The rising cost of transport, childcare and energy and benefits cuts mean a single breadwinner family on the lowest income is 27% short of the minimum amount it needs to get by, according to a report for the Joseph Rowntree Foundation (JRF).
The Minimum Income Standard (MIS), carried out by the Centre for Research in Social Policy at Loughborough University, is based on what members of the public think we need to achieve a decent minimum living standard.
The report says a single person needs to earn £18,400 a year to reach MIS; each parent in a working couple with two children needs to earn £20,000. A lone parent with a pre-school child must earn £28,450.
Since 2008, the research shows the cost of a minimum ‘basket’ of goods and services has risen by 35% for a single working-age adult without children, by 30% for a couple with two children and by 50% for a pensioner couple, compared to a 25% increase in the Consumer Prices Index (CPI). The cost of the weekly food shop, for instance, rose by just over a quarter between 2008 and 2018 while the average price of a full-time nursery place for a two-year-old is now £229 a week, having risen by well over 50% since 2008.
Working parents with children on low wages are struggling in particular, says the report. This is despite a 41% increase in the National Minimum Wage and tax cuts. The report says this is because tax credits to top up low wages have been pared back, meaning single parents are 20% short of MIS, couples of two children who both work full time are 11% short and couple with a single breadwinner are 27% short.
JRF is calling on the Government to allow families to keep more of their earnings by increasing the Work Allowance under Universal Credit.
Campbell Robb, chief executive of the JRF, said: “These figures show just how precarious life can be for low income households. People who live below the minimum standard say that they shop around to get the best deals and juggle to pay the bills, but the soaring cost of transport, energy and childcare means millions of families are still locked in a daily struggle to make ends meet.
“Some working parents are actually further away from reaching a decent living standard because tax credits to top up low wages have been falling at a time when families need them most. The Government must put things right by allowing families to keep more of their earnings. This would ease the constraints the crippling cost of living places on their ability to build a better life and ensure everyone can reach a decent standard of living.”
Official figures released last week show 73,500 low-income families lost up to £2,800 each last year after having their entitlement to benefits taken away as a result of the government’s “two-child policy” on child benefit. Some 59% of the families who lost financial support for a third child were in work. The policy on child tax credit and the child element of universal credit applies to third or subsequent children born after April 2017. There are exemptions for women who have become pregnant as a result of rape and families who have multiple births.