The political drivers of the reformed scheme
Green Paper: "The well-being of the growing number of
children whose parents have separated depends on them receiving the
financial and emotional support of both parents, wherever they live."
Green Paper: "Child support is about families as well
Green Paper: "Children have a right to care and support
from both their parents, wherever they live."
White Paper: "We will put the need for regular and reliable
payments of maintenance at the heart of the new system and we will introduce
effective and prompt sanctions for those who try to avoid providing
for their children."
What happened to those non-financial statements - "emotional
support", "families", "care"
- in the year between the Green Paper and the White Paper?
This section is still under development
The nature of the reformed scheme, and the features included in it and
omitted from it, are more determined by political and administrative advantage
than by the nature of children and parenting.
To see what this means, imagine an alternative. In such an alternative
scheme, it would be possible to trace each feature of the scheme to some
aspect of bringing up children. For example, the amounts paid would be
identifiably related to research into how much children cost. If the costs
changed at particular ages, this would be reflected in the formula. If
the expenditure on children changed in a particular way according to circumstances
(such as income or others costs), then this would show in the formula,
accompanied by references to the evidence.
In fact, the current scheme shows many of these features.
It is based on benefit rates, which are supposed to be based on research
into the costs of staying alive for adults & children. (It then screws
up by attempting some wealth-sharing features).
The reformed scheme shows none of this. It is as though
every feature were chosen for what is politically or administratively
expedient. None of it properly relates back to research or analysis
of the topics concerned.
This summarises a more detailed
article about the percentages.
The basic percentages in the reformed scheme are 15% / 20% / 25% of NRP's
net income for 1 / 2 / 3-or-more qualifying children. These were not properly
based on research.
Everyone knows that the 1st child doesn't cost 3 times as much (15% instead
of 5%) as the 2nd child. And the 3rd child child doesn't cost the same
(5%) as the 2nd child. And the 4th child doesn't cost nothing. Research,
benefits rates, and personal experience, all say this. So why these percentages?
Expediency! Besides, what research anywhere in the world says that one
child costs 15% of one (or both) parent's net income to bring up?
The Green Paper (consultation paper)  was
issued about 6th July 1998. This was the first "official" announcement
of the 15% / 20% / 25% formula. (There has been leaks before then). It
cited 2 pieces of research:
1. "One recent study found that on average parents spend
about £3,000 per year on one child. This is equivalent to almost
£60 per week. This study also found that many parents go without
necessities for themselves in order to protect their childrens
standard of living.
Small Fortunes Middelton (sic) et al 1997"
The Small Fortunes research  is probably
the most credible research available in the UK into the cost of bringing
up children. Sue Middleton (not Middelton), from the Centre for Research
in Social Policy, Loughborough University, has been pursuing a particular
"survey methodology" for years, and is a regular contributor
of evidence to government policy. It identified an average expenditure
(during 1995) at about £57 per week (of which 10% came from people
other than the parents and some came from Child Benefit). At 2001 prices
this is probably about £65 per week. But - there is no hint whatsoever
in the research that this rises as a percentage of net income! Indeed,
evidence to the Social Security Select Committee in November 2000,
Sue Middleton said: "We also found, at first sight strangely, that
average spending did not vary greatly with income of a family; about
20 per cent from the bottom quartile to the top income quartile."
2. "Overall, there are indications that the cost of
a child represents between 20 per cent and 30 per cent of the budget
of a family with one child.
The Costs of Children and the Welfare State Dickens, Fry
and Pashardes, 1996"
The Dickens et al research  is based upon
published surveys (the Family Expenditure Surveys of 1970 - 1986). It
tries to identify how much children cost compared with adults, hence
the proportion of household spending on children. I conclude from their
Table 3.1 that the expenditure on a young only-child in a household
with 2 adults is 10.4% of the total expenditure on the 3 people, and
for an older only-child is 14.7%. This doesn't say "X% of income
is spent on a child", unless it is assumed that "income =
expenditure on people", hence no expenditure on anything else,
no savings, or no drawing upon savings for expenditure, etc. But even
is this were true, the range appears to be about 10% - 15%, not what
the Green Paper says.
The White Paper (policy paper)  was issued
about 1st July 1999. It didn't refer to Dickens et al, only to Middleton
It says "The proposed base rate of 15 per cent of their income
is roughly half the average that an intact two-parent family spends
on a child". (That statement appears
to be innumerate).
But Middleton never identified a formula for expenditure based on percentages
on income (see her evidence to the Select Committee quoted above)! The
suspicion has to be that the policy drew incorrect conclusions from
Dickens et al (who actually appear to say that the average is 10% -
15%) then wrongly attributed them to Middleton et al. Frankly it doesn't
matter who they cited - none of the quoted research leads to a formula
about the costs of children based on income.
