Tag Archives: childcare

Working families fall short of minimum living standard

The overall cost of a child over 18 years (including rent and childcare) is £150,753 for a couple and £183,335 for a lone parent. But work doesn’t pay low-income families enough to meet a no-frills standard of living, new research from Child Poverty Action Group (CPAG) shows.

Cost of a Child ReportA combination of rising prices, benefits and tax credits freezes, the introduction of the benefit cap and two-child limit, the bedroom tax, cuts to housing benefits and the rolling out of Universal Credit have hit family budgets hard.

Life has been getting progressively tougher for families on low or modest incomes over the past ten years, with families on in-work and out-of-work benefits hardest hit, the report warns.

Despite the introduction of the ‘national living wage’, low-paid families working full-time are still unable to earn enough to meet their families’ needs. The gains from modest increases in wages have been clawed back through the freezing of tax credits.

Even families with two parents currently working full time on the ‘national living wage’ are 11% (£49 per week) short of the income the public defines as an acceptable, no-frills living standard.

The cumulative effect of cuts, frozen benefits and new punitive measures hit lone parents particularly hard. For lone parents, even a reasonably paid job (on median earnings) will leave them 15% (£56 per week) short of an adequate income because of the high cost of childcare. A lone parent working full-time on the ‘national living wage’ will be 20% (£74 per week) short of what they need to achieve a minimum standard of living. However, a lone parent relying solely on benefits will go without 40% of the budget they need for a socially acceptable minimum.

With the introduction of the two-child limit, families with three or more children fare worst – a third child born after 1 April 2017, for whom no additional support will be provided, costs around £86,500 or £4,800 a year excluding childcare.

Larger families on out-of-work benefits who avoid being hit by the two-child limit will instead be hit by the benefit cap which restricts support to £23,000 in London and £20,000 outside London regardless of family size. The impact of the benefit cap means that an out-of-work family with three children living in a privately rented home will receive just a little over a third of what they need to meet their needs, with a shortfall of around £400 per week.

The costs of a child are calculated according to a minimum standard of income that covers the costs of essentials such as food, clothes and shelter as well as other costs necessary to participate in society. It looks at the needs of different family types and is informed by what ordinary members of the public feel is necessary for both couples and lone parents bringing up children.

Chief Executive of Child Poverty Action Group Alison Garnham said: “Today, the majority of children growing up in poverty have working parents. While the number of parents in work is increasing, income from work alone is not sufficient to enable some to meet their families’ needs or escape poverty and the cost of a child is substantial. There is strong public support for government topping-up the wages of low-paid parents and investing in children is the best long-term investment we can make. By using the forthcoming budget to unfreeze benefits and restore work allowances, the government can take steps towards making work really pay.”

Click here to read the report.

Childcare problems cost mums £3.4 million each day

The childcare system is costing mothers in England £3.4 million a day because it prevents them from working, according to new analysis from Save the Children. That’s £1.2 billion every year.

Save the Children logo

The charity estimates there are around 89,000 mothers of children under five who would like to get back into work but say that childcare is the main barrier to doing so.

Steven McIntosh, Director of UK Poverty Policy, Advocacy and Campaigns at Save the Children said: “Mothers describe a childcare system that feels stacked against them. They tell us it’s nightmare to navigate with barriers to work at every turn. The result is an astounding loss in earnings, hitting families already battling to make ends meet. The financial pressure and stress that creates at home is never good for parents or their children. It’s time to make childcare work for families.”

Research shows childcare issues are the number one barrier to work for parents with young children. Despite recent reforms, Save the Children says that parents are still facing sky-high childcare bills and struggling with a complicated system – with almost half of parents saying they have no idea or are confused about what support they should get. The charity says that they are left unable to access the childcare they need to work, which can tip families into hardship.

Bianca, 36, is a Mum from East London with two boys aged three and seven. After working full time for ten years, childcare issues forced her to give up her job as an education team leader in a college.

Bianca said: “ I absolutely loved my job and I could see myself progressing. It was the cost of childcare that made me give it up, because if I’d had to pay for my younger son to be in nursery full-time that would have been a massive chunk of my salary. We made sure we lived within our means but of course you lose out on some things.

“There are a lot of people who have a lot to give to the economy, but childcare is such a massive barrier. The only way you can jump over that barrier is if you’re willing to shell out a lot of money and have little left for three or four years. We did make that choice to have children, but we shouldn’t be penalised for it, and that’s how it feels at the moment.”

Research shows that the average take home pay for a mum working full time is just over £20,000 and almost £45,000 for a couple both working full time. Even taking into account free childcare hours and government subsidies, the cost of childcare for two children can still be more than £8,000 a year. That is 39% of the mother’s take home pay – twice as much as she pays in tax. Parents say that childcare bills are still too high, with many claiming it costs more than their mortgage or rent, or that it doesn’t make financial sense to go back to work.

To address the problems of cost, complexity and accessibility in the childcare system which are preventing parents from working, Save the Children is calling on new government ministers responsible for childcare to urgently set out the next steps to delivering a childcare system in England that is high quality, affordable, easy to use and fits around families’ lives.