The impact of financial incentives in welfare systems on family structure

B Stafford and S Roberts; Department for Work and Pensions

In recent years there have been academic and policy debates about whether financial incentives in welfare systems affect demographic behaviour. For some they are seen as leading to less marriage, and more cohabitation, non-marital births and single parents. This review finds mixed evidence that financial incentives in welfare systems substantially affect family structure. Overall, there is no strong evidence to support claims that the welfare system is responsible for the breakdown of the traditional family.

The report is available from the DWP website.

April 2009

tax and benefits, family trends

Valuing and supporting carers

Work and Pensions Committee

This report from the Work and Pensions Select Committee criticises the government's Carers Strategy for addressing the inadequacy of benefits for carers only as a long-term priority from 2011 onwards. The committee recommends replacing the current system with two distinctive 'tiers' of support for carers: income replacement support for carers unable to work, or working only part-time; and compensation for the additional costs of caring for all carers in intensive caring roles.

Other areas for action include: a need for affordable, reliable and flexible care services to take pressure off carers; sensitive, tailored support to re-enter employment when caring ends; enabling young carers to access opportunities for education, training and employment; and improving the financial position of those whose pensions have been affected by their caring roles.

The report is available from the Committee website.

August 2008

carers, tax and benefits

Understanding cohabitation: A critical study of the living together as husband and wife rule in UK social security law

S Kelly; Centre for Research on Families and Relationships

In social security legislation, the cohabitation or 'living together as husband and wife' rule treats cohabiting couples who claim means-tested benefits as if they are married. However, this may not provide protection for financially vulnerable cohabitants who are not necessarily in the same circumstances as married couples. Drawing on research with men and women who have had relevant personal experience of 'the cohabitation rule', this briefing identifies problems with its underlying assumptions about unmarried couples' relationships and their financial support obligations to each other.

May 2008

tax and benefits

Taxation of the Family

T Bowler; Institute for Fiscal Studies

In this discussion paper produced for the Tax Law Review Committee, the tax treatment of three couples in differing family contexts is examined: a married couple with two children under the age of 16; an unmarried couple in a stable and long term relationship with two children under the age of 16; and a family where the couple have recently formed a relationship and have children from different relationships. The discussion paper considers the tax treatment of the couples while the relationship is ongoing, after break-up and on the death of one of the couple. The paper concludes by considering the implications of current Government, Conservative Party and Liberal Democrat policy.

The report can be downloaded from the IFS website.

June 2007

couple relationships, family break-up, tax and benefits

Budget June 2010

Measures in the Coalition's first Budget include:

• restricted eligibility to the Sure Start Maternity Grant;
• the abolition of the Health in Pregnancy Grant from January 2011; and
• a freeze on Child Benefit.

The full budget report and speech are available from the HM Treasury website.

June 2010

tax and benefits

Cohabitation, marriage and child outcomes

Institute for Fiscal Studies (IFS)

The study, funded by the Nuffield Foundation, looks at how children's cognitive and social development differs between married and cohabiting parents, and provides a preliminary assessment of the extent to which such differences might be due to a causal effect of marriage itself. It aims to inform a policy debate on the merits of encouraging individuals to enter marriage before they bear children. Children born to married parents achieve better outcomes, on average, both at school and in terms of their social and emotional development, than children born into other family forms, including to cohabiting couples. The study found that there are differences in development between children born to married and cohabiting couples, but this reflects differences in the sort of parents who decide to get married rather than to cohabit. It concludes that differences in socio-economic status and relationship quality between married and co-habiting parents seem to account for the differences in their children's development. Having taken account of these (largely pre-existing) characteristics, marital status appears to have little or no additional impact on the child's development.

The report can be downloaded from the IFS website.

April 2010

tax and benefits, inequality, poverty

The couple penalty - Couple penalties and premiums in the UK tax and benefit system

Institute for Fiscal Studies (IFS)

The report, funded by the Nuffield Foundation, suggests that the majority of people in the UK would receive more financial support from the state if they were single (or told the authorities they were single) than if they were married or part of a cohabiting couple. The report analyses the distribution of couple penalties and premiums in the tax and benefit system. It defines 'couple penalties and premiums' in the tax and benefit system as the change in entitlements to benefits and tax credits and in liability to taxes that occurs when two single people marry, or start to live together as husband and wife.

The report can be downloaded from the IFS website.

