Experts agree tax benefits encourage parents to split

The Government’s tax and benefits system encourages divorce among poorer families, according to a weighty new study.

Evidence published by the Royal Economic Society (RES) shows a mother is £100 a week better off if she splits from her husband.

The report also reveals that the divorce rate for low-income families surged by 160 per cent in the three years after tax credits were introduced.

It concludes that the Government’s tax credit system provides incentives for mothers to divorce husbands with low incomes.

Under the current system, a mother-of-two earning £5,000 a year who is married to a man earning £15,000 could gain over £6,000 in benefits if she divorced him.

Professor Marco Francesconi, who led the research at the University of Essex, said: “While this improvement in the relative economic position of single mothers may have led to an increase in bargaining power of married women (especially those in poorer households), it also reduced the overall gains from marriage, resulting in a greater risk of family disruption.”

The report comes after research from influential think-tank Civitas revealed that married couples who live together can be 20 per cent poorer than those living apart as a result of the tax and benefits system.

A separate study by Christian charity CARE comparing Britain with other developed countries found that the traditional British family is losing out because the current welfare system is designed to benefit single mothers.

Responding to the new report Jill Kirby of the Centre for Policy Studies said: “Tax credits were sold as the solution to poverty for hardworking families. Now we know they are the benefit that breaks up families.”

The RES report, published in the Economic Journal, is based on evidence about 3,235 couples. These couples took part in the British Household Panel Survey between 1991 and 2002.

The report explores the effects of the Working Families Tax Credit, which was introduced in 1999. In 2003 the Government replaced the existing Working Families Tax Credit with Working Tax Credit and Child Tax Credit which are currently in operation.

Don Draper, a tax and benefits analyst at CARE, said: “Tax credits are now much more generous to single mothers than they were then. The problem is getting worse, not better – we are in a hole and we are still digging.”

Tory families spokeswoman Maria Miller said: “We have made it clear that we will end the couple penalty in the tax and benefits system so that there is not a financial incentive for parents to live apart rather than together.”

“Strengthening, rather than undermining, family life is at the heart of our vision for Britain”, she added.

A Government spokesman claimed: “Academic studies have found no consistent connection between the structure of the tax system and people’s personal choices about marriage and children.”

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