WIREDGOV

New research published by the Joseph Rowntree Foundation (JRF) challenges the assertion that couples with children on benefits are economically better off if they split up.

The report, Does the Tax and Benefit System Create a Couple Penalty? finds that families on benefits are neither better nor worse off if they separate, while working families on low incomes are as likely to lose as to gain from living apart.

Politicians from across the political divide have declared they would reform a benefits system that, in their view, rewards and encourages couples who live apart. The report points out that even though the total benefit income of a family rises if parents split up, so do their total costs – as they have to run two households. Unlike previous assessments, this analysis uses detailed research on household needs to look carefully at how the extra income compares to the extra costs.

The findings show that out-of-work benefits paid to a family with children whose parents live apart cover a similar proportion of family needs to the same family living together. Using the official Government basis for comparing the needs of a single person with those of a couple, the economic effect of splitting up is negligible.

Government figures, however, are not based on an actual comparison of needs, and underestimate the additional cost of living on your own. JRF's research on Minimum Income Standards assesses what different households need to spend as a minimum.

Using this more reliable basis for comparison, families on benefits are actually slightly better off if parents stay together: they can cover between 4 and 6 per cent more of their minimum needs than if they separate.

Chris Goulden, JRF Policy and Research Manager, said: "Our report shows it would be misguided to base benefit reform on the idea that couples with children are being incentivised to split up. This is not borne out by careful analysis of the evidence."

Donald Hirsch, Director of the Centre for Research in Social Policy and author of the report, said: "These calculations show that there is at least as likely to be an economic penalty for separating as for remaining as a couple. The exact comparisons depend on assumptions about how much cheaper it is for two adults to live together. "

"The official figures, which say that a couple's day to day costs are 16 per cent lower living in one household rather than in two, were set arbitrarily in order to monitor poverty trends. It is highly risky to plan benefit reforms as if they accurately measured relative needs. In fact, our research estimates that the saving from living in a couple is much higher, about 26 per cent.

"Even on the official figures, there is no couple penalty for out-of-work families. There are more cases where there is a separation penalty than a couple penalty."