April 2010

tax and benefits, inequality, poverty

Budget 2010

Measures in this year's budget include:

• Sure Start to share £150 million in "efficiency savings" with further education and sixth form budgets.
• Child Tax credit to rise by £4 a week from 2012 for families with infants
• A commitment to protect frontline public service priorities in the years to 2012-13, including schools (spending to rise by 0.7 per cent in real terms), 16 to 19 education (0.9 per cent) and Sure Start (in line with inflation), with free childcare continuing to be available for three and four year olds
• £1.1 billion of education frontline efficiency savings to be delivered by 2012-13 across all three of the above areas
• Extension of 10 hours' free childcare for the most disadvantaged two year olds to families on low or modest incomes over the period 2011 to 2015

The Budget documents show that the Government is likely to miss its 2010 target of halving child poverty by at least 600,000 children.

The full budget report and speech are available from the HM Treasury website.

March 2010

tax and benefits

Families with children in Britain: findings from the 2007 Families and Children Study

D Philo et al; Department for Work and Pensions

The 2007 Families and Children Study (FACS) is the ninth in a series of annual surveys which investigate the circumstances of British families with dependent children. The first part of the report focuses on the circumstances, lives and conditions of families, and topics covered include: family characteristics, health, education, work, income, benefits and tax credits, social capital, money management, housing and deprivation. The second part of the report focuses on the circumstances, conditions and lives of children, and topics covered include: child characteristics, health, schooling, children's activities, childcare and child maintenance.

The report can be downloaded from the DWP website.

June 2009

family trends, housing, tax and benefits, inequality, childcare

Budget 2009

Measures in this year's budget include:

• The child element of the Child Tax Credit will be increased by an additional £20 a year above indexation from April 2010;
• The law will be amended to clarify that from 31 July 2009 the current four-week run-on of entitlement to WTC also covers the childcare element, including for couples when only one partner stops working;
• Grandparents and other adult family members who care for their grandchildren or other members of their family aged 12 or younger for 20 hours or more a week will be able to gain National Insurance credits toward the basic State Pension from April 2011;
• The support for vulnerable homeowners in financial difficulty is to be extended through widening the eligibility criteria for the Mortgage Rescue Scheme so that households in negative equity are not excluded.
• A £600 million fund to deliver up to an additional 10,000 homes in England over the next two years.

The full budget report and speech are available from the HM Treasury website.

April 2009

tax and benefits

Pre-Budget Report

Measures in this year's Pre-Budget Report include:

• measures to help families at risk of repossession;
• bringing forward the increase in the child element of the child tax credit by £25 above indexation to April 2009.
• bringing forward the increase in Child Benefit from £18.80 to £20pw for the first child to January 2009; and
• setting out that the Prime Ministers announcement to legislate on the commitment to eradicate child poverty by 2020 will be taken forward through a child poverty bill in 2009.

Full information on the Pre-Budget Report is available from the HM Treasury website.

November 2008

tax and benefits

Comprehensive Spending Review and Pre-Budget report

Key measures announced in this year's Comprehensive Spending Review include:

• increasing the child maintenance disregard in relation to the main income related benefits to £20 by the end of 2008, with a further increase to £40 from April 2010. Maintenance payments will also be ignored when calculating Housing Benefit and Council Tax Benefit.
• increasing the child element of the Child Tax Credit will increase by a further £25 per year above indexation from April 2008 and by a further £25 above indexation from April 2010.
• confirming the national roll-out from April 2008 of the In-Work Credit for lone parents at a rate of £40, retaining a rate of £60 in London

Several new Public Service Agreements were announced including:

• to raise the educational achievement of all children and young people
• to narrow the gap in educational achievement between children from low-income and disadvantaged backgrounds and their peers.
• to improve the health and well-being of children and young people
• to improve children and young people's safety
• to increase the number of children and young people on the path to success.

October 2007

tax and benefits

Child benefit to be paid from the 29th week of pregnancy

The Chancellor, Gordon Brown, announced in his pre-budget report that child benefit would be extended to be paid to women from the 29th week of pregnancy.

New rates for benefits including Child and Working Tax Credit rates and Child Benefit can be found on the HM Treasury website.

The pre-budget report and speech can be found on the HM Treasury website.

