Child costs hit £148,000 – enough to buy a house

According to the Child Poverty Action Group (CPAG), the costs of raising a child to the age of 18 have climbed by 4 per cent to £148,000 – enough to buy a three-bed house in Glasgow or a one-bedroom flat on the outskirts of London.

A squeeze on benefits combined with rising costs on food and childcare means child costs have risen to about £160 a week, said a report by CPAG.

But parents on benefits will continue to struggle for the next three years even if the economy recovers, due to the government’s decision in last year’s autumn statement to break the 80-year link between tax credits and inflation, said Professor Donald Hirsch, director of the centre for research and social policy at Loughborough University.

Childcare costs have rocketed, up 5.9 per cent, and families receiving out of work benefits face income shortfalls. Lone parents receive only 61 per cent of the income needed to cover minimum costs and couples receive 58 per cent, says the report.

“Couples with kids rely more on the state, they can’t make ends meet,” said Mr Hirsch. “You’re much more vulnerable to austerity on the part of the state.”

“When you have a situation where we return to growth you’d expect that earnings would increase as fast as inflation. People who just rely on earned income will probably be out of this squeeze in the next year or two.”

The childcare burden is due to get lighter for some parents in 2016 when the government enhances benefits, but the problem of expensive childcare “has been a bugbear for several years now”, he said.

@Channel4News Unless r on at least 60k u cannot afford childcare now also a good healthy food is becoming far far too expensive..

— Dawn Hardy (@dawnvhardy) August 19, 2013

The report found that costs are highest for the first child, then dip significantly for the second child then increase again for the third.

The greater cost of the third child was often due to extra expenses when a “tipping point” is reached, for example when parents buy a bigger car, said Mr Hirsch.

A report by insurers LV= in January found that the cost of raising a child to the age of 21 had climbed by an average of 58 per cent compared to 10 years ago, up to just over £222,000.

LV= said child rearing was most expensive in London, at an overall cost of £239,000, and the cheapest was Wales at £207,000.

@Channel4News keeping up with the jones can be slashed, but utility bills, childcare and daily living are unbearable

— Alyzande Renard (@alyzande) August 19, 2013