Research (pdf) published today by the Joseph Rowntree Foundation shows what the public think we all need for an acceptable minimum standard of living. It is based on panels of ordinary people reaching a consensus about the items and activities that allow participation in society as well as food, clothes, paying the bills and a home.
This year is the first time that families with children have been asked again from scratch what they think constitutes their minimum and it means we can compare what they’ve said with the original research done pre-recession in 2008.
The net weekly budget for a family of four, with children aged 3 and 7, has risen from £370 to £455 during this time.
That’s an increase of 23 per cent compared with CPI over the same period of 14 per cent. It’s not just the greater inflation of a minimum basket of goods that’s causing this, however.
Some things in particular are hitting working families the hardest . This is why we are seeing an even larger rise in the gross wages that families need to earn - rising by a third from £28,000 a year in 2008 to £37,000 today.
Childcare: has risen by nearly a third. In 2008, child minders outside London charged on average £2.70 an hour; now they charge £3.50. Full-time childcare are families’ single biggest weekly outgoing at nearly £150 per week.
Transport: bus travel has doubled in price since the late 1990s which, combined with cuts to public transport, means families with children now deem a (second-hand) car as essential.
Tax credits: cuts to Tax Credits - particular Childcare Tax Credits - have increased earning requirements substantially, more than wiping out the benefit of higher income tax thresholds.
Chart 1 below shows the ‘swings and roundabouts’ that lead to an overall rise of £5,000 (inflation-adjusted) in the minimum budget for a family of four. This highlights the importance of looking at incomes, costs and tax/benefit changes in the round.
• Two children in every classroom go hungry 5 Jul 2012
You can’t just rely on a single policy (increases in tax credits or the income tax threshold for instance) to be effective against the problems of low income.
We would like to see governments using this more comprehensive analysis to show that changes in policy really do lead to improvements on the ground. It’ll be particularly important when Universal Credit comes in next year to maintain this level of scrutiny of its impact.