Changes to taxes and benefits since 1997 have increased the financial incentive to work for most lone parents. As a result, there are more lone parents in work and fewer children in poverty. However, for couples with children where one parent is already in work, the same changes have, on average, reduced the incentive for the other parent to find a job as well.

This contrast reflects the fact that, when increasing financial support for all parents on low incomes, the Government has been more generous to parents who work, but has then had to means-test that more generous support away as household income rises. Relative to the position in 1997, this encourages lone parents and one parent in a couple to work, but then discourages any effort to increase household income further.

These are the findings of new IFS research funded by the Joseph Rowntree Foundation and published today. It examines the success of the Government's "Make Work Pay" agenda, which seeks to improve financial incentives to work, and to reduce poverty amongst working families, mainly through changes to tax credits.

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