Katie Schmuecker: Families left out in the cold by summer’s financial pressure

For low income families whose children receive free school 
meals, suddenly money has to be found for three rather than two meals every day. And as the 
return to school looms on the horizon, thoughts begin to turn 
to the school supplies and uniform needed for the new 
term. You don’t need to tell many parents that having children is 
an expensive business, they already know.

Nonetheless, researchers like to be able to put a figure on things, and new research published by the Joseph Rowntree Foundation in York has calculated how much it adds to a household budget to raise a child to the age of 18. The answer is £148,000 (which works out at £160 a week).

To be clear, this is not simply the cost of providing food, clothes and shelter to a child. That would be a very low bar indeed for what we aspire to for our children. But neither is it £148,000 to provide a child with a life of luxury. The figure is based on what members of the public tell us is required for a minimum acceptable standard of living. So it does include basic leisure activities like a one week self-catering holiday in the UK each year and swimming lessons for young children.

But what’s notable about this research (which is now in its second year) is how quickly the cost of raising a child is rising. Over the last year the cost of giving a child a decent standard of living has gone up by four per cent.

To put this in perspective, over the same period the minimum wage has gone up by 1.8 per cent, and average pay by 1.5 per cent. In short there is a growing gap between the costs faced by families and the money they’ve got coming in.

This squeeze is even more acute for those that rely on either tax credits or benefits. In 2013, for the first time since the 1930s, the value of benefits did not rise in line with the cost of living. In the interests of austerity, most benefits and tax credits only increased by one per cent. Meanwhile child benefit has been frozen. The growing gap between money in and money out is even greater for these families.

In recent decades the state has recognised that it is expensive to raise children, but it is also in all our interests for children to grow up with a reasonable standard of living.

As such, extra help has been provided to families – through things like child benefit and tax credits for childcare – to offset some of the additional costs of having children. But this support for families has been cut as part of the Government’s reforms to the welfare system and measures to balance the books.

These are measures that hit those with the least the hardest. And when they’re combined with the rising cost of living, the result is more families struggling to make ends meet.

This is true whether families are in work or not. The research into the cost of a child calculates how far short different sorts of families fall from a decent standard of living in 2013.

Take for example a couple with two children who are both working full-time, earning the minimum wage. You would expect them to be able to live reasonably comfortably, but in fact they cannot reach what the public tells us is required for a decent standard of living – although they do get four fifths of the way there (their combined income gives them 83 per cent of what is needed for a decent standard of living).

But they do considerably better than if they were out of work. If the same couple was entirely reliant on out of work benefits, they would have just 58 per cent of what they need for a decent standard of living. Overall in Yorkshire and the Humber, around one in five families is falling short of a decent standard of living.

The return to school in a few weeks may take some of the immediate pressure off family budgets. But the growing gap between family incomes and what families need for a decent standard of living shows no signs of abating.

Katie Schmuecker is part of the poverty team at the York-based Joseph Rowntree Foundation.