Families with both parents working full time on the national living wage can no longer reach an “acceptable” standard of living, new research has found.
The study for Child Poverty Action Group (CPAG) found that the cost of living crisis meant these families were now £34 per week short of a bare minimum, “no frills” living standard.
Single parents working full time on the living wage face even greater struggles – falling £107 a week short of what they need.
The study by Loughborough University also found that out of work couples with two children who are paying private rent are a full £353 short of what they need each week.
The CPAG said the below-inflation uprating of benefits at a time of soaring inflation had left families across Britain struggling to avoid dire poverty.
Urging the prime minister Rishi Sunak and his chancellor Jeremy Hunt to hike benefits by 10.1 per cent – in line with inflation – the charity’s chief executive Alison Garnham said: “The warning lights are flashing as family incomes plummet following the real-terms benefit cut last April.”
Ms Garnham added: “Another cut would be calamitous. The government must end the desperate worry and uncertainty in struggling households by uprating benefits with inflation and removing the benefit cap.”
The CPAG said the below-inflation uprating last April had helped push many families into trouble, as had the freezing of the overall cap on benefits since 2016.
Dr Juliet Stone, who co-authored the latest Cost of a Child report, said the “stark” economic crisis meant families have experienced “the sharpest deterioration in living standards since we first started calculating the cost of a child a decade ago”.
The study found that the cost of having a child reaches almost £160,000 for couples, and £200,000 for lone parents. Childcare is a key driver of rising costs for in-work families – making up around 60 per cent of the lifetime cost of a child for a couple working full time, compared to around 40 per cent in 2012.
Families on universal credit or tax credits are eligible for support with childcare costs up to a limit of £175 a week for one child, or £300 for two or more. But these limits have been frozen since 200, while childcare fees have risen sharply.
Mr Sunak is said to be considering raising benefits and state pensions in line with inflation, a move that would likely usher in deeper public spending cuts elsewhere and some higher taxes.
Treasury sources said no decisions have been taken, but did not deny a report in The Times that they would avoid real-terms cuts on pensions and benefits, as they seek to address a black hole of up to £60bn.
On Tuesday Tory MPs urged Mr Sunak to give pensioners an inflation-proof income rise in the coming autumn statement, though stopped short of supporting a Labour motion on the issue.
Former ministers Sir John Hayes and Kevin Foster were among those calling on the to reinstate the state pensions triple lock, which was temporarily suspended last year.
With Tories abstaining, MPs voted 218 to zero favour of Labour’s non-binding motion calling on the government to commit to maintaining the triple lock, which requires pensions to rise by the highest of inflation, average earnings or 2.5 per cent.
