The high rates of child poverty in the UK are a result of the tax and benefit policies pursued by Tony Blair's government, according to a comparison of fiscal systems in France, Germany and the UK published by the independent think-tank Civitas.

Fiscal Policy and the Family by Rebecca O'Neill presents a detailed comparison of ways in which the tax and benefit rules of the three countries impact on the family. It is the first study to look at the effect of taxes and benefits combined by comparing the situation of different family types - two-parent, single-parent, children of different ages - with that of a single, childless person earning the wages of an average production worker (APW). It looks at the ways in which the three systems cushion the shocks of major lifestyle changes, like having children or splitting up, as well as the possible incentives and disincentives of each system.

The striking thing about the UK system, compared with those of France and Germany, is the way in which it targets resources on non-earners, low-earners and single parents. A woman who earns the minimum wage and becomes a non-working single mother actually sees a significant increase in her standard of living (p.14 and Figures 7 & 8, p.16) while an unemployed mother who leaves the unemployed father of her children would also experience a rise in her standard of living of between 20% and 35% (p.14 and Figure14, p.20). If parents who are both working full-time at minimum wage split up, both they and their child would have a higher standard of living after the split (Table 3, p.8). Click here for a breakdown of the figures.

Two-parent families do less well in the UK compared with the other countries, especially as they progress up the income scale. The French and Germans pay more in taxes than we do for a more generous state provision, but it is fairer than the UK system because its benefits are spread across the whole population, and there is a link between what you have paid and what you are entitled to receive.

In contrast, redistribution of taxes and social security contributions in the UK is much more narrowly directed at low wage-earners and especially non-working or low wage-earning lone parents. Hence, many in the UK view welfare as a form of enforced charity payable to those who have not contributed their fair share…

• First, it provides financial incentives for many couples with children, especially those at low incomes or on jobseeker's allowance, to break up or to keep their relationships informal and 'off-the books'.
• Second, the UK's welfare regime favours poor children who live with lone parents over those living with two parents.
• Third, it 'evens out' the changes in standard of living for low earners, but provides little cushion for average and higher earners who experience life changes, such as having a child. (p.18-19).

These act as perverse incentives to people to have and bring up children in the very circumstances in which they are most likely to experience poverty. The UK has very high out-of-wedlock birthrates, especially amongst teenagers, and a high proportion of single parent families, nearly double that of France which has a more punitive attitude towards lone parenthood built into its fiscal system. The Blair government's much-trumpeted child-poverty policy may therefore actually be causing child poverty, which is between two and three times higher in the UK than in France or Germany (Table 2). This is because the government concentrates on vertical redistribution - transferring large sums from richer to poorer - rather than horizontal distribution - trying to put all parents on a better footing compared with those who do not have children.

'The government claims that it is neutral in matters of the family' says Robert Whelan, Deputy Director of Civitas, 'but it is far from neutral. Whereas France is known for its pro-natalist policies, and Germany is known for its pro-marriage policies, the Blair government is undeniably pro-single parents and pro-non-workers or low-earners. Middle England gets short shrift from Gordon Brown, and then Mr Blair wonders why we have such deplorable levels of child poverty. The way out of child poverty is for children to be brought up by two hard-working parents - but that option is never discussed.'

Robert Whelan 020 7799 6677

'Fiscal Policy and the Family: How The Family Fares in France, Germany and the UK' by Rebecca O'Neill is published by Civitas, 77 Great Peter St, London SW1P 2EZ tel 020 7799 6677 www.civitas.org.uk, price £6.00 inc. p&p.

Click here to read the online version.

For more information e-mail CIVITAS on:
    info@civitas.org.uk

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