‘Low-income families having to pay thousands more for same goods and services’

The poorest families in the UK are having to fork out between £3,000 and £5,600 more this year as the cost-of-living crisis bites, new research from Save the Children has suggested.

Larger families on low incomes have been disproportionately affected by rising costs, meaning they are struggling to buy the goods and services they could afford before the pandemic, and shortfalls rise dramatically when housing costs are considered, the charity said.

It commissioned the Institute for Public Policy Research (IPPR) to do modelling comparing pre-pandemic spending among low-income families with children, to see how significant the shortfalls are for 2023/2024.

The study looked at the poorest third of families whose incomes are approximately £24,000 a year or less.

In the IPPR analysis of Living Cost and Food Survey data from the Office for National Statistics, the think tank found low-income families had budget shortfalls of between £200 and £1,400 per year on average, excluding housing costs.

A single parent with one child on average needs to spend an additional £3,100 in 2023/24 to get the same basket of goods and services they would have bought in 2019/20, the report said.

This rises to almost £5,600 – or more than £100 per week – for a couple with three children, it added.

Out of pocket

Save the Children said that because there have not been proportionate benefit increases to match rising costs, and cost-of-living payments have not been tailored to family size, larger families have been disproportionately affected.

Taking housing costs into account, the analysis suggested that a large family renting privately on Universal Credit “could be out of pocket by thousands of pounds per year”.

It gave the example of a five-person family in Salford, where a shortfall of £2,400 per year was identified.

Save the Children is calling for a child poverty strategy and for the two-child limit – where families do not get additional benefits for more than two children unless particular circumstances apply – and benefit cap to be abolished.

Benefit cap

The charity also said housing reforms must have children and families’ needs in mind.

Its report said: “The UK Government needs to do more to protect families from poverty and provide a level of support that matches families’ circumstances.

“Children have not been adequately considered by successive governments, who have implemented policies which unfairly penalise children, like the two-child limit and the benefit cap.

“The last few years have seen two major national crises which have pushed families to the brink.

“Coupled with years of underfunding and cuts to social security levels, this means that parents are struggling to provide their children with the things they need for a happy, full childhood.”

Becca Lyon, head of child poverty at the charity said: “This is the most significant research we’ve ever done on family budgets and the results are worse than we had imagined.

“For years, parents told us that raising a child was more expensive than it used to be, but we had no idea of the scale of the crisis. For single parents and those with three or more children, their shortfall in just a few years has increased substantially.”