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Families ‘stuck in working poverty’

Families working full time at the national minimum wage are 18% short of the basic amount needed to provide a minimum standard of living, according to a new report.

The Cost of a Child in 2014, published today by Child Poverty Action Group (CPAG), found the shortfall for out-of-work families was even starker – standing at 43%.

Its author Donald Hirsch said the evidence showed “unequivocally” that families had found it progressively harder to make ends meet.

Mr Hirsch, who is director of the Centre for Research in Social Policy at Loughborough University, went on: ” The forecast increase in wages in the next few years should help, but may not reverse this trend for the worst-off working families.

“This is because the support they get from the state will continue to decline in real terms. So if items such as food, social housing and childcare continue to become more expensive, it is unlikely that these families’ overall incomes will keep up.”

The findings show – excluding childcare, rent and council tax costs – that the basic cost of raising a child for a couple is £88.84 per week, a 4.3% rise since 2012. For a lone parent, the basic cost of raising a child is £103.53 a week, a 9.7% rise since 2012.

Including childcare, rent and council tax costs, the amount rises to £164.19 per week for a couple, a 7.7% rise since 2012. For a lone parent, the figure is £184.50 per week, an increase of 11.4% since 2012.

According to the report, funded by the Joseph Rowntree Foundation, t he cost of childcare – the most expensive item purchased by many families with small children – jumped up by 42% between 2008-2014, over twice the official inflation rate.

It also found that families in which all parents work full time on the national minimum wage now have only 82%, in the case of couples, or 87%, in the case of lone parents, of the minimum income required to meet their needs.

Families receiving out-of-work benefits face even greater shortfalls of income. They receive only 57%, in the case of couples, or 60%, in the case of lone parents, of the income required to meet basic needs.

Alison Garnham, chief executive of CPAG, said the picture was one many hard-pressed parents would recognise.

She went on: “Children cost. That is why families with children have a higher risk of poverty than those without. The most recent statistics show 27% 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.”

Katie Schmuecker, policy and research manager at the foundation, added: “We need to get to grips with the high cost of living and the low pay jobs market which traps parents in working poverty.

“Reforms under Universal Credit go some way to helping parents, but this needs to be part of a comprehensive anti-poverty strategy.”

Responding to the report, which is the third of its kind, Shabana Mahmood, Labour’s shadow treasury minister, said it showed the “cost-of-living crisis” facing millions of families.

She went on: “While millionaires have been given a huge tax cut, families with children have been hit hardest of all by this government’s choices.

“Labour would back families and make work pay by expanding free childcare for working parents, increasing the minimum wage and introducing a lower 10p starting rate of tax.”

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