Image: Andrew Weekes Photography

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.

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