The calculations for 2024 show that rising costs and real-terms social security cuts have left even couple-families with two children and both parents working full time for the national minimum wage (NMW) £138 per week short of what they need for a no-frills but dignified living standard.
These families can meet only 82% of their costs. In 2008 they could cover 93% of costs. A single parent working full-time for the NMW is now £192 short each week, meeting only 69% of the family’s costs, compared to 97% in 2008.
The combination of the two-child limit and gaps in help with childcare costs has left huge income shortfalls for working families with more than two children. A lone parent with three children on the NMW can only cover 61% of the family’s costs. A couple with three children can meet only 70% of costs.
Low-income families were hit hard not only by headline high inflation between 2021 and 2024 but also by sharp price rises above overall inflation for goods and services such as food and energy on which they must spend a greater share of their income.
These cost pressures followed years of austerity measures such as freezes and below-inflation upratings of social security support from 2010 and the introduction of the two-child limit on child allowances in universal credit.
Universal credit (and previously ‘legacy benefits’ such as tax credits) is paid to families on low wages and to non-working households but has only been uprated by headline inflation in five of the past 14 years.
Dr Juliet Stone (Loughborough University), who did the calculations for the report, said: “Our updated analysis of the cost of bringing up a child shows that parents living on low incomes are increasingly unable to provide their families with a decent standard of living, even if they are in full-time work.
“The findings add further evidence of the need for urgent policy reform – including removing the two-child limit – to ensure that all children can grow up in households with enough income to allow them to live with dignity.”
Child Poverty Action Group says its findings must shape the government’s ‘plan for change’ and spur the Child Poverty Taskforce to take bold action when it reports in Spring, including scrapping the two-child limit.
Chief executive of Child poverty Action Group Alison Garnham said: “The PM can see that families are struggling against the tide but a reset will need action not just words.
“Investment in children through the social security system is guaranteed to improve living standards for kids and would be a vital down-payment on the future of the country.
“Families need to feel improvements, and a crucial place to start is with scrapping the two-child limit.”
Out-of-work families with two children are drastically short of what they need for a minimum living standard, covering less than half their costs - 39% for a couple-family today, compared to 62% in 2008 and 44% for a one-parent family today, compared to 68% in 2008.
Even on a full -time median income some families can’t cover costs: couples in this group can manage 99% of what they need but single parents have only 80% of the income needed.
Raising a child from birth to 18 costs £260, 000 for couples and £290,000 for lone parents, the research finds.
The Cost of a Child 2024, produced for CPAG by Loughborough University’s Centre for Research in Social Policy, looks at the cost of raising a child from birth to 18 and at what families need for a minimum socially acceptable living standard as defined by the public. The research has been running since 2008.