December 2006

tax and benefits

Take up the challenge

Take Up Taskforce, Child Poverty Unit

In November 2008 the Government created the Take Up Taskforce to advise on how local services can reduce child poverty through helping poor families to access the benefits and tax credits to which they are entitled. This report includes actions that local authorities and partners can take now to maximise families' incomes, case studies of successful approaches, and recommendations for Government on how to support local services to increase take-up. A cross-government delivery group will work to secure a more customer centred and co-ordinated approach to the delivery of benefits and tax credits, and to produce materials to support local services to take the action in the report.

The report is available from the DCSF website.

July 2009

tax and benefits

In-work poverty: a systematic review

J Tripney et al; Department for Work and Pensions

This report reviews 18 studies from the UK and other countries. These evaluated the impact of changes (real or hypothetical) to the tax and benefit system to provide greater financial return on paid employment. The financial interventions that have been evaluated do not appear, on average, to have resulted either in attracting more potential second earners into work or encouraging two-parent families to work more hours, but caution in evaluating the evidence is advised.

The report is available from the DWP website.

February 2009

tax and benefits, welfare to work

Ending child poverty: 'Thinking 2020'

G Cooke, P Gregg, D Hirsch, N Jones and A Power; Department for Work and Pensions

This report contains the write-up of the event, Ending child poverty: 'Thinking 2020', along with four think-pieces on:

• Escaping disadvantage through parenting and school support
• Ensuring communities are safe, sustainable places where families can thrive
• Financial support to end child poverty
• Increasing employment and raising incomes

The report can be downloaded from the DWP website.

November 2008

welfare to work, tax and benefits, local environment

Social Security Advisory Committee 21st Report

This report reviews the committee's work from August 2007 to July 2008 and the issues that have been considered. The committee broadly support the use of conditionality in welfare reform, but questions whether this approach has universal applicability. In particular the state needs to provide a decent level of financial and other support to those individuals who cannot personally respond to this approach. The chairman describes the committee as being "disappointed that more evidence has not been presented to show that sanctions and compulsion are effective in generating long-term sustainable employment." The committee would also like to see greater progress on the concept of a single working-age benefit.

The report is available from the committee website.

November 2008

welfare to work, tax and benefits

Measures to improve women's pension entitlements

The government will today propose an amendment to the Pensions Bill to allow people to buy up to an additional six years of voluntary National Insurance contributions, over and above those permitted under the current time limits, to increase their state pension entitlements. This is intended to benefit women who have taken time out of paid employment because of caring responsibilities.

More information is available from the DWP website.

October 2008

tax and benefits, carers

This is child poverty

Citizens Advice

This report presents evidence from parents on the impact on families of living in poverty. It highlights problems with the benefits and tax credits system, rising costs of living and the risk of getting into debt, inadequate housing, and the hidden costs of schooling.

The report can be downloaded from the Citizens Advice website.

September 2008

experience of poverty, tax and benefits, housing

The effects of benefit sanctions on lone parents' employment decisions and moves into employment

V Goodwin; Department for Work and Pensions

Lone parents must attend a Work Focused Interview (WFI) every six months. If they fail to attend, the interview is rearranged. If they do not attend a second time and fail to make contact or demonstrate good cause their benefit payments may be reduced. This study was designed to explore the effects of these sanctions on lone parents' employment decisions.

Missing an interview tended to be for reasons linked to health, caring responsibilities or simply forgetting the appointment. Those with health conditions or disabled children found it particularly difficult to attend appointments. The lone parents in this study understood that their benefit might potentially be cut if they failed to attend a WFI, but many were unsure of the amount of benefit payment that they should be receiving. Those who continued to live with a sanction had made generally appeared to be unaware of their reduced rate of benefit. The majority of the sample considered employment as a longer-term goal, but childcare and/or health concerns meant employment was considered unlikely until these issues were resolved. Receiving benefit sanctions did not affect their employment decisions.

The report is available from the DWP website

August 2008

lone parents, welfare to work, tax and benefits

No one written off: reforming welfare to reward responsibility

This latest Green Paper on welfare reform proposes abolishing Income Support and creating a system based around Jobseeker's Allowance (JSA) and the new Employment and Support Allowance (the replacement for Incapacity Benefit).

It proposes moving all lone parents onto JSA, although they would not be required to look for a job until their youngest child is seven. They would have to attend a skills health check when their youngest child reaches five and attend skills training subject to the discretion of the adviser. A 'skills for work' premium would be paid for taking part in agreed activity. From April 2010 child maintenance payments would be completely disregarded when calculating how much out of work benefits a parent should get.

