Families £1,250 worse off

5 January 2012

Families with children will see their income drop by more than £1,000 on average, according to forecasts from the Institute for Fiscal Studies (IFS).

Commissioned by the Family and Planning Institute to uncover future financial prospects for UK households, the IFS has found that families with two children are likely to see their income fall by 4.2%, or £1,250 in real terms, by 2015.

In comparison, the average childless couple is forecast to lose 0.9% of their income, equating to just £215 a year.

"These figures reveal the full extent to which families with children are shouldering the burden of austerity," says Dr Katherine Rake, chief executive of the Family and Parenting Institute.

Tax and benefit changes

Thanks to tax and benefit changes, lone parents, big families and those with children aged under five are set to be hit even harder - with the average non-working single parent standing to lose £2,000 or 12% of their income by 2015.

"It is particularly surprising to see that some of the most vulnerable groups – such as families with new babies and lone parents out of work – are bearing the brunt of the tax and benefit reforms," says Rake.


Families with children will lose more than adults without children and even pensioners under the government's tax and benefits reshuffle. Despite the introduction of universal credit, which combines together several benefits and credits, parents in the poorest income bracket will find themselves 6% worse off in 2014/15, compared to what they would have received had no changes to the tax and benefits system been made.

"Many families will be left struggling to understand why they have been singled out in this way and how this sits alongside the government's ambition for the UK to become a family-friendly nation," concludes Rake.

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