Low-income families on breadline as cost of raising a child increases

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Increases in the amount paid for childcare and the cost of living are leaving low-incomes families struggling financially.

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The increased cost of bringing up a child means low-income families can't afford a minimum standard of living, says report

The Child Poverty Action Group’s report, ‘Cost of a Child 2014’ reveals that since 2012, the minimum cost of bringing up a child has risen by nearly eight per cent for a couple to £164.19 per week.

For lone parents, the cost has risen by more than 11 per cent to £184.50 per week.

This means that families where both adults earn the national minimum wage are 18 per cent short of the basic amount needed to provide themselves with a minimum standard of living, say the report’s authors.

A minimum standard of living is referred to as being able to afford the opportunities and choices necessary to participate in society, not just necessities like food, clothes and shelter.

A hike in the amount parents pay for childcare has contributed to the rise, according to the Child Poverty Action Group (CPAG), which says that the cost of childcare has risen by 42 per cent over the last six years, more than twice the official inflation rate.

While the free entitlement for three- and four-year-olds and disadvantaged two-year-olds has helped some families, the reduction of support through the tax credit system has made childcare much more expensive for low-income families, requiring them to cover 30 per cent, rather than 20 per cent, of the fees.

The report, funded by the Joseph Rowntree Foundation, claims that if childcare was still being funded at 80 per cent rather than 70 per cent in tax credits, a lone parent working full-time and earning the minimum wage would only be nine per cent short of what is needed to meet a minimum standard of living, rather than 13 per cent as is the case.

This shortfall would fall to seven per cent if childcare costs had only risen by the same rate as the Consumer Price Index (CPI) since 2008.

It goes on to say that while under Universal Credit the childcare subsidy will increase, families may not see costs reduced because the maximum amount eligible for support is set at £175 for one child and £300 for two or more children, which the charity says has been unchanged since 2005.

Since then, the cost of childcare outside London has risen by nearly 60 per cent, with families with one child under the age of three and not eligible for a two-year-old place, paying an average of £169 a week for childcare, slightly below the cap.

However, families living in more expensive areas, including London, or with more intensive care needs, such as for disabled children, or with more than one child, may already be well above the cap, says the report.

If limits to reimbursable childcare costs continue to be frozen and fees rise, there will be serious consequences for families, warns the report

Also contributing to the increased cost of raising a child is, according to the report, the price of housing, food and household goods.

Alison Garnham, chief executive of CPAG, 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 per cent 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.’