The benefits of parenting

Since 1975 governments in the UK have increased the amount they pay parents to bring upa child by almost 150 per cent, after adjusting for inflation, according to a report by IFS researchers published today. More than half this increase reflects tax and benefit changes since 1999.

Measured in 2002 prices, the average amount paid by the government to parentsfor each child will haverisen from ñ2.62 a week in 1975 to ó1.28 by the time the new child tax credit is introduced nextyear. This will takegovernment spending on financial support for childrento an historic high of ò1bn, compared to ùbn in 1975. This represents an increase from 3.4 to 4.7 percent of total government spending, and from 1.5 to 1.9 per cent of national income.

The report also finds that:

• Between 1978 and 1999, changes in the characteristics of families with children such as the increase in the proportion of children living in lone parent families explain more of the rise in support for children than successive governments' changes to taxes and benefits.
• In 1979, 78 per cent of support for children was provided by child benefit. Since then, governments have become less reliant on child benefit, as means-tested support for children has expanded. In 2002, child benefit will still be the most important programme that supports families with children, but by 2004, more money will be spent on the new child tax credit than on child benefit.
• Since 1975, support for children has become increasingly focused on families with younger children, those with one child, and lone parents. However, the growth in financial support for children since 1997 has been faster for couples than for lone parents.

Ends

Notes to Editors

1. The benefits of parenting: government financial support for families with children since 1975 by Stuart Adam, Mike Brewer and Howard Reed is published on Friday 15th November 2002. It is available from IFS for £25 (£10 to IFS members). The report will be launched at a briefing at 10am: for details, contact Emma Hyman on 020 7291 4850 or by email.
2. The report defines financial support for children as the difference in taxes paid and benefits received by a family with children compared to an otherwise-equivalent family without children. It does not include the considerable support provided for parents and children through public services, such as education or health services.
3. More than 35 different taxes and benefits have been used since 1975 to provide financial support to families with children, and the way they interact means that the overall impact is difficult to analyse. This report aims to quantify explicitly the amount of support provided for children by using the IFS tax and benefit model, TAXBEN, run on representative samples of households between 1975 and 2003.
4. The Joseph Rowntree Foundation (JRF) has supported this project as part of its programme of research and innovative development projects, which it hopes will be of value to policy makers, practitioners and service users. The facts presented and views expressed in this report, however, are those of the authors and not necessarily those of the Foundation. Future work at the IFS will compare the changes in government financial support to changes in the costs of children since 1975.