The cost of children
Benefits and tax credits
For simplicity, the parents below are all mothers. The numbers would be the same if they were fathers. The benefit / tax credit amounts are pre-June 2001.
5 women live near one-another, all of them the only adult in the household. Some potential benefits (such as Housing Benefit and Council Tax Benefit) are ignored for simplicity.
Anne receives nothing, so everything the government pays to others is because they have a child, not for any other reason.
Brenda receives £99.00 made up from the following:
Carol receives £95.50 made up from the following:
Diane receives £167.72 made up from the following (with the tax credits reduced by 55p in the £ for earnings beyond £91.45):
Erica receives £15.50 made up from the following:
Why bother to mention Brenda's Income Support personal allowance? It is for her, not the child, isn't it?
It is "cheap childcare" - it is a service for the child. If it was not intended for the child, she wouldn't be entitled to Income Support. (Compare it with Diane's childcare - that costs £100 per week of which the government is prepared to pay £70). It is arguable that older children don't need full time childcare, and so their lone parents shouldn't be entitled to such a personal allowance, and perhaps not be entitled to Income Support. Sooner or later a government will probably act accordingly. But, in the meantime, the personal allowance is part of the cost which the government recognises for a child. The fact that it also keeps the lone mother alive doesn't alter this fact - the costs of childcare includes the cost of keeping the childcarer alive! (When lone mothers with older children cease to qualify for full Income Support, they can act like Carol and claim Working Families Tax Credit instead).
How much of what is paid to Carol and Diane is for the child, and how much is simply an incentive for them to work? Is the question meaningful? (How much of Anne's personal allowance is an incentive for her to stay at home?)
Note also that the government quite deliberately doesn't pay all of the indisputable costs of the child incurred by Diane - the childcare tax credit falls short by £30 of her actual expenditure. So what the government is prepared to pay certainly doesn't give the full figure of what a child costs.
Suppose the government introduces an "earnings top-up tax credit" which Anne could claim. Suddenly, some of the above amounts received by Carol and Diane cease to be for the child - childfree Anne would be getting perhaps the basic tax credit (or some other amount). So the picture isn't simple, nor is it static.
The government is prepared to pay about £99 or £95 or £167 or £15 per week. No definitive cost of a child can be deduced from government payouts!
No one in government is going to set child support amounts according to the child allowance component alone - it is too obvious that it only tells a small part of the story.
And typical NRPs certainly don't want to start paying a large proportion of certain of the amounts that the government is prepared to pay someone because of their child!
|Page last updated: 5 July, 2004||© Copyright Barry Pearson 2003|