How was the £71,000 working-family benchmark calculated and what income components are included?

1. How CSJ says the £71,000 figure was built: a quick forensic read

The Centre for Social Justice explains the benchmark was produced by estimating working households’ gross wages using the Family Resources Survey (FRS) and then applying HMRC’s tax calculator to produce net pay after taxes, student loan and National Insurance deductions; that process underpins their statement that a three‑child working family needs about £71,000 a year before tax to “match” an equivalent jobless family under the post‑Budget rules ^[1]. CSJ also states their working‑hours assumptions explicitly: full‑time = 36 hours and part‑time = 16 hours, drawn from ONS definitions used in their modelling ^[1].

2. What income components CSJ includes and what they explicitly model

CSJ’s documentation lists gross pay as the starting point (wage estimates from the FRS) and then deducts statutory items using an HMRC tax calculator: income tax, National Insurance, and student loan repayments are explicitly applied to reach net pay figures ^[1]. The underlying wage estimates are from FRS microdata for 2026/27; CSJ does not in this excerpt list other benefit‑in‑kind, investment income, or self‑employment adjustments — the focus is on paid employment wages reported in the FRS ^[1].

3. What the benchmark is trying to compare — benefit package versus net wages

CSJ frames the £71,000 benchmark as the gross annual pay a working three‑child household must earn so that, after statutory deductions, its take‑home pay is comparable to a jobless household receiving combined benefits following the government’s abolition of the two‑child limit and related measures ^[1]. The organisation therefore compares a modeled working family’s post‑tax wage to a modeled welfare income package; the methodology combines administrative survey wage data with tax‑calculation routines to make that net‑to‑net comparison possible ^[1].

4. Limits and gaps in the published explanation

CSJ’s short public note names the core inputs (FRS wages, HMRC tax calculator, hours assumptions) but does not in this disclosed text detail the exact FRS variables used, whether benefits in kind, unearned income, or local cost adjustments were included, nor the precise treatment of childcare costs or housing costs in the comparison — those elements are not mentioned in the CSJ excerpt provided ^[1]. Available sources do not mention detailed line‑by‑line tables, sensitivity checks, or alternative hours/earnings scenarios that would show how sensitive the £71,000 figure is to different assumptions ^[1].

5. Alternative methodologies and context from other institutions

By contrast, established family‑budget and living‑wage tools (EPI Family Budget Calculator, MIT Living Wage, etc.) construct required income from component costs — housing, food, childcare, healthcare, transport — using administrative and survey sources and then sum those to a “required income,” a different approach than CSJ’s net‑pay matching to benefit levels ^{[2] [3]}. Those technical documents show an alternative framing: rather than asking what gross pay equals a benefit package, they calculate the income needed to meet defined expenses, using different data sources and adjustments ^{[2] [3]}.

6. What readers should take away

CSJ’s £71,000 is a modelled, policy‑focused counterfactual: it answers “how much gross pay would produce the same post‑tax income as a specific benefits package” under chosen hours and data sources (FRS + HMRC tax calculator), not “how much does a typical three‑child family actually earn” or a full budget‑needs analysis ^[1]. The CSJ note makes its main data choices transparent — FRS wage estimates and HMRC tax calculator — but omits many granular methodological details in the excerpt provided, so the figure should be read as a headline output of a particular modelling path rather than a comprehensive cost‑of‑living benchmark ^[1].