Business

National Living Wage 'fails to cover families' basic needs'

Mother and children Image copyright Getty Images

Low-earning parents working full-time are still unable to earn enough to provide their family with a basic, no-frills lifestyle, research suggests.

A single parent on the National Living Wage is £74 a week short of the minimum income needed, according to the Child Poverty Action Group.

A couple with two children would be £49 a week short of the income needed, the charity said.

But this was better than last year, when couples were £59 a week short.

The National Living Wage is £7.83 an hour for those aged over 25.

A government spokesperson said fewer families were living in absolute poverty: "The employment rate is at a near-record high and the National Living Wage has delivered the highest pay increase for the lowest paid in 20 years, worth £2,000 extra per year for a full-time worker."

However, the Child Poverty Action Group (CPAG) said gains from modest increases in wages had been "clawed back" through the freezing of tax credits.

Rising prices and changes to various benefit schemes had also "hit family budgets hard", it said.

Funding essentials

The CPAG's definition of a "no-frills" lifestyle is based on the Minimum Income Standard, a set of criteria drawn up by the Centre for Research in Social Policy at Loughborough University.

It calculates the income required for a minimum standard of living based on essentials such as food, clothes and accommodation, as well as "other costs required to take part in society".

The research centre asks focus groups drawn from a mixture of socio-economic backgrounds what they think a household would have to be able to afford in order to achieve an acceptable living standard.

The charity's Cost of a Child report showed that the overall cost for a couple raising a first child until they are 18 also fell from £155,100 to £150,800.

The cost of bringing up children was heavily influenced by childcare, with full-time childcare accounting for almost half the total sum.


What is the National Living Wage?

Image copyright Getty Images

The National Living Wage was introduced by then Chancellor George Osborne in his Budget in July 2015.

It came into effect in April 2016, and is £7.83 an hour for workers aged 25 and over, with the aim of increasing it to £9 an hour by 2020.


Child costs 'substantial'

CPAG's chief executive Alison Garnham said there was "strong public support" for the government to top up the wages of low-paid parents.

She urged the government to use November's Budget to "unfreeze benefits and restore work allowances".

"Income from work alone is not sufficient to enable some to meet their families' needs to escape poverty and the cost of a child is substantial," she added.

More on this story