Lone parents' employment boosted by tax credit

Tuesday, 17 August 2004 12:00 AM

Gordon Brown's much vaunted Working Families Tax Credit (WFTC) has succeeded in increasing the number of lone parents in work, according to new research.

Launching the credits in 1997 the Chancellor said that they would provide an incentive to lone parents to work rather than claim benefits and help lift children out of poverty.

In addition to the basic WFTC, there is also the Childcare Tax Credit which offers eligible parents up to £140 a week for childcare.

The research, from the Economic and Social Research Council at the University of Essex found that since the credit was introduced lone mothers' employment rates have risen from 41 per cent at the end of 1997 to around 50 per cent in 2002.

They suggest that 50 per cent could be the "natural" level for working single parents.

By May 2000 there were almost 30 per cent more households receiving WFTC than its predecessor Family Credit, and this number has continued to rise so that as of November 2002, 737,000 households were in receipt of the credit.

The researchers found that the increase in employment was almost all full time and they estimate that an additional 135,000 lone mothers were in employment by the end of 2001.

The "generous" childcare component of the WFTC is particularly highlighted with "more than 50 per cent of the increased entry rate into eligible employment was attributable to lone mothers who also chose paid childcare arrangements".

The rise in employment is also linked to a fall in child poverty, with the researchers estimating that between 1997 and 2001 there was an 11 per cent reduction in the number of children living in low income households.

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