Families with children hit by tax and benefit changes

Child playing Families with three or more children will be affected most, the FPI says

Families with children will be hardest hit by tax and benefit changes aimed at cutting the deficit, a charity argues.

The Family and Parenting Institute (FPI) says the average income of households with children will drop by 4.2% between 2010-11 and 2015-16, the equivalent of £1,250 a year.

Average household income however will fall 0.9%, or £215 a year, say the FPI.

The government says it is already taking "practical steps" to help such as cutting fuel duty and income tax.

The figures, calculated for the FPI by the Institute for Fiscal Studies (IFS), suggests much of the fall in income during these years will be due to tax and benefit changes, as well as other reasons such as falling incomes.

"This research confirms that families with children are shouldering a disproportionate burden," said Katherine Rake of the FPI.

"This disparity is largely driven by a package of benefit reforms which have affected families with children.

"As a result of the changes being introduced between January 2011 and April 2014 families are set to lose more than pensioner households and working-age households without children," she added.

Changes in average (median) family income

2011 2012 2013 2014 2015 Total

Source: Institute for Fiscal Studies/Family & Parenting Institute






























All households







In reply the government pointed to policies that it says are already relieving the burden for families.

"The prime minister acknowledged that families are facing difficult times so the government has taken practical steps to help them - cutting fuel duty, freezing council tax and cutting income tax for millions," said the government in a statement.

"The chancellor also confirmed working-age benefits will go up by 5.2% in April and increased the child element of the Child Tax Credit in line with inflation."

The government response drew special attention to its planned Universal Credit scheme.

"When introduced Universal Credit will see nearly three million households with a higher level of entitlement than present and we believe, due to its simplicity, more families will be able to take up entitlements that are currently unclaimed. It will also help 80,000 more families with childcare support, which will enable more parents to take up work."

Universal credit

The IFS and FPI acknowledge that the introduction of the new flagship Universal Credit benefit, which is being phased in from October 2013, will protect the incomes of many poor families.

FPI spokesperson Katherine Rake says families are having to shoulder a disproportionate burden

But even so, the overall effect of all the current and impending tax and benefit changes will be negative for many families, with the biggest drop already underway in the current financial year 2011-12.

The shadow minister for women and equalities, Yvette Cooper, says the research is a "damning verdict" on the coalition's family policies and she accused the government of being "out of touch" with the pressures on families.

"It leaves David Cameron's promise to be a family-friendly government in tatters," she said.

"The government is taking more from children than from the banks. Women and children are paying the highest price.

She added: "It isn't even working - with £158bn more borrowing than planned, as a result of their failed economic policies."

Among the many changes already implemented by the coalition government are VAT at 20%, reductions in tax credits, cuts in housing benefit, a freeze on child benefits, and the use of the consumer prices index (CPI) to uprate benefits each year.

Other forthcoming changes include more changes to the child tax credit and child benefit systems, reductions in council tax benefit, and "medical reassessment" of claimants of disability living allowance.

The FPI argues that the forthcoming fall in family incomes will be harshest for those families with three or more children, those with young children aged under five, and those renting private accommodation.

As a result, the charity argues, by 2015-15 a further half a million children will be living in absolute poverty.

The IFS said its calculations, which updated previous research, took into account recent economic forecasts by the Office for Budget Responsibility and announcements in November's Autumn Statement.



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  • rate this

    Comment number 672.

    667. Jeff Martin

    To all those talking about Child Benefit, don't forget it was only introduced after WW1 to encourage repopulation. It should, in my opinion, be scrapped as it encourages some parents to have more children than is neccessary. (and yes, I am a parent).


    No, it was first introduced by the Family Allowances Act 1945.


  • rate this

    Comment number 671.

    622.mac fae stirling

    So you don't actually read the Daily Mail, ignore any good campaigning it may have done and dimiss it out of hand simply out of prejudice.

    And you don't see the irony of you displaying bigotry every bit as blinkered as you accuse the Daily Mail of?

  • rate this

    Comment number 670.

    We should not encourage large families. There are too many people in this country......and the world in general. We need to consider that the planet has finite resources. Couples should plan ahead and consider having no more than 2-3 kids......thereafter any family carries the burden itself.... NOT the benefits system.

  • rate this

    Comment number 669.

    651 Comrade Moderator! Please! More humour!

    Good to see Ship of Fools has docked at last.

