THE COST OF BRINGING UP A CHILD topped £160,000 in 2021 – jumping well over three per cent – as millions grapple with inflation and the universal credit cut, research for Child Poverty Action Group (CPAG) shows.
The cost of raising a child up to age 18 reached £160,692 for couples and £193,801 for lone parents, a 3.6 per cent and 3.3 per cent rise respectively on 2020 – fuelled by inflation and rising childcare costs. CPAG warns that the cost of a child is likely to rise more and to outpace rising general inflation in the months ahead, because prices for essential goods and services (such as energy and food), which make up a greater share of low-income families’ budgets, are expected to rise faster than other goods. And a 3.1 per cent uprating of benefits won’t happen until April 2021 when inflation is projected to be even higher at five per cent.
The Cost of a Child 2021, produced for CPAG by Loughborough University, shows the £20 weekly universal credit (UC) cut has left non-working couple-families on UC with barely half (55 per cent) of what they need for a minimum acceptable standard of living.They are £216 short each week, compared to £186 last year when the £20 uplift was in place. Lone parents who can’t work fare only slightly better: they can clear 58 per cent of their costs (leaving them £164 short), but that compares to 64 per cent of costs covered last year (a £136 shortfall). The income shortfall will be even greater for non-working families who are subject to the two-child limit and/or benefit cap.
While the Budget changes to universal credit compensated families with a full- time worker for the UC cut, the many working families having to rely on part-time earnings – commonly because they have very young children – often saw a net loss, ie they lost more from the £20 cut than they gained from the Budget changes. For example, a lone parent working half the time on the minimum wage gained about £700 a year from the Budget, having previously lost £1,000 from the cut in UC, a net loss of £300. These families will therefore currently be able to cover considerably less of their costs than they could in 2020. Since 2013/14 the rise in child poverty has been steeper for families where the youngest child is under five, growing from 30 per cent in 2013/14 to 36 per cent in 2019/20.
Couple-families on UC where both partners work full-time for the minimum wage just clear their costs with a net income of 106 per cent of costs, but lone parents on the same hours and wages are 11 per cent (£43 per week) short.
Since 2012, the cost of a child has risen by 12.6 per cent for a couple and 25 per cent for a lone parent. To help parents provide a decent living standard for their children, CPAG wants a £10 increase in child benefit and removal of the two-child limit and benefit cap.
Chief Executive of Child Poverty Action Group, Alison Garnham, said: “There is no let-up ahead for low-income families as the cost of bringing up a child climbs and the universal credit cut bites. Families who can’t work and those having to rely on part-time earnings – often because of very young kids – look especially precarious.
“Our research is based on what the public thinks families need for a decent, no-frills living standard. It finds that many are living below that minimum standard – and it’s moving further from their reach. The Government must act. It must stabilise family finances and protect children’s life chances by increasing child benefit by £10 per week.
Author of The Cost of a Child in 2021, Professor Donald Hirsch from Loughborough University, said: “After the blow to families on universal credit of losing £20 a week in October, rising prices this winter will bring new pressures. Since the government ended the benefits freeze last year, cost-of-living increases each April should help the poorest families to keep up with rising prices, but this is not always how things work out. With a return to rising food and energy prices, families whose costs are focused on covering basics like food and fuel face inflation rates higher than the general Consumer Prices Index on which benefit upratings are based.
“The pandemic demonstrated how vulnerable the worst-off families have become, with safety-net benefits at an all-time low relative to need. Only a decisive change of direction in benefits policy can avoid widespread suffering in the months and years ahead.”
The Cost of a Child in 2021, the tenth in a series, provides a snapshot of how the cost of a child in 2021 compares to current incomes and the extent to which social security support helps families to make ends meet.
The costs of a child are calculated according to a minimum standard of income (MIS) that covers the costs of essentials such as food, clothes and shelter as well as other costs necessary to participate in society. It looks at the needs of different family types and is informed by what ordinary members of the public feel is necessary for both couples and lone parents bringing up children.
The two-child limit restricts child allowances in universal credit and tax credits to the first two children in a family unless the children were born before April 2017, with limited exceptions.
‘Net income’ refers to disposable income after rent, council tax and childcare.
* Read CPAG’s short Briefing on the Cost of a Child 2021 research here.
* Source: Child Poverty Action Group