An extra one million families will be living below the Minimum Income Standard by 2015

A Bleak Future for Families examines the current and future impact of various benefit and welfare changes, including the Universal Credit, direct and indirect tax changes, and real wage growth since 2010 on the incomes of different households and family types.

It says that an extra one million families will be living below the Minimum Income Standard by 2015 - the level of income needed to achieve a minimum acceptable standard of living in the UK - compared to where they would have been under the policies and forecasts the Government inherited in 2010.

The current Minimum Income Standard for a single parent with two children is £23,992, rising to £24,643 for a couple with one child.

According to the report, tax and welfare changes, including tax credit cuts, the VAT rise and the increase in the personal allowance, will have the biggest net impact in terms of increasing the number of children whose families are struggling to make ends meet, pushing 460,000 more children below the breadline by 2015.

Slower than initially forecast wage growth over the course of this parliament will push a further 170,000 below the minimum income standard, while the pay freeze and cap for public sector workers will see 80,000 more children falling into hardship.

The report goes on to say that while the Government has justified welfare cuts by claiming that they target those out of work, working families are hit hard by government austerity policies.

It estimates that working lone parents will lose the equivalent of 8.2 per cent of their total income, more than the median household loss of 6.6 per cent, mainly as a result of tax credit cuts. A middle-income household will be nearly £1,200 a year worse off.

Families living in Wales and Yorkshire and the Humber will suffer the sharpest loss in incomes, which, the TUC says, is partly due to the higher than average concentration of public sector workers in these regions who are facing the biggest real term cuts to their wages.

The research was published ahead of an evening rally organised by the TUC in central London (13 March) in which various union leaders and campaigners urged the Chancellor to prioritise jobs, growth and families in next week’s Budget.

Frances O’Grady, TUC general secretary, said, ‘Families are suffering the tightest squeeze in their living standards in nearly a century. On top of wages that do not keep up with prices, government policies are making life even more miserable for millions of low to middle-income families through tax increases and cuts in benefits and tax credits.

‘By the 2015 election, the majority of children in Britain will be living below the breadline. For any civilised society, that should be shaming.

‘But while the Prime Minister says there is no alternative, the truth is that support is growing for a new approach. The Budget should start from recognising that what Britain faces is a growth, jobs and living standards crisis. Rather than targeting tax cuts at millionaires, cutting VAT would benefit everyone, and would help poorer households far more than raising the personal allowance.’