Preston families need to earn a third more money to make ends meet than a decade ago

Low salary families need a third more disposable income than a decade ago to make ends meet and are facing even bigger barriers to meet rising costs.

Tuesday, 24th July 2018, 10:05 pm
Updated Tuesday, 24th July 2018, 11:07 pm
Families are struggling

A report by The Joseph Rowntree Foundation estimates a couple with two children need a household income of at least £40,000 a year to have a decent standard of living.

The foundation added single working parents with a pre-school child need to earn £28,450.

The charity asked the public what they thought people needed to achieve a decent living standard, which was outlined as Christmas presents and a one week holiday in the UK along with the usual basics of food and clothing.

Sign up to our daily newsletter

The i newsletter cut through the noise

Rebecca Senior with Alessia, Olivia and Amelia

Despite a 41 per cent increase in the minimum wage since 2008, people are still struggling to make ends meet due to huge rises in the cost of transport, food shopping and childcare.

It means that on average, single working parents are now £3,640 short of achieving the national income average, compared to the £528 difference in 2008.

In 2008, a lone parent working full-time on the minimum wage, helped by tax credits, had annual disposable income of £520 a year (3.5 per cent) short of the expected living standard.

oday they are £3,640 a year short (20 per cent).

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

A single breadwinner family - one full-time worker, the other not working – are £6,240 (27 per cent) short.

JRF is calling on the government to allow families to keep more of their earnings by increasing the Work Allowance under Universal Credit, which would help three million working families on low incomes reach a decent standard of living.

Campbell Robb, chief executive of JRF, said: “These figures show how precarious life can be. People who live below the minimum standard say that they shop around to get the best deals and juggle to pay the bills, but the soaring cost of transport, energy and childcare means millions of families are still locked in a daily struggle to make ends meet.

“Some working parents are actually 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.”

A separate report, this time by Child Poverty Action Group, reveals parents could spend up to £155,000 over 18 years in raising a child.

This figure, which includes rent, childcare and council tax, is even bigger for single parents, with a cost of up to £187,000.

The report also found support with costs has fallen: for couples, child benefit plus the maximum amount of Child Tax Credit now covers 94 per cent of the basic cost of a child – compared to 98 per cent the previous year. For lone parents, the proportion is 69 per cent (72 per cent in 2016).

The shortfall has risen: for families receiving maximum benefits, the overall benefit package now falls 31 per cent short of covering the cost to a lone parent of bringing up a child – up from 22 per cent in 2012.

For couples, the shortfall is only six per cent, an increase in the shortfall since last year but a decrease since 2012 influenced by a more modest assessment of minimum costs made by couple parents in 2016 in the wake of years of austerity.

Child Poverty Action Group is expected to release another report next month, but as last year’s figure rose by around two per cent, this is predicted to go up again.

Benefits you may be entitled to

You get Child Benefit if you’re responsible for one or more children under 16 (or under 20 if they stay in approved education or training).

Child Benefit rates:

Eldest or only child £20.70 a week

Additional children £13.70 a week per child

You may be able to claim Child Tax Credit if you’re responsible for children either:

Aged 16 or under - you can claim up until 31 August after their 16th birthday

Under 20 and in eligible education or training

All three to four-year-olds in England can get free early education or child care.

Some two-year-olds are also eligible for 15 hours free child care, for example if you get certain benefits.

You can usually get 30 hours free childcare if you (and your partner, if you have one) are:

In work - or getting parental leave, sick leave or annual leave

Each earning at least the National Minimum Wage or Living Wage for 16 hours a week - £125.28 if you’re over 25

This earnings limit does not apply if you’re self-employed and started your business less than 12 months ago.

Essentials create drain on personal finances

Public transport has become more expensive and bus services have been cut As a consequence, transport costs take up nearly a fifth of minimum household budgets. Bus travel is 65 per cent more expensive in 2018 than in 2008. For a single person, the minimum transport budget rose from £17 to £37 a week.

On average the cost of food rose by just over a quarter between 2008 and 2018, but a minimum food budget for a single person rose from £29 to £44 a week, a rise of just over 50 per cent.

Energy bills are more than 40 per cent higher than a decade ago, putting pressure on household budgets, despite the internet making it easier to shop around for better tariffs and more energy-efficient lighting making rises less steep for some households.

Childcare costs have risen. The average price of a full-time nursery place for a two-year-old is now £229 a week, having risen by over 50 per cent since 2008. The government’s emphasis on early years development is reflected in parents saying, unlike in 2008, that families should have the choice of nursery care for their pre-school children, rather than only being able to afford a childminder.

People are spending less today on technology and are more connected than they were ten years ago. Broadband, a basic laptop and smartphone cost £8 a week today for a single working-age person, compared to £9.50 for a landline telephone and a pay-as-you-go mobile in 2008, despite inflation of 25 per cent. Technology is also reducing minimum costs by enabling people to shop online and make price comparisons.

How one Preston mum makes her money stretch

Rebecca Senior, of Penwortham, is a single parent and admits, with three daughters, she struggles with spiralling costs.

The 46-year-old split up with her husband three years ago even with child maintenance from him, and a part time job, she finds the costs mounting up all the same.

Rebecca said: “I have two twin girls, aged nine and an 11-year-old.

“When I had my eldest daughter I gave up work and then I became pregnant with twins. The cost of childcare was too much, it was not worth working so I stayed at home for seven years to look after my girls.

“I went back to work four years ago, working 10am until 2pm so I can cover the school pickups and drop offs. There is an after school club, but that costs £6.50 per session per child.”

Rebecca, who is a content sales adviser in Fulwood, admitted school is one of her biggest hits to her bank account.

She said: “It gets even more expensive as they get older.

“They grow out of their clothes and I have to buy their school uniform. I am dreading my eldest going to high school in September as the school uniform, plus the PE kit is even more expensive.

“School trips are a nightmare. It is always pay, pay, pay. It has cost almost £700 to send all three girls on a trip to Hothersall Lodge and Crosby Hall. I don’t know how schools can expect single parents to pay that. I couldn’t afford it and so their grandparents had to pay. If it wasn’t for their support, they would not have been able to go. High school will be even worse, with trips abroad. There is no way I can afford that.

“I have also been told my eldest will need an iPad when she goes to high school or can pay £30 a month for one - so I will have to find the extra money from somewhere.

“All three girls play for Euxton Girls Football Club and that is expensive, as I have to pay for the kit. It is £12 a month each and £2 subs for every match. They used to go swimming but I had to stop that as it cost too much.”

Rebecca added she tries her best to find good deals as she enjoys days out with her girls.

She said: “They are happy and they know I put them first and do what I can.

“When I take them out I go to places like Blackpool, Lytham and Fairhaven Lake, taking a picnic. I find free places to go where they will enjoy.

“In terms of holidays I look for deals on Groupon and see what places like Pontins can offer. Recently I used Groupon to book a mini cruise to Amsterdam which only cost £200.

“I do struggle to cover care over the whole of the summer holidays.

“I don’t like relying on family so I take my holidays during school holidays and I also register them in Funda holiday club.

“I have also booked them in Swim Safe, which is free. It is an organised day trip to Windermere.

“I am also lucky as the girls spend time with their dad. Out of 10 days, he has them for three over night stays which helps with child care.”

Rebecca added she thinks the government could help to make information more readily available to support families.

She said: “I don’t think there is enough support from the government. There is help out there but there is not enough information and you don’t always know about it.”