So they\’ve got this piece up at \’T\’ G about how these cuts are just going to be so horrendous for young couples expecting a child.
Take one scenario, a couple in their mid-20s expecting their first child in May 2011. Based on data from the Office for National Statistics, we estimate that there are about 525,000 families who are expecting to have a baby post April 2011. Let\’s assume that this couple live in Stoke-on-Trent, bought a flat several years ago (for the average price, which was £90,000 in 2006) and are paying a mortgage on it. They have never been in receipt of benefits.
Since leaving school, they have both always worked, mostly full-time. They currently earn the median income, which in April 2010 was £538 a week for full-time male employees and £439 for women. Both could be worried about their future job security with a volatile local labour market.
So, thinking ahead, what might 2011 hold for this couple with a baby on the way?
According to the latest figures, the average weekly household expenditure for couples with no children is £529.50. This rises to £615.30 for a couple with children. With the increases in VAT (calculated at 1.5% as VAT is not added to every household purchase), this could conservatively add an extra £413 (calculation based on expenditure with no children) to the family budget in 2011. On top of this, the health and pregnancy grant (worth £190) for expectant mothers is being scrapped and so is the child trust fund (worth £250) for every child. Taking all this together, compared to if they had a baby in 2010, our imagined couple will be more than £800 worse off in 2011.
Now there\’s a few choice bits in there. They\’ve got the local cost of a flat about right (although, for Stoke on Trent it looks a little high maybe) but they\’re using the national median wage, not the local.
Judging from the cost of my own UK mortgage I\’d estimate their repayments at around £500 a month….not all that accurate but close enough for a blog post. £6,000 a year.
But now look at their incomes: that\’s £50,800 a year! Umm, they\’re between the fourth and fifth quintiles for household incomes! And they\’re in friggin\’ Stoke on Trent! With only £6,000 a year to pay in mortgage!
And, get this, look how much worse off they\’ll be as a result of the cuts. £800 a year. 1.6% as a share of gross income, 1.8% as a share of pretax but post housing income.
Umm, isn\’t this what we actually want? That the rich carry their share of the pain?
I have to admit I do wonder what the IPPR were smoking when they put this example out there…..