Working families with children have been dealt a ‘triple financial blow’ in the recession through cuts to tax credits and rising costs of childcare and transport, according to the Joseph Rowntree Foundation.
The charity has published its annual minimum income standard survey, which tracks what members of the public think is needed for a socially acceptable standard of living, and translates the findings into an annual income.A minimum income standard was first calculated in 2008 based on discussions with ordinary people about what they felt was an acceptable level.
Despite the financial squeeze, the public has not fundamentally changed their views of what is necessary. However, the research found that a quarter of the UK’s population now live below these standards – 3 million more people than in 2008.
The minimum income that a couple with two children now needs to earn to reach the standard is £36,800, up nearly one-third since 2008.
This increase is twice the rate of inflation, and the foundation said the income needed has risen to compensate for government cuts to tax credits. These reductions have ‘substantially’ increased the earnings required to reach the threshold, more than cancelling out the benefit of higher income tax personal allowances, the report concluded.
Childcare costs have risen by nearly a third since 2008, and the cost of bus travel has doubled in price since the late 1990s, leading to more families with children deeming a car ‘essential’ for the first time.
Single people need to earn £16,400 a year to reach an adequate standard of living, while the figure for a lone parent with one child is £23,900. Pensioner couples need £231.48 a week, which is attainable providing they claim all the support they are entitled to.
Families now face ‘a monumental task trying to earn enough to get by’, JRF chief executive Julia Unwin said.
‘This year’s research shows that a dangerous cocktail of service cuts and stagnating incomes are being keenly felt by parents. Many working people face the risk of sliding into poverty. It illustrates how anti-poverty measures are needed to address not just people’s incomes but also the costs that they face.’
Donald Hirsch, co-author of the report, added: ‘People are being more modest in terms of what they think needs to be spent on participating in society, but this thrift has been outweighed by rising costs. Parents have not changed their view of most needs, including a nutritious diet and participation by children in activities vital for social inclusion. What has changed is the ability of many families to afford such essentials.’
The research also points out that the level of Universal Credit will strongly influence the ability of households to reach the minimum standard.
Chris Goulden, programme manager for poverty at the foundation, highlighted that the National Minimum Wage combined with in-work benefits can still currently leave families well short of the minimum standard.
Richard Hebditch, campaigns director at the Campaign for Better Transport, said: ‘This report shows that for families with children outside London, having a car is now seen as an essential cost.
‘This can be largely attributed to the government reducing its support for public transport, resulting in cuts to bus services and higher rail and bus fares.’
He added that those who have to rely on public transport are also facing a squeeze with reduced bus services making it more difficult to get to places of employment.
