Parents will bear brunt of austerity cuts, says IFS

A COUPLE with two children will be £1,250 a year worse off by 2015 as families “shoulder the burden of austerity”, an Institute for Fiscal Studies (IFS) report has found.

The study, for the Family and Parenting Institute, said the shrunken income reflects benefit cuts for those of working age and the greater reliance on benefits by people with children than those without.

Lone unemployed parents will be particularly badly hit, losing £2,000 of annual income, a 12 per cent drop, the study said.

The report highlighted a “very real concern” as single parents face the challenge of finding a flexible job in a tough labour market as well as meeting childcare costs.

The report, titled The Impact of Austerity Measures on Households with Children, found incomes among homes with children were set to fall in real terms by 4.2 per cent between 2010-11 and 2015-16.

The annual reduction in income of £1,250 for a couple with two children was “significantly” steeper than the 0.9 per cent drop across all households and the fall in income of £215 a year for couples with no children.

The report warned 500,000 more children would fall into poverty between 2010-2011 and 2015-16, with most from households where the youngest child was under five.

Homes with children under five face a 4.9 per cent drop in income by 2015-16, the report found, saying these tended to be households which relied more on benefits than those without young children, who would see incomes grow more strongly when real earnings started to rise.

Larger families will also be strongly affected, largely driven by the imposition of the cap on the total amount of benefit that families can receive, to be introduced in 2013-14.