  • rate this

    Comment number 668.

    Reading some of these comments people complaining about how money is handed out. So he's an good idea, why not pay out as vouchers that can be redeemed for your weekly food shopping, not allowed to be used to buy alcohol or cigarettes. then for fuel bills take them in when you collect your vouchers and the state will take care of them. But not cell phones or sky tv etc, you want them get a job

  • rate this

    Comment number 667.

    To all those talking about Child Benefit, don't forget it was only introduced after WW1 to encourage repopulation. It should, in my opinion, be scrapped as it encourages some parents to have more children than is neccessary. (and yes, I am a parent).

  • rate this

    Comment number 666.

    634. J J Hunsecker " I actuall think raising 2 children is perfect, especially when you make sure they make the most of their talents, so they can contribute to enriching teh economy. In my eyes, CB is an investment."

    Human beings reduced to being 'investments' and valued only on the basis of what they can contribute to the economy. Attitudes like this lead to dark and barbaric times. Abhorrent.

  • Comment number 665.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 664.


    "state paid benefits?? like what CB??"

    Like the NHS which you contribute no more to after having given birth. Like the state schools available to your children purely due to you making the choice.

    See what I mean when I say you ignore certain benefits? It really is a sad state of affairs in this country when you don't even recognise half the things provided for you.

  • rate this

    Comment number 663.

    oh and does a single person not get reduced council tax benefit?? If your scrapping benefits that assist people because they have kids then lets not let anyone have a benefit that is rewarded solely based on their living situation!!! So no reduced council housing prices they should pay the same as it would cost in the private sector?? No NHS?? No Gov pensions state or private?? to name a few

  • rate this

    Comment number 662.

    The clildren that you are so dismissive of will ultimatley pay more cumulative taxes their parents ever received. Their taxes that will pay for you're future healthcare, state pension, roads, etc, etc or are you suggesting that anyone born to a 'large' family are ultimately unemployable and destined to be a further drain on society.

  • rate this

    Comment number 661.

    Those ranting about benefits for parents haven't a clue. In France there's a saying: the 1st pays for the TV, the 2nd the car & the 3rd buys the house. There are many benefits showered upon parents in France. UK benefits are actually employer subsidies. UK working benefits mean that employers can be absolved from paying a decent wage/salary, instead we subside each other to keep business happy.

  • rate this

    Comment number 660.

    What a bunch of miserable Scrooges on here today. You'd kick Tiny Tim into the gutter by the sounds of things!

  • rate this

    Comment number 659.

    Nieuw divil

    You are right it's more shameful to be a Telegraph reader than a Daily Mail reader! We suffer from the most prejudiced press in the world where neither side gets to read the others argument preferring to wallow in the afirmation of their own beliefs rather than have them challenged. Guardian readers should be force fed the Mail and vice versa,then we might get rational debate.

  • rate this

    Comment number 658.

    631.mac fae stirling. Whilst I agree with you on most your comments the subject is specific to Benefits! I have made comments previously which accord to yours on the other matters! Presume by "revolting racist groups" you are implying that I am a member of same - if so you are incorrect but may be tempted in the future by PC compliant morons! Note you make no mention of censorship!

  • Comment number 657.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 656.


    It seems many people don't realise how hard it is to get off benefits once you are on them. I have been stuck on them since before my first child was born and my only option to get off them is to get more qualifications. Until I complete my degree, I have no choice but to claim cos no job will earn me enough to come off.

    perhaps you should have thought about contraception

  • rate this

    Comment number 655.

    All the useless politicians and Gov depts waste billions every year and hand out bonuses to anyone & everyone. Why is it that people who can hand out taxpayers money just don't seem to care if they waste a few £billion. Why are not a lot more public servants sacked without pensions and not allowed to resign or retire with pensions to save enquiries. The £billions saved would pay for these cuts.

  • rate this

    Comment number 654.

    Sadly the truth is that the UK is populated by people who think the world owes them a living.

    People who will sleep until 11 O’clock on a Saturday morning and complain about the price of food!

    People who will spend 3 hours a night watching soap operas and complain that there are no jobs for their skillset!

  • rate this

    Comment number 653.

    That's the Tories for you....

    But please, won't someone please think of the poor bankers, CEO's & other fat cats.


Page 2 of 35


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