Rising living costs leaving millions of low-income families struggling to make ends meet

The rising cost of transport, childcare and energy has hit people who are struggling to get by, leaving low-income families needing a third more money to make ends meet, according to a new study.

The Joseph Rowntree Foundation (JRF) said families on low incomes were facing bigger barriers to meet rising costs, despite tightening their belts and shopping around online for better deals.

JRF called on the Government to allow families to keep more of their earnings by increasing the Work Allowance under Universal Credit.

This would help three million working families on low incomes reach a decent standard of living, said JRF.

JRF worked out a so-called Minimum Income Standard (MIS), researched by the Centre for Research in Social Policy at Loughborough University, which it said acted as a barometer of living standards in the UK.

A single person needs to earn £18,400 a year to reach MIS, each parent in a working couple with two children needs to earn £20,000 and a lone parent with a pre-school child must earn £28,450, the study found.

The report said public transport has become much more expensive and bus services have been cut so that transport costs take up nearly a fifth of minimum household budgets.

Bus travel is 65% more expensive in 2018 than in 2008 so for a single person the minimum transport budget has risen from £17 to £37 a week, said the report.

The average 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%, while energy bills are over 40% higher than a decade ago.

Childcare costs have risen sharply, with the average price of a full-time nursery place for a two-year-old rising by more than 50% in the past decade to £229 a week.

Campbell Robb (pictured), chief executive of the Joseph Rowntree Foundation, said: “These figures show just how precarious life can be for low-income households.

“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.”

Rosie Ferguson, chief executive of Gingerbread, which campaigns on behalf of single parents, commented: “Single parents and their children are slipping further and further below a decent living standard, with neither welfare nor low-paid work keeping pace with rising everyday living costs.

“The Government needs to act to create a benefit system which is fit for purpose – one that is linked to financial need, minimises the use of benefit limits or suspensions and genuinely makes work pay.”

Tess Lanning, director of the Living Wage Foundation, said: “The financial pressures created by the rising costs of childcare, transport and housing are placing a huge stress on families and particularly the millions of people still earning less than the wage they need to make ends meet.”

A Government spokesman said: “We recognise some families face real challenges with livings costs and that is why we are helping them earn more and keep more of what they earn.

“Our increases to the national living wage have put £2,000 more into people’s pockets, we are backing families by providing 30 hours free childcare and have cut income tax for 31 million people.”

Margaret Greenwood, shadow work and pensions secretary, said: “By cutting social security while the cost of essentials is rising steeply, the Tories are making a conscious choice to push low-income families into poverty.

“For all Theresa May’s talk of helping the ‘just about managing’, her Government has made life more difficult for people across the country.

“Labour would halt the roll-out of Universal Credit, which is clearly causing great hardship, and introduce a £10 real living wage to ensure that work pays.”

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