two - Helping British lone parents get and keep paid work

Summary

Introduction

By most international comparisons British lone parents have low rates of labour market participation. Fewer than four out of 10 work full time, which in Britain is 16 hours a week or more, when they qualify for inwork benefits. Britain also has more lone parents than most other countries. About one in four of Britain's seven million families with dependent children are headed by a lone parent, which is a threefold increase in 25 years. This means that 1.7 million lone-parent families are caring for about three million children. More than nine out of 10 of them are women. Six out of 10 rely on out-of-work benefits, often for long periods, and more than half live in social accommodation. They are prone to hardship and form the largest group in Britain among people of working age who live on household incomes below half the national average. This chapter sets out the development of policy in this area. It next provides a profile of lone parents’ demographic and employment patterns in Britain. The chapter then discusses the incentives and barriers to work before speculating about the future direction of policy.

The development of policy

It is beyond debate that Britain's lone-parent families need more income and it would be hard to argue that increased labour market participation, where possible, should not provide part of this increase. To this end, British ‘welfare-to-work’ policy has four main strands:

• • wage supplementation, including cash payments through Working Families’ Tax Credit (WFTC) and a National Minimum Wage, to ‘make work pay’;

• • active case management;

• • child support payments;

• • a national childcare strategy, including cash additions to wage supplements.

Making work pay

Since 1971, successive British administrations have relied on direct wage subsidies to try to ensure that parents have an incentive to work greater than the value of their benefits when out of work. This is especially important for lone parents because unlike couples with children, they are not required to seek work until their youngest child is 16 or 18 years old and in full-time education.

From 1971, Family Income Supplement (FIS) provided limited cash payments to parents working more than 30 hours a week. Family Income Supplement had a poor record, reaching only about 200,000 families and leaving some worse off in work.