Childcare costs soar past the ability of minimum wage owners to afford them

 

Social Affairs Editor

The cost of bringing up children has soared in the last year, leaving families on the minimum wage 18 per cent short of the basic amount needed to live on.

Research from the Child Poverty Action Group and the Joseph Rowntree Foundation shows how the costs involved in raising children have increased far faster than wages, leaving many parents struggling.

The paper calculates the cost of what the public says every family requires to meet its basic needs and participate in society: food, household items and childcare. This is then contrasted with the reality of people’s budgets to calculate a shortfall.

For a couple, the cost of a child has risen by eight per cent to £164.19 a week. For lone parents the increase is 11 per cent and the overall cost is also higher at £184.50 a week because there is only one adult to offset savings from their own living expenses.

Although wages are forecast to start growing, those on the lowest incomes are unlikely to see an improvement. Because family benefits have been capped to below inflation rises, experts say the living standards of low income families will stay inadequate and could get worse.

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.”

Commenting on the fact that parents working full-time on the minimum wage could not earn enough to bring up their children, Ms Garnham added: “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.”

For parents with young children childcare is the most prohibitively expensive cost, jumping by 42 per cent between 2008 and 2014, more than twice the official inflation rate.

Stagnating wages have made it harder than ever for parents to cope with the rising cost of food, fuel and other bills. In the last six years, inflation rose by 19 per cent and the minimum cost of living by around 28 per cent - but wages grew by only nine per cent.

Donald Hirsch, director of the Centre for Research in Social Policy at 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.”

Families receiving out-of-work benefits are amongst the hardest hit, with couples only receiving 57 per cent of the income needed to meet basic needs. Families working full-time on the minimum wage do not fare much better, with these couples typically having 82 per cent of the money they need.

Shabana Mahmood, shadow Treasury Minister, said: “This report shows the cost of living crisis facing millions of families. While millionaires have been given a huge tax-cut, families with children have been hit hardest of all by this Government’s choices. Labour would back families and make work pay by expanding free childcare for working parents, increasing the minimum wage and introducing a lower 10p starting rate of tax.”

A Government spokesman said: “The Government’s long term economic plan to build a stronger economy and a fairer society is working, delivering the fastest growing economy in the G7 and more people in work than ever before. The only way to secure rising living standards is to fix the economy. The effects of the great recession are still being felt and so where possible we’ve acted to help including by lifting over three million people out of paying income tax altogether, providing free school meals, and tax-free childcare to up to 1.9 million families.”

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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