Partners of benefit recipients would also be moved onto a joint claim for JSA when their youngest child reaches 7. Carers currently on Income Support would be moved onto a modified form of JSA which would not require them to undertake work-focused activity.

The Green Paper is available from the DWP website. The deadline for consultation responses is 22 October 2008.

July 2008

welfare to work, lone parents, carers, tax and benefits

Review of conditionality in the welfare system

A review has been announced into conditionality - the use of sanctions in the benefit system, to be led by Professor Paul Gregg of the University of Bristol. The terms of reference of the review are:

• To set out a vision for a more personalised conditionality regime.
• To consider the evidence about the impact and effectiveness of conditionality in the UK and from different international regimes.
• To consider the implications of the latest evidence from the fields of behavioural economics and social psychology for conditionality policy.
• To consider what reforms would be needed to the welfare system.
• To consider the potential trade-offs and tensions in delivering a more personalised conditionality regime.

More information about the review is available from the DWP website, along with a background paper, More support, higher expectations: the role of conditionality in improving employment outcomes.

July 2008

welfare to work, tax and benefits

The effects of taxes and benefits on household income, 2005/06

F Jones, National Statistics

In 2005/06, original income (before taxes and benefits) of the top fifth of households in the UK was sixteen times greater than that for the bottom fifth (£68,700 per household per year compared with £4,200). After redistribution through taxes and benefits, including benefits in kind such as health and education, the ratio between the top and bottom fifths is reduced to four-to-one (average final income of £49,300 compared with £13,500).

The report is available from the National Statistics website.

May 2008

tax and benefits, poverty statistics

The impact of benefit and tax uprating on incomes and poverty

H Sutherland, M Evans, R Hancock, J Hills and F Zantomio; Joseph Rowntree Foundation

This study emphasises the importance of annual adjustments of benefit, tax credit levels and tax thresholds, which are often overlooked. Most benefits are uprated according to price inflation. Over 20 years, the consequences of current uprating policies, other things being equal, would be to reduce the value of benefits and tax credits, relative to earned incomes and lower tax thresholds relative to income. It would therefore increase the percentage of incomes taken in tax revenues and almost double the rate of child poverty. To avoid the burden falling disproportionately on poorer households money should be spent on uprating benefits rather than cutting taxes.

The report is available from the JRF website.

April 2008

tax and benefits, poverty

Budget 2008 and child poverty strategy

The Budget included an extra £765m to be spent in the coming financial year and £950m in 2009/10, aiming to take up to 250,000 more children out of poverty. The Chancellor, Alastair Darling, announced an increase in the first child rate of Child Benefit to £20 a week from April 2009; an increase in the child element of the Child Tax Credit by £50 a year above indexation from April 2009; and that Child Benefit would be disregarded in calculating income for Housing and Council Tax Benefit from October 2009.

Other plans include pilots of new child development grants of £200 in 10 Local Authority areas, payable where parents take up their childcare places and have contact with their local Children's Centre

Further details are available from the HM Treasury website.

The report 'Ending child poverty: everybody's business' can be downloaded from the Treasury website.

March 2008

tax and benefits

Working Out of Poverty: A study of the low paid and the 'working poor'

G Cooke and K Lawton

This report highlights the figure of 1.4 million poor children living in working households, which has not fallen since 1997. This is linked to the statistic that 23 per cent of all employees in this country were paid less than £6.67 an hour in April 2006, equivalent to just over £12,000 a year full-time. The authors recommend:

• maintaining the value of the minimum wage at least in line with average earnings growth
• introducing a higher minimum wage for London
• measures to enhance individuals' earnings potential and to increase the availability of adequately paid jobs with prospects for progression
• a Personal Tax Credit Allowance to boost the financial incentive to move into work for second adults in couple families
• increasing the value of Working Tax Credit for couple families

The report is available from the IPPR website.

January 2008

poverty, tax and benefits

Tax credits: Getting it wrong?

Parliamentary and Health Service Ombudsman

From the complaints brought to the Ombudsman, this report concludes that HM Revenue and Customs have made significant improvements to the administration of the tax credits system. However, it appears that a small, but significant, number of customers - typically those on the lowest incomes, who are amongst the most vulnerable in society, are undergoing highly distressing experiences within the tax credit system.

The Ombudsman recommends that the process of dealing with overpayments is reviewed to ensure that recovery of overpayments is reasonable and takes account of personal circumstances. The report also raises fundamental questions as to whether a system which contains an inherent possibility of debts arising, can really meet the needs of vulnerable families.

