Four in ten families with children are ‘struggling to make ends meet’ and are at greater risk of ‘inadequate income’ compared to other groups, says a damning new report.
According to new research from the Joseph Rowntree Foundation (JRF), at least 8.1 million families with children are living on an income lower than what’s needed to cover the cost of living – up by more than a third since 2008/09 (5.9 million).
JRF used the latest available data on households incomes to determine the number of families living below a ‘Minimum Income Standard’, which shows a widening income gap in the aftermath of the last recession.
The ‘Minimum Income Standard’ is calculated by the Centre for Research in Social Policy (CRSP) and is the amount the public believe is needed for an ‘acceptable standard of living’.
According to the report, 39% of parents live below the ‘Minimum Income Standard’, with lone parents “suffering most” as the result of falling earnings, benefit cuts and rising living costs. 71% of lone parents now live on inadequate incomes (2.3 million), up from 65% (2.2 million) in 2008/09.
Families with only one parent working are also at risk of inadequate incomes, says JRF. The number of families with a single breadwinner and whom are struggling to get by has risen from 1.6 million (38%) to 1.9 million (51%).
The worsening gap between the income of families with children and living costs is ‘driven by a real-terms fall in wages and cuts to benefits and tax credits’, says JRF.
The report – Households Below A Minimum Income Standard – also reveals that under David Cameron and the Tory-led coalition government, 23% of adults are ‘unable to make ends meet’ – up from 16% in 2008/09.
Adults without children, particularly young adults, faced poor job prospects and unstable employment following the recession, reducing their earning potential. JRF says rising employment rates may help to improve the future prospects for childless adults, but families with children may continue to struggle with stagnating wages and benefit cuts.
JRF is calling for:
- Reform of the markets for essential goods and services eg. energy, financial services and transport, to ensure they provide good value for money and those on low incomes don’t pay more than better off households for services (the so called ‘poverty premium’).
- National minimum wage rates to be set with regard to the changing cost of living and average earnings.
- Employers to pay the Living Wage where they can afford to.
- Changes to the design of Universal Credit so that low earners keep more of the money they earn before benefits are withdrawn.
Katie Schmuecker, Policy and Research Manager at JRF said:
“There has been a turnaround in who is suffering most as a result of the economic crisis and government measures to reduce the deficit. While last year’s monitoring report showed a sharp rise in young single people struggling to make ends meet, this year’s report shows a rapid widening of the gap between the incomes and costs of families with children.
“Falling earnings, cuts to in and out-of-work benefits and sharp rises in the cost of essential items over several years have taken their toll upon the ability of families with children to secure a decent living standard.
“Without action by the government and employers to address this group as part of a wider anti-poverty strategy, this trend is likely to have serious consequences for the next generation.”
Donald Hirsch from the University of Loughborough, co-author of the report, said:
“Our tracking of what has happened to people on the lowest incomes shows just how much ground they need to make up in order to restore pre-recession living standards.
“Over one in three families with children now have incomes that are not high enough to afford a minimum basket of essentials according to our research into what the general public define as adequate.
“A pause in inflation, influenced by the drop in oil prices will make it easier to reverse recent trends, but it will take several years of rising real wages, while maintaining support through tax credits and Universal Credit, to reduce decisively the number of families with inadequate incomes.”