The government’s so-called National ‘Living Wage’ (NLW) is anything but, as new research shows families with two parents working full-time on the statutory minimum will not earn enough to support their children.
A report from the Child Action Poverty Group (CAPG) published on Monday (August 20) found that a household of two parents working full time on the NLW – now set at £7.83 for those aged 25 and over – will fall nearly £50 short each week of providing a family of two children with a basic, no-frills lifestyle.
Single parents working full-time on the government’s minimum wage will be even worse off – their weekly shortfall rises to £74.
Since 2012, the CPAG has calculated the cost of raising a child based on the ‘minimum income standard’, which includes not only rent and food but other necessities that people believe are needed to participate in society.
The total cost of a couple raising a child now until they reached 18 is £150,800, down from last year when the overall cost was £155,100.
The cost of childcare was flagged as the greatest single cost of raising children, one which the CPAG called “a major strain on working low and middle-income families”. The charity estimated that full-time childcare costs around £80,000 over the course of childhood. While parents claiming Universal Credit can have up to 85 per cent of these childcare costs reimbursed, the CPAG noted that “reporting requirements are complex and because Universal Credit is paid in arrears, it is hard for parents to pay childcare fees in advance.”
Government to blame
Both the CPAG and Unite agreed that it was government policies that have contributed to a situation where parents, even those working full-time, cannot provide for their children.
The government has claimed that its National Living Wage, introduced in 2016, represents the biggest rise in the minimum wage in two decades, but critics say it still falls far short of the minimum needed to live a decent life.
Moreover, any gains made from a higher wage are clawed back by cuts and freezes to benefits and tax credits as well as the rollout of Universal Credit. Higher prices which continue to jump amid Brexit uncertainty have also played a role.
The report found that out-of-work families and working families on low-incomes with more than two children are hardest hit, especially after the introduction of the government’s two-child policy last year.
The policy, which stops children’s benefits after a family has more than two children, caused about 70,000 households – most of them in work – to lose up to £2800 each last year alone. The CPAG said the policy would lead to skyrocketing rates of child poverty by putting an additional 200,000 children under hardship.
GPAG CEO Alison Garnham urged the government to use the “forthcoming budget to unfreeze benefits and restore work allowances” in order “to make work pay.”
“Investing in children is the best long-term investment we can make,” she said.
Unite assistant general secretary Steve Turner agreed.
“This research shows that actually living on the so-called National Living Wage is virtually impossible, especially if you have the added responsibility of raising children,” he said. “It’s a sad indictment of the society and economy that we live in in which couples who are both working full-time – spending precious time away from their children in order to give them a basic standard of living – still cannot earn enough to do so.
“As the Child Action Poverty Group has highlighted, this mess is entirely of the government’s own making. This giving with one hand by hiking the minimum wage and taking with the other with its cruel cuts and delays to benefits are hitting innocent children hardest. If the government really wants to make work pay it must raise the minimum wage to a real Living Wage of at least £10 an hour, reverse cuts to benefits and tax credits and immediately halt the botched Universal Credit roll-out.”
Unite general secretary Len McCluskey contrasted revelations last week of “excessive fat cat salaries with the CAPG report “on low wage misery.”
“Low pay hurts not just those families who live on it but our entire economy,” he tweeted. “We need a £10 minimum wage now.”