The report can be downloaded from the Ombudsman's website.

October 2007

tax and benefits

Disabled children and child poverty

Every Disabled Child Matters Campaign

To end child poverty for families with disabled children, this paper argues that the government should:

• spend the £4 billion on benefits and child tax credits estimated to be necessary to reach the 2010 target of halving child poverty.
• run a major take-up campaign on Disability Living Allowance (DLA)
• increase in the childcare element of working tax credit for families with a disabled child to £300 per week
• increase in DLA to meet the real cost of caring for a disabled child
• review the Carer's Allowance.

The briefing can be downloaded from the Every Disabled Child Matters website.

August 2007

disabled children, tax and benefits, poverty

Breakthrough Britain. Ending the costs of social breakdown

Social Justice Policy Group

This report from the Conservative Party's Social Justice Policy Group identifies the main problems facing Britain as family breakdown, economic dependency and worklessness, educational failure, addiction, and serious personal debt. It also reviews the role of the third sector

Proposals relating to the family include:

• a reduction in the couple penalty by enhancing the couple element in Working Tax Credit
• a transferable tax allowance for all married couples of £20 a week for those making use of it
• 'front-loading' child benefit to the first three years
• making lone parents should work part-time once their youngest child reaches five, and full-time at 11
• investment in relationship support
• increase in Carer's Allowance
• allowing the use of childcare tax credit to pay un-registered close relatives
• encouraging use of existing provision rather than state-provided childcare including Children's Centres
• a higher rate of childcare tax credit for disabled children
• stricter enforcement of contact arrangements

The report is available to download from the Social Justice Policy Group website.

July 2007

poverty, family relationships, family break-up, tax and benefits, substance misuse, childcare, lone parents, Conservative Party

Welfare Isn't Working: Child Poverty

F Field and B Cackett; Reform

This report by Frank Field, the former Welfare Reform Minister, and Ben Cackett, for the think tank Reform, criticises the government's tax credit strategy. It argues that the system discriminates against two-parent households and that this will cause the target of halving child poverty by 2010-11 to be missed.

The report can be downloaded from the Reform website.

The report states that a single mother working 16 hours a week, after tax credits, gains a total income of £487 a week, and that a two parent family earning the minimum wage has to work 116 hours to gain the same income. The accuracy of these figures has been disputed. Click here for details.

June 2007

poverty, tax and benefits

Welfare Reform Bill receives Royal Assent

The Welfare Reform Bill received Royal Assent on 3 May 2007.
Part One of the Act makes provision for the Employment and Support Allowance which would replace incapacity benefit and income support on grounds of incapacity. Entitlement for the new benefit would be by satisfying either a National Insurance contribution test (similar to incapacity benefit) or an income test (similar to income support) and by being assessed to be limited in capability for work.

For all except an exempt group, the Act provides for a person's benefit to be cut if they do not take part in certain activities, ranging from work-focused health assessments and work-focused interviews to work-related activity. Details of the sanctions would be dealt with in regulations.

Part Two of the Act deals with housing benefit and council tax, containing measures to facilitate the extension of local housing allowance, currently being tested in 18 Local Authority areas, across the deregulated private rented sector. The Act also provides for a reduction in housing benefit where a person has been evicted on grounds of anti-social behaviour and then refuses to co-operate with support that is offered to him with a view to improving his behaviour.

May 2007

welfare to work, anti-social behaviour, tax and benefits

2007 Budget announced

In this year's Budget speech, the Chancellor, Gordon Brown, announced that he would cut the basic rate of income tax from 22p down to 20p, but remove the lowest 10% tax bracket. Other measures relevant to families include:

• increasing the weekly rate of Child Benefit for the eldest child to £20 in April 2010
• increasing the child element of the Child Tax Credit by £150 a year above earnings in April 2008, raising the child element to £2,080 a year;
• an increase in the rate at which Working Tax Credit is received in full, by £1,200 to £6,420 a year from 2008.
• families with two children to start paying income tax when earning more than £24,250 in April 2009, up from the current £22,500.
• extension of the £40 per week In-Work Credit in the existing pilot areas until June 2008; and offering the credit at a higher rate of £60 across the whole of London.
• introduction of a four-week run-on in entitlement to Working Tax Credits, reducing overpayments and easing the transition from tax credits to benefits.
• free childcare places for up to 50,000 workless parents undertaking training
• Increased funding for Sure Start, early years and childcare to over £1.6 billion by 2010-11, up at least £340 million from 2007-08, to deliver existing commitments.

