Family of four to shoulder biggest burden of austerity

The Institute for Fiscal Studies report, commissioned by the Family and Parenting Institute, said this reflects benefit cuts for those of a working age and the greater reliance on benefits by people with children than those without.

Shadow Minister for Women and Equalities Yvette Cooper said the report left the Prime Minister’s “promise to be a family-friendly Government in tatters”.

She added: “The Government is taking more from children than from the banks. Women and children are paying the highest price.

“David Cameron and his Cabinet are completely out of touch with the pressures on families across Britain. And it isn’t even working – with £158bn more borrowing than planned, as a result of their failed economic policies.”

Lone unemployed parents are set to be particularly badly hit, losing £2,000 of their annual income, representing a 12 per cent drop.

The report highlighted a “very real concern” as single parents face the challenge of finding a flexible job in a tough labour market as well as meeting childcare costs. The report, titled The Impact of Austerity Measures on Households with Children, found that incomes among homes with children are set to fall in real terms by 4.2 per cent between 2010-11 and 2015-16.

The annual reduction in income of £1,250 for a couple with two children is “significantly” steeper than the 0.9 per cent drop felt across all households and the fall in income of £215 a year for couples with no children. The report warned that 500,000 more children will fall into absolute poverty between 2010-2011 and 2015-16, with most coming from households where the youngest child is aged under five. Homes with children under five face a 4.9 per cent drop in income by 2015-16, the report found, saying these tended to be households which relied more on benefits than those without young children, who would see incomes grow more strongly when real earnings started to rise.

Larger families will also be strongly affected, largely driven by the imposition of the cap on the total amount of benefit families can receive to be introduced in 2013-14, the report found.

Families with three children are predicted to see their incomes fall by 6.8 per cent by 2015-16, compared with those with only one child, who are set to see a 3.3 per cent fall.

Dr Katherine Rake, chief executive of the Family and Parenting Institute, said: “These figures reveal the full extent to which families with children are shouldering the burden of austerity.

“Having children has always been expensive. But now many families with children face an extra penalty of more than £1,000.”

The report said the introduction of Universal Credit will “soften the blow” for some families but the it added that the Government should consider whether the right safeguards are in place in the meantime.