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The state can't afford to cut back family support

Children are not a private luxury but the future workers and taxpayers of this country. Labour should pledge to reverse the fall in the value of child benefit.

Washing hangs out to dry above children's bikes on the balcony of a residential development in the London borough of Tower Hamlets. Photograph: Getty Images.

The dog days are upon us and like most parents, I’m scrabbling around for childcare and searching for affordable activities for my child. The summer holidays cost – but as new research published by the Child Poverty Action Group (CPAG) and the Joseph Rowntree Foundation (JRF) shows, an ice cream here and play scheme there is just the beginning of it.

Cost of a Child in 2013 documents the minimum income required to bring up a child in the UK today. It draws on JRF’s on-going work, which regularly asks members of the public which items they think we should all be able to afford. What emerges from this exercise is a consensus that families need enough to cover the bare essentials such as food and shelter, but also require a modest amount to enable them to participate in normal social activities too.

The numbers are enough to make anyone sit up and think: the research estimates the minimum acceptable cost of a child over 18 years is £81,722 for couple, and £90,980 for a single parent. (The figure for single parents is higher due to the fact that there is only one adult in the family to offset some of the children’s costs by reducing their own). Add in childcare costs and the numbers increase still further - to £148,105 for couples and a staggering £161,260 for single parents, over the 18-year period.

The figures illuminate why families with children are generally at a higher risk of poverty than other groups in society: costs sky-rocket when we have children yet our earning power is compromised by childcare responsibilities. In recognition of this, the state helps us smooth our incomes over the course of our lifetime through the provision of child benefit and, for lower-income families, child tax credits too.

But as the report documents, both these sources of support have diminished considerably in recent years. Child benefit was frozen in 2010 and has consequently lost one-seventh of its value; tax credits look set to wither away in a similar manner as they are uprated at a mere 1% over the next three years.

With earnings lagging behind costs as well, it’s not surprising that a couple with two children working full-time on the minimum wage today net only 83 per cent of the minimum income they require. While the same couple can just about reach an adequate standard of living on the median wage – our national mid-point - a single parent family in the same situation is still almost 10 per cent shy of a decent standard of living.

There’s a question, of course, as to how much the state should help parents with the costs of their children. But children are not a private luxury as some current political debates like to suggest. Instead, they are the future workers and taxpayers of this country and supporting families with their children’s costs is more accurately seen as an investment, not the deadweight cost it is often presented as.

Labour has indicated that restoring child benefit to higher earners would not be a priority if it were in power but has remained silent on whether it would seek to restore the benefit’s real value to its 2010 level. Meanwhile, the coalition is proposing to pay childcare costs to families earning up to £300,000 between them, while through universal credit it will compensate only those earning more than £10,000. And the Conservatives are set to unveil plans later this year to introduce a married couple's tax allowance. But as far as I know, once the wedding is over, married couples don’t have any additional costs, so it is hard to see any rationale for it.

Meanwhile, think tanks such as IPPR have gone on record numerous times to suggest that child benefit be frozen for a decade and the money redeployed to pay for additional childcare support. The Cost of a Child report shows what a self-defeating strategy that would be: subsidising childcare by cutting child benefit is giving with one hand while taking away with the other. As we move towards the 'living standards election' of 2015, all parties need to think harder about how we re-commit to all our children - as we did after the Second World War through universal family allowances – we need to find more funds and better ways to help families at all income levels, working or not working, with the costs of a child.