More information is available from the HM Treasury website.

March 2007

poverty, tax and benefits

Poverty and inequality in the UK: 2007

M Brewer, A Goodman, A Muriel and L Sibieta; Institute for Fiscal Studies

This analysis estimates that, taking measures in the 2007 Budget into account, additional new spending of around £4 billion a year (on the per-child element of the child tax credit) by 2010-11 is still needed for the government to have a 50:50 chance of halving child poverty by that time.

This report can be downloaded from the IFS website.

March 2007

poverty statistics, tax and benefits

Further conditionality on lone parent benefits proposed

John Hutton, Secretary of State for Work and Pensions has stated that the Government is considering changing the rules that currently allow lone parents to receive Income Support with no requirement to seek work until their youngest child is 16. A review of welfare to work is currently being carried out by David Freud, launched in December as as a review of the "can work, won't work culture".

More information is available from the DWP website.

February 2007

lone parents, welfare to work, tax and benefits

Comprehensive spending review 2007: What it needs to deliver on child poverty

F McGlone with P Dornan; Child Poverty Action Group

This paper is the Child Poverty Action Group's submission to the 2007 Comprehensive Spending Review. It argues that to ensure that the Government meets its child poverty aims, it should do the following.

• Provide most for those children at greatest risk of poverty.
• Work towards better jobs, not just more jobs.
• Ensure the safety net protects families against poverty.
• Maximise the contribution of child benefit within family support.
• Introduce free at the point of delivery good-quality childcare.
• Make the reduction of child poverty central to the new child support policies.
• Make education truly free at the point of delivery.
• Provide benefit entitlement to all UK residents equally, irrespective of immigration status.
• Reduce the disproportionate burden of taxation on poorer families.
• Improve the quality of delivery and gear it to the needs of the poorest families.

The report can be downloaded from the CPAG website.

January 2007

poverty, tax and benefits

Out of Reach: Benefits for disabled children

G Preston with M Robertson; Child Poverty Action Group and Contact a Family

Drawing on interviews with families and a survey undertaken by Contact a Family, this report argues that better administrative processes and increased take up of disability living allowance would improve the lives of disabled children, enhance their life chances and reduce child poverty. It contains a number of detailed recommendations about how national and local government can improve access to financial support for disabled children. The report concludes that ensuring disabled children receive the benefits to which they are entitled is essential if the Government is to reach its 2010 target of halving child poverty.

The executive summary is available and the report can be ordered from the CPAG website.

December 2006

disabled children, tax and benefits

The Disabled Child Project: Evaluation Report

J Pannell; One Parent Families

This report evaluates an information and advice service for lone parents with sick or disabled children. Over a quarter of lone parents are caring for a sick or disabled child, which means that there are around half a million parents in the UK bringing up at least one child with additional needs on their own. The most frequently raised issue was welfare benefits and tax credits, discussed with 63 per cent of all callers to the project helpline. Many parents were finding it difficult to find out about and obtain benefits that they were entitled to. Another major issue raised by parents was accessing help from social services.

The summary can be downloaded and the full report requested from the One Parent Families website.

November 2006

disabled children, lone parents, tax and benefits

Work-related activity benefit for lone parents

Minister for Employment and Welfare-Reform, Jim Murphy MP has announced that lone parents will get an extra £20 on top of their benefits if they take active steps towards work under a pilot scheme being rolled out next year.

Under the pilots, lone parents with children aged 11 and over will be eligible for a Work Related Activity Premium (WRAP), worth £20 a week if they agree to take the necessary steps to prepare themselves for moving back into work. The new schemes will be introduced from April 2007 in the New Deal Plus for Lone Parents Pilot areas.

More information can be found on the DWP website.

October 2006

welfare to work, tax and benefits

21st Century Welfare white paper

Department for Work and Pensions

Options in the paper include combining elements of the current income-related benefits and tax credit systems, bringing out-of-work and in-work support together in a single system, and supplementing monthly household earnings through credit payments reflecting circumstances such as children, housing and disability. The system is intended to provide more incentive to work as benefits will be withdrawn more slowly alongside gaining employment and to create a simpler system, which will allow for less error and fraud.

