Family with two children needs income of £40,000 to afford basics

The Joseph Rowntree Foundation’s annual Minimum Income Standard (MIS) report, which looks at what members of the public think households need to achieve a ‘socially-acceptable’ living standard, shows that a couple with two children now needs to earn more than £20,400 each, compared to £13,900 each six years ago, when the first MIS report was carried out.

A lone parent with one child needs to earn more than £27,100, up from £12,000 in 2008 for a minimum acceptable standard of living.

Parents with two children needing childcare need to earn 46 per cent more than 2008.

The report, carried out by Loughborough University, found the cost of a minimum socially acceptable standard of living has increased by around 28 per cent since 2008, higher than the official inflation rate of 19 per cent, which is due to rising costs of essentials such as food and public transport, rather than people’s expectations.

It claims that families with children have significant ground to make up in order to make ends meet. This is not only because of the soaring cost of essentials, but also because of cuts to benefits and tax credits.

The report says for every £1 that low-income families with children have gained from raising the tax allowance, they have lost up to £4 as a result of cuts to tax credits and child benefit. 

Julia Unwin, chief executive of the Joseph Rowntree Foundation, said, ‘These figures show there is still a lot of work needed to make up the lost ground for low-income families. The income they need to make ends meet has soared at a time when their ability to make up the shortfall is severely constrained.

‘There is no guarantee recovery will restore living standards for the poorest families, so we need joined-up measures to help alleviate the pressure on the worst off households: as the recovery gathers momentum, we must ensure those in greatest need feel the benefits of growth.'

Abigail Davis, an author of the report, said, ‘Throughout the past few difficult years, the people we talk to have held a consistent view of what it means to live at an acceptable level in the UK. It means being able to afford to feed your family and heat your home properly, but also having enough to buy a birthday present for your children, and to spend time with your family away from home, such as the occasional meal out. The growing number of people who fall below this standard are unable to afford basic goods, services and activities that most of us would take for granted.’

The report comes ahead of new Government statistics on Households Below Average Income (HBAI), which show that an additional 100,000 children were living in severe poverty in 2012/13.

Javed Khan, chief executive of Barnardo's, said, 'The news that 100,000 more children are now living in severe poverty in the UK is shocking.
 
'The Government is making no progress in tackling child poverty. Over the past few years, the poorest families have been left financially stranded by measures which have cut lifeline benefits, with few alternatives that make work pay, partly due to delays with Universal Credit.
 
'To prevent more children growing up in poverty, the Government must act urgently to genuinely boost the poorest families’ incomes. Measures should include restoring the link between benefits and inflation, and ensuring that low paid families can keep more of their earnings when Universal Credit is introduced.'

• More information about UniversalCredit is available on the Money Advice Service website.