The net weekly budget for a family of four, with children aged 3 and 7, has risen from £370 to £455 since 2008.
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Chris Goulden is the programme manager for poverty at the Joseph Rowntree Foundation (JRF)
Research (pdf) published today by the Joseph Rowntree Foundation shows what the public think we all need for an acceptable minimum standard of living. It is based on panels of ordinary people reaching a consensus about the items and activities that allow participation in society as well as food, clothes, paying the bills and a home.
This year is the first time that families with children have been asked again from scratch what they think constitutes their minimum and it means we can compare what they’ve said with the original research done pre-recession in 2008.
The net weekly budget for a family of four, with children aged 3 and 7, has risen from £370 to £455 during this time.
That’s an increase of 23 per cent compared with CPI over the same period of 14 per cent. It’s not just the greater inflation of a minimum basket of goods that’s causing this, however.
Some things in particular are hitting working families the hardest . This is why we are seeing an even larger rise in the gross wages that families need to earn – rising by a third from £28,000 a year in 2008 to £37,000 today.
Childcare: has risen by nearly a third. In 2008, child minders outside London charged on average £2.70 an hour; now they charge £3.50. Full-time childcare are families’ single biggest weekly outgoing at nearly £150 per week.
Transport: bus travel has doubled in price since the late 1990s which, combined with cuts to public transport, means families with children now deem a (second-hand) car as essential.
Tax credits: cuts to Tax Credits – particular Childcare Tax Credits – have increased earning requirements substantially, more than wiping out the benefit of higher income tax thresholds.
Chart 1 below shows the ‘swings and roundabouts’ that lead to an overall rise of £5,000 (inflation-adjusted) in the minimum budget for a family of four. This highlights the importance of looking at incomes, costs and tax/benefit changes in the round.
Chart 1:
• Two children in every classroom go hungry 5 Jul 2012
• Government has “no hope” of reaching its target on reducing child poverty 13 Jun 2012
• UK success on child poverty threatened by austerity programme 29 May 2012
You can’t just rely on a single policy (increases in tax credits or the income tax threshold for instance) to be effective against the problems of low income.
We would like to see governments using this more comprehensive analysis to show that changes in policy really do lead to improvements on the ground. It’ll be particularly important when Universal Credit comes in next year to maintain this level of scrutiny of its impact.
42 Responses to “JRF: You can’t rely on a single policy to combat poverty”
Eva Lloyd
You can’t rely on a single policy to combat poverty, @chris_goulden writes on @leftfootfwd: http://t.co/yZ5FsaIO #mis2012
JC
Why would you want to call me a scrounger and make attacks on the hard working poor just because the tax free allowance was above the amount I was paid? I don’t think taxing the poor is a particularly good idea at any time, especially now.
The government should be running an economy within the reach of fair taxation policies, and should be trying to optimise the amount of tax collected instead of targeting various groups for political gain.
As for having a tax on jobs; I just don’t believe that it’s a good idea. There’s no evidence that employers take advantage of your last point anyway. There’s nothing stopping them doing it now.
If my proposals were adopted, then the minimum wage would become the living wage.
Anonymous
I wouldn’t, but I’m not a Tory now am I?
And the thresholds don’t make it very sensible to do it now, but you’d make it near-irriststable. It’s also not a “tax on jobs”, it’s part of the standard cost of employment and it’s actually not especially high. Again, the sort of tax cuts you’re talking about would be taken out, by this government, of poor people’s services causing an even higher poverty premium, and if you think wages would rise I have some buckets of wet sand to sell you.
News4NowHere
You can’t rely on a single policy to combat poverty, @chris_goulden writes on @leftfootfwd: http://t.co/yZ5FsaIO #mis2012
JC
What’s the difference between a cost of employment which goes to the government and a tax on jobs? Especially when the latter is a percentage of the pay.
As for the reduction in government spending, if the poor had more money, then the government wouldn’t need to give them so much to catch up would they?
Evidence shows that a lower tax on employment leads to larger profits and thus higher wages. Unless you decide to increase the tax on company profits that is.