The white paper can be downloaded from the DWP website.

The proposals are open for consultation and comments until 1st October 2010.

July 2010

tax and benefits

Families and Children - Election briefing note

Institute for Fiscal Studies (IFS)

The note analyses the manifesto proposals of the three main political parties in the area of families with children. In particular, it discusses the following policies:

• Taxes, benefits and tax credits for families with children;
• Abolishing the couple penalty in the tax credit system;
• Parental leave, pay and flexible working;
• Childcare, early years education and education.

Other issues relevant to families with children, such as welfare policy towards lone parents and schools are also discussed in other notes in the series.

The briefing note can be downloaded from the IFS website.

April 2010

tax and benefits, work-life balance, childcare

Tax credits: improving delivery and choice - a discussion paper

HM Treasury

This paper sets out options for reforming the tax credit system, in particular to avoid problems associated with overpayments. These include services intended to make the process of claiming, receiving and renewing tax credits easier and to reduce the scope for error. There are also possible changes to the childcare element of the working tax credit, such as refunding costs rather than paying them in advance, or basing entitlement on income bands rather than exact income.

The discussion paper can be downloaded from the HM Treasury. The deadline for responses is 5 September 2008.

May 2008

tax and benefits, childcare

Report on Working Families Helpline 2007

Working Families

This report highlights how parents may in practice be unable to access their legal employment rights, for example on flexible working, and that the legislation may also be inadequate to protect all parents. The policy changes recommended include:

• to change the rules for entitlement to statutory maternity pay - particularly for low income mothers who are ill during pregnancy and lose out financially as a result;
• to reduce the notice periods for and extend the availability of statutory paternity leave and pay, including for self employed fathers;
• to extend the right to request flexible working to all parents; and
• to amend parental leave and guidance about time off for dependants so that parents, including parents of disabled children, can take time off when their children are ill or attending appointments.

The report is available from the Working Families website.

April 2008

work-life balance, tax and benefits

Mothers' participation in paid work: the role of 'mini-jobs'

J Hales, S Tipping and N Lyon; Department for Work and Pensions

Mothers in couples are more likely to be in work than lone mothers (around 15 percentage points). Around half of this gap is a reflection of it being more common for mothers in couple families to work in a job of between one and 15 hours per week. These jobs can be a route into other employment This report finds that 91 per cent of owner-occupier lone parents were in paid employment, a higher rate than mothers in owner-occupier couples. Similarly in social housing, 40 per cent of mothers in couples and 38 per cent of lone parents were in paid work. However a higher proportion of the lone parents were social renters.

The authors conclude that if mini-jobs could be made much more worthwhile for lone parents in social housing, by changing the rules for Housing Benefit, Council Tax Benefit, Income Support and tax credits, they would also benefit mothers in couple families in social housing.

The report is available from the DWP website.

January 2008

lone parents, work-life balance, tax and benefits

Full employment and world class skills: Responding to the challenges

Work and Pensions Committee

This report examines two Government documents: the Green Paper, 'In work, better off: next steps to full employment', and 'World Class Skills: Implementing the Leitch Review of Skills in England'. The committee welcomes the 'In work, better off' Green Paper but felt it left out some issues, for example David Freud's proposals for a single working age benefit and also the impact the proposals might have on lone parents with disabled children. It also calls for more evidence that increasing conditionality for lone parents is the best way to help them to get back into the labour market.

The report is available from the committee website.

October 2007

lone parents, welfare to work, tax and benefits

Lone parents and 'mini-jobs'

K Bell, M Brewer and D Phillips; Joseph Rowntree Foundation

This report examines whether encouraging lone parents to work in jobs of less than 16 hours a week ('mini-jobs') could increase the employment rate of lone parents, tackle the high rates of poverty among this group, and allow lone parents to make choices about how to combine work and family life on a more similar basis to mothers in couples.

The report can be downloaded from the JRF website.

October 2007

lone parents, work-life balance, welfare to work, tax and benefits

Carer's Allowance wage exemption increased

From 1 October 2007, the maximum amount of money that carers in Great Britain will be allowed to earn without losing their entitlement to Carer's Allowance (CA) will rise from £87 to £95 a week, after expenses such as income tax and national insurance contributions have been taken into account.

More information is available from the DWP website.

A Standing Commission on Carers has also recently been established by the
Department of Health to review issues such as the level of Carer's Allowance.

September 2007

carers, tax and benefits