40 per cent of families struggling

FAMILIES with children are now at greater risk than any other group of having an inadequate income, with more than one in three having less than they require for a socially acceptable standard of living.

According to new research for the Joseph Rowntree Foundation, at least 8.1 million parents and children are living on incomes below what is needed to cover a minimum household budget, up by more than a third from 5.9 million in 2008/09.

Using the latest available data on household incomes, the report reveals the widening gap in income inadequacy since the recession and its aftermath.

Calculated by the Centre for Research in Social Policy (CRSP) at Loughborough University, the Minimum Income Standard is the amount that the public think people need in order to reach a socially acceptable standard of living. The report finds that:

The research finds that the widening gap between the incomes of families with children and what they need was driven by a real-terms fall in wages and cuts to benefits and tax credits.

The analysis also confirms the rapid increase in the risk faced by childless working age households:

For childless working age households, especially younger adults, worsening job prospects played a crucial role in increasing the risk of low income in the immediate aftermath of the recession.

The precarious nature of the labour market also left many unable to find stable employment, and reduced the earning potential of those that did. For single people under 35, the proportion not working rose from 16 per cent to 25 per cent.

As employment rates for younger adults recover, their prospect of having an adequate income may improve. Working families with children, on the other hand, will continue to feel the effects of stagnating wages and benefit cuts because they are reliant on benefits to top up their low pay.

Donald Hirsch from the University of Loughborough, co-author of the report, said: “Our tracking of what has happened to people on the lowest incomes shows just how much ground they need to make up in order to restore pre-recession living standards.

“Over one in three families with children now have incomes that are not high enough to afford a minimum basket of essentials according to our research into what the general public define as adequate.

“A pause in inflation, influenced by the drop in oil prices will make it easier to reverse recent trends, but it will take several years of rising real wages, while maintaining support through tax credits and Universal Credit, to reduce decisively the number of families with inadequate incomes.