Living wage families facing standard of living shortfall, report warns

Serious parents discussing parental guardianship
Serious parents discussing parental guardianship

Families working full time on the national living wage are 13% or £59 a week short of the amount needed to provide their children with a minimum standard of living, according to a new report.

The Cost of a Child 2017, published by Child Poverty Action Group (CPAG) on Monday, found the shortfall for lone and out-of-work of parents was even starker.

Figures show single parents working full time on the national living wage are 18% or £68 per week short.

Meanwhile, for non-working couples and lone parents relying on benefits, it stands at 42% or £187 a week, and 40% or £146 a week respectively.

The report also warns that these shortfalls will increase as inflation combines with the current freeze on working age benefits to put family budgets under new and greater strain.

Its author Donald Hirsch, the director of the Centre for Research in Social Policy at Loughborough University, said the cost of essentials is once again rising after a lull in inflation.

"For the first time in post-war history, these cost increases are not being matched by increases in support given to families from the state," said Mr Hirsch.

"While this policy persists, the struggle that low-income families face to make ends meet will become steadily harder, especially because it is being combined with numerous other cuts including the benefit cap and the bedroom tax.

"These cuts are particularly painful for non-working families, who already have little over half what they need to cover family costs."

Mr Hirsch said families on benefits who are unable to cover their costs typically fall back on help from their loved ones, run up large debts or endure serious hardship.

The report says that in the year to April 2017 the basic cost of a child from birth to 18, not including rent, childcare or council tax, rose from £72,596 to £75,436 for a couple. For a lone parent this increased from £99,035 to £102,627.

According to the report, which also involved the Joseph Rowntree Foundation (JRF), government support with costs has also fallen.

For couples, child benefit plus the maximum amount of Child Tax Credit now covers 94% of the basic cost of a child - compared with 98% last year.

For lone parents the proportion is 69% in contrast to 72% last year.

The report also says that the freeze on benefits, implemented in 2016, and the uprating of children's benefits more slowly than price rises between 2012 to 2015, is impacting families.

For both working and non-working parents this combination has cost them £7.30 per week for the first child, and £5.80 per week each for the second and third child.

Chief executive of CPAG Alison Garnham said their research shows the benefit freeze means children will be "the main losers with the return of inflation".

"The cost of raising children is rising but for the first time in decades support for families is not keeping pace," she said.

"The result is a yawning gap between what ordinary families need for a no-frills living standard and what they actually have."

She said that shortfall will grow if inflation rises further with "damaging consequences for children", adding: "With the return of inflation the benefits freeze has become toxic for struggling families."

She said Chancellor Philip Hammond should use the Autumn Budget to invest in helping families with children, and that ending the benefits freeze is the first step he should take to re-balance the finances of ordinary families.

Responding to the report Katie Schmuecker, head of policy at JRF, said the Budget will be a "key test" of the Government's commitment to helping "just managing" and struggling families.

"Rising inflation, combined with a 0.5% fall in real earnings and a freeze on working age benefits, means that tough times are set to get even tougher," she said.

"By ending the freeze on working age benefits and reversing the two child limit on Universal Credit the Government can give low income families much-needed respite from the strain on their living standards."