Cost of raising a child falls but many parents still struggle to meet the threshold
Raising a child to the age of 18 will cost couples £150,753, according to new figures by Loughborough University’s Centre for Research in Social Policy (CRSP).
Each year, the centre forecasts the amount of money it would take to bring up a child – including paying for rent and childcare – based on what members of the public identify as essentials.
The results have been published in a report by the charity Child Poverty Action Group and also include the cost of caring for a child until adulthood for a single parent, for which the 2018 total stands at £183,335.
Both figures have fallen from last year when the cost for couples was £155,142, and for lone parents, £187,120.
My latest cost of a child report for @cpaguk highlights how much family costs are influenced by the complex system for funding childcare, and also the particularly dire prospects for larger families as state support based on family size is withdrawn. https://t.co/KuN17mriKo— Donald Hirsch (@donaldhirsch) August 20, 2018
Despite the introduction of the ‘national living wage’, low-paid families working full-time are still unable to earn enough to meet their families’ needs.
He said that the gains from modest increases in wages have been clawed back through the freezing of tax credits.
Even families with two parents currently working full time on the ‘national living wage’ are 11% (£49 per week) short of the income the public defines as an acceptable, no-frills living standard.
This year’s calculations also take into account factors such as the introduction of the benefit cap and two-child limit, the bedroom tax, cuts to housing benefits and the rolling out of Universal Credit have hit family budgets hard.
“Life has been getting progressively tougher for families on low or modest incomes over the past ten years, with families on in-work and out-of-work benefits hardest hit,” the report warns.
“The cumulative effect of cuts, frozen benefits and new punitive measures hit lone parents particularly hard.”
For lone parents, even a reasonably paid job (on median earnings) will leave them 15% (£56 per week) short of an adequate income because of the high cost of childcare.
A lone parent working full-time on the ‘national living wage’ will be 20% (£74 per week) short of what they need to achieve a minimum standard of living.
However, a lone parent relying solely on benefits will go without 40% of the budget they need for a socially acceptable minimum.
With the introduction of the two-child limit, families with three or more children fare worst – a third child born after 1 April 2017, for whom no additional support will be provided, costs around £86,500 or £4,800 a year excluding childcare.
Larger families on out-of-work benefits who avoid being hit by the two-child limit will instead be hit by the benefit cap which restricts support to £23,000 in London and £20,000 outside London regardless of family size.
The impact of the benefit cap means that an out-of-work family with three children living in a privately rented home will receive just a little over a third of what they need to meet their needs, with a shortfall of around £400 per week.
The cost of a child is heavily influenced by the cost of childcare, a major strain on working low and middle-income families.
Full-time childcare costs around £80,000 over the course of childhood, making up around half of the total costs of bringing up a child.
For those receiving Universal Credit, 85% of childcare costs can be reimbursed but the reporting requirements are complex and because Universal Credit is paid in arrears, it is hard for parents to pay childcare fees in advance.
The new 30 free hours early years entitlement (available to parents of three and four-year-olds working more than 16 hours per week at the minimum wage) has helped, but parents can face difficulties finding nurseries and childminders offering this.
In practice, low-income families facing high childcare costs will often choose instead to limit their working hours – reducing family income significantly – because childcare is unaffordable.
The costs of a child are calculated according to a minimum standard of income that covers the costs of essentials such as food, clothes and shelter as well as other costs necessary to participate in society.
It looks at the needs of different family types and is informed by what ordinary members of the public feel is necessary for both couples and lone parents bringing up children.
“The Cost of a Child in 2018” from Loughborough University’s Donald Hirsch, is the seventh report in an annual series.
Notes for editors
Press release reference number: 18/117
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