‘Full-time parents on minimum wage can’t earn enough to get by’

Even families where both parents working full time for the ‘national living wage’ [NLW] can’t reach a minimum, socially acceptable living standard – as defined by the public – this year, largely because benefits were uprated far below inflation last April, according to a new report.

The Cost of a Child 2022 report produced for the Child Poverty Action Group [CPAG] by Loughborough University, finds that whereas last year these families could cover their minimum costs – helped by the temporary £20 universal credit uplift, this year, below-inflation uprating of benefits has left them 6% (£34 per week) short of a minimum, no-frills living standard. The CPAG says this is the biggest annual deterioration in living standards since its annual report began in 2012.

The income gap this year is greater still for single parents: even on a median income, the report says lone parents working full time are 12% (£58 a week) short of what they need.   On the ‘national living wage’ (working full time) lone parents are 23% (£107 a week) short of what they need.

It adds that, for out-of-work families with two children, benefits will cover less than half their costs this year – (48% for a couple, 49% for a lone parent) compared to more than 60% in 2012.

The report says the cost of raising a child has risen to £157,562 for couples while the earnings gap has widened significantly since 2016 due to changes such as the benefits freeze and the two-child limit, particularly for those parents who are not working:

• Couples where one partner works part-time and the other full-time for the NLW have a £74 weekly shortfall today, compared to £51 in 2016.
• Lone parents working full-time for the NLW are £108 short today, compared to £76 in 2016.
• The gap for couples where both partners work full time is similar this year (£34) as in 2016 (£36)
• Out-of-work-couples with two children and paying private rent are a full £353 short of what they need each week, compared to £226 in 2016.

The situation has led to more and more parents being subject to the benefits cap and childcare costs now make up around 60 per cent of the lifetime cost of a child for a couple working full time, compared to around 40 per cent in 2012. The report says that while Universal Credit and tax credits can support with childcare costs up to a limit of £175 a week for one child or £300 for two or more, the limits have been frozen since 2005 at the same time as childcare costs have risen steeply, doubling between 2005 and 2022. 

The CPAG says the report shows the urgent need for the Government to commit to increasing benefits with inflation from next April.

Chief Executive Alison Garnham said: “The warning lights are flashing as family incomes plummet following the real-terms benefit cut last April.   Another cut would be calamitous.  The Government must end the desperate worry and uncertainty in struggling households by uprating benefits with inflation and removing the benefit cap.  Anything less and the UK will set itself a new child poverty record with millions falling too far back to ever recover.”

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