Families with children worst affected by falling incomes

Impact of Austerity Measures on Households with Children

New evidence produced by the Institute for Fiscal Studies (IFS) for the Family and Parenting Institute (FPI):

  • The median income among families with children is projected to fall between 2010 and 2015 by 4.2%. For a couple with two children this equates to £1,250 less a year by 2015
  • Families with children aged under five, families with more than two children, and lone parent families not in paid work bear the biggest financial pain in years ahead
  • Larger families will suffer a disproportionate financial hit
  • The UK’s poorest families with children lose the largest proportion of their income from tax and benefit changes
  • Although Universal Credit strengthens work incentives for most individuals, it weakens the incentive for a second earner in a couple, typically the mother in a couple household, to take up employment

Before or after the introduction of Universal Credit, families with children will lose of their income more on average through tax and benefit changes:

  • Households with children lose 6 per cent on average
  • All households lose 4 per cent
  • Working age households without children lose 3 per cent on average
  • Pensioner households lose less than 2 per cent on average
  • The overall average loss is 4 per cent

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