The IPPR really is most glorious

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…..

3 thoughts on “The IPPR really is most glorious”

  1. They’re about to lose her £439 a week when the poo monster arrives (neatly explaining that gap between £439 and £538).

  2. Also the £250 Child Trust Fund couldn’t have been spent until the child reaches 18, so it’s hardly going to affect their living standards now.

  3. Given that a woman in full time employment is far more likely to be in the public sector than the private, the new arrival won’t affect the income that much. Maternity leave with full pay for 6 months probably, then statutory pay for 3 months. Plus the guarantee that the job will still be open in exactly the same form if she wants to go back afterwards.

    Whereas in the private sector she’d get the absolute minimum, and probably plenty of hassle once she returned to work to catch up on what she’s missed. Or gets made ‘redundant’ soon after.

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