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Families ‘need a third more income to make ends meet’

Childcare costs have risen 50% since 2008

Low-income families need a third more disposable income than a decade ago to make ends, an analysis suggests.

The rising cost of transport, childcare and energy have restricted and restrained people who are struggling to get by, according to the research for the Joseph Rowntree Foundation (JRF).

The Minimum Income Standard (MIS), carried out by the Centre for Research in Social Policy at Loughborough University, acts as a barometer of living standards in the UK. It is based on what members of the public think people need to achieve a decent minimum living standard.

The calculator shows a single person needs to earn £18,400 a year to reach MIS, while each parent in a working couple with two children needs to earn £20,000. A lone parent with a pre-school child must earn £28,450.

Since 2008, the cost of a minimum basket of goods and services has risen by 35% for a single working-age adult without children, by 30% for a couple with two children and by 50% for a pensioner couple, compared to a 25% increase in the Consumer Prices Index (CPI).

Childcare costs have risen sharply, with the average price of a full-time nursery place for a two-year-old now £229 a week, up 50% since 2008.

In 2008, a lone parent working full-time on the minimum wage, helped by tax credits, had annual disposable income just £520 a year (3.5%) short of MIS. But today they are £3,640 a year short (20%), the report found.

A couple with two children is about £2,600 a year (11%) short of MIS if both parents work full-time on the minimum wage.

A single breadwinner family are £6,240 (27%) short.

Campbell Robb, chief executive of the Joseph Rowntree Foundation, said some working parents are further away from reaching a decent living standard because tax credits to top up low wages have been falling at a time when families need them most.

“The government must put things right by allowing families to keep more of their earnings. This would ease the constraints the crippling cost of living places on their ability to build a better life and ensure everyone can reach a decent standard of living,” he added.