in things many take for granted, such as buying a small birthday present or taking the children swimming.

“We need to get to grips with the high cost of living and the low pay jobs market which traps parents in working poverty. Reforms under Universal Credit go some way to helping parents, but this needs to be part of a comprehensive anti-poverty strategy.”

Breakdown of costs:

  • Food comprises a quarter of the basic cost of a child. The price of food has increased 25 per cent over the past six years.
  • Essential household items such as furniture and white goods are 5-10% While this is a small amount of the total, these items are expensive and often have to be purchased in a concentrated way (for example, when a child is born or when moving house) which often puts pressure on family finances).
  • Childcare can comprise up to 45% of the cost of a child if both parents are working full-time.

Notes for editors

Article reference number: PR 14/149

  1. Report available on request
  2. The Cost of a Child in 2014 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 (insert link when live)
  3. Weekly figure for the cost of a child is calculated by dividing total figure from 0-18 years by 18 (for annual total) and by 52 (for weekly total).
  4. 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.
  5. CPAG is the host organisation for the Campaign to End Child Poverty coalition, which has members from across civil society including children’s charities, faith groups, unions and other civic sector organisation, united in their campaigning for public and political commitment to ensure the goal of ending child poverty by 2020 is met.
  6. JRF is a funder of research for social change in the UK. We aim to reduce poverty and strengthen communities for all generations.
  7. Scorecard: Cost of a child in 2014
 

A. How much extra a child adds to family costs, and how much benefits contribute to this cost

Minimum additional cost of a child (averaged for first and second child)

 

Couple

Lone parent

1. Basic cost over 18 years*

£83,155

£96,905

2. Full cost over 18 years*

£153,679

£172,694

3. Percent of basic cost covered by Child Benefit

19%

16%

4. Percent of basic cost covered by Child Benefit plus maximum Child Tax Credit

85%

73%

 

 

 

B. The extent to which families have enough to cover the minimum cost of living

Net income* as a per cent of minimum family costs - family with two children aged 3 and 7

 

Couple

Lone Parent

5. Not working

57%

60%

6. Each parent working full time on the National Minimum Wage

82%

87%

7. Each parent working full time on the median wage

106%

91%

Notes: Basic cost does not include rent, childcare or council tax, and net income is income after subtracting these costs. Cost of a child is based on housing costs that assume families live in social housing

8.     The Centre for Research in Social Policy (CRSP) is an autonomous research centre based in the Department of Social Sciences at Loughborough University.

9.     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 has been awarded five stars in the independent QS Stars university rating scheme, putting it among the best universities in the world, and was named Sports University of the Year 2013-14 by The Times and Sunday Times. Loughborough is consistently ranked in the top twenty of UK universities in the Times Higher Education’s ‘table of tables’ and has been voted England's Best Student Experience for six years running in the Times Higher Education league. In recognition of its contribution to the sector, Loughborough has been awarded seven Queen's Anniversary Prizes.

In 2015 the University will open an additional academic campus in London’s new innovation quarter. Loughborough University in London, based on the Queen Elizabeth Olympic Park, will offer postgraduate and executive-level education, as well as research and enterprise opportunities.

Contact for all media enquiries

Natalie Owen
CPAG Press Officer
T: 020 7812 5216
M: 07816 909302
E: nowen@cpag.org.uk

Additional contact information

Daniel Wright
JRF Media Team
T: 01904 615958
E: daniel.wright@jrf.org.uk

 

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