Baroness Hollis showed her thinking on Wednesday 22nd July 1998 when
evidence about the Green Paper to the Social Security Select Committee
soon after the Green Paper was issued:
(Mr Pond) Could we move on to the question of the formula now and I
think all of us are delighted that there is going to be a less complex
method of dealing with this. I think the Minister is quite right to
explain that we need that sort of formula. Can I ask about the percentages
that have been put in, the 15, 20 and 25 per cent, why those particular
figures were chosen as the appropriate percentages for the first, second
and three plus children?
(Baroness Hollis) I think there is both a rationalised answer and an
instinctual answer. The instinctual answer was that it felt about right
from what we knew. It was supported by a fair amount of evidence about
what net income people get left with in, say, Australia, New Zealand,
Canada, the United States, as well as by some of the research that has
gone into, for example, the Middleton Study, Small Fortunes which illustrated
what parents in different financial income bands spend on their child
support. On average about a third of a couple's income tends to go on
the support of their children, so 15 per cent from one parent in a separated
family seemed about right and it fitted our perceptions. But it was
also that at the moment you have a system with a protected formula,
in other words a protected income in which we build in all the complexities,
and then there is effectively a 50 per cent deduction rate thereafter,
with all of the problems of disincentives and so on that arose. We felt
that by going for a 15 per cent figure, which was lower than the current
figure, we left him with more income, as I say, to pay for all the things
that we will not be building into the formula, that still could allow
us to finance the maintenance disregard, still effectively have an assessed
maintenance figure than was higher than the average maintenance currently
paid so that parents with care should not on the ground be actual losers
for the most part, and kept it cost neutral from the Treasury point
of view. It was a mixture of what felt right, informed by the research
that was available, informed by the balancing act between the three
parties if you like. That was why we came to that figure. If we dropped
the figure down to say 10 per cent for him, either the parents with
care lost out or the Treasury, that is, other parents as taxpayers were
having to pick up that responsibility. If we increased it we felt it
was unreasonable for him given the extra responsibilities we were asking
him to carry, so it was in that sense a negotiated figure between those
Second families in the formula
To be supplied
Shared care in the formula
To be supplied
Tax on fathers
Instinct, feeling, incorrect conclusions drawn from Middleton,
innumeracy, perceptions, cost neutral for the
Treasury, "what he can afford", balancing act ....
Don't look for a rational relationship between the attributes of children
and parenting and the features of the reformed formula!
This doesn't mean the reformed scheme is totally wrong. If catering for
political expediency stops it upsetting too many people, that may be good.
If administrative expediency ensures that is responds accurately and in
reasonable time, that may outweigh a logical formula. (And there is a
possibility that making 2 serious compensating mistakes
in the analysis has led the government to nearly the right percentage
But it does mean that the reformed scheme must be judged on grounds other
than simply whether the formula matches research into expenditures on
children, etc. Perhaps one of the grounds needs to be whether it will
operate without too much protest or even terrorist action.
It also means that press releases and other political statements must
be judged accordingly! (They don't always bear any useful resemblance
to what they are announcing).
 Children First: a new approach to child support
(CSA reform Green Paper)
Command paper Cm 3992 July 1998
 A new contract for welfare: children's rights and parents
(CSA reform White Paper)
Command paper Cm 4349 July 1999
 Small Fortunes: Spending on children, childhood poverty and
Sue Middleton, Karl Ashworth and Ian Braithwaite
Published by the Joseph Rowntree Foundation.
ISBN 1 85935 032 1
 The Costs of Children and the Welfare State: An Empirical
Analysis based on Consumer Behaviour
Dickens, Fry, Pashardes
Discussion paper series no 466, December 1996
Department of Economics, University of Essex
There appear to be consistent arithmetic flaws in this consultation process:
"The proposed base rate of 15 per cent of their income is roughly
half the average that an intact two-parent family spends on a child"
"On average about a third of a couple's income tends to go
on the support of their children, so 15 per cent from one parent in
a separated family seemed about right" (evidence to Social
Security Select Committee)
But remember: (third of X) + (third of Y) = third of (X
+ Y). So if the intact family spent a third of their joint income, why
shouldn't each of the separated parents also spend a third of their net
income? You don't just go and halve the number!
In fact, since the correct amount from 
is more like "10% - 15% of the intact household's total expenditure
on people is spent on their child", then if "income = expenditure",
a more justifiable percentage would be about 10% for a young child and
15% for an older child. Has the combination of incorrect reading of the
research and innumerate derivation of the formula from that research led
to nearly the right answer? (But remember that 
doesn't suggest that percentages apply).