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Coffee House

Ignoring struggling families will be politically costly

5 September 2012

5:45 PM

5 September 2012

5:45 PM

More bad news for Britain’s families: new research shows that the cost of bringing up a child is an eye-watering £143,000.

This piles more pressure on a government that already knows it has to do better to show it’s on the side of families struggling to make ends meet.

Based on what parents say is essential, our report shows the minimum required to raise a child until the age of 18 today is £143,000 (including housing and childcare costs), which averages out at about £150 a week.

The report also reveals that this cost is rising faster than inflation. The rising price of food, water and fuel contribute to this but it is the high cost of childcare in the UK that is the most significant driver of this above-inflation increase. Since 2008, childcare costs have risen by about 30 per cent outside of London and by a staggering 50 per cent in the capital, squeezing family budgets further.

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Benefits and tax credits go some way to offsetting the extra costs families encounter when they have children but the report shows these fail to support families adequately. Out of work benefits provide between 73 per cent and 94 per cent of minimum costs of a child, leaving parents to deal with the shortfall.

The picture does not get any better for working parents. A full time job on national minimum wage for couple families, combined with benefits and tax credits, meets only 82 per cent of the basic costs of a child.

Yet, the Government is scaling back its financial support to families.

Child benefit goes some way to helping families with the costs of children, but the three year freeze the government introduced in 2011 looks set to have reduced its real value by 10 per cent by 2014. The reduction in childcare support provided by tax credits, from 80 per cent to 70 per cent of costs, is also hurting.

Why should the Government help parents with the cost of children?  Because it is a national responsibility.

Ignoring these costs and allowing child poverty to soar damages children’s childhoods and destroys life chances. It also inflates public spending levels (child poverty costs society £25 billion a year) and, by wasting talent, weakens the UK’s skills base and economic competitiveness.

As No 10 reportedly understands, it’s not just about the social and economic costs. Walking away from struggling families or, worse, making repeat raids on shrinking family budgets also risks the government paying a hefty political price in 2015.

Alison Garnham is Chief Executive of the Child Poverty Action Group.

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