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End the couple penalty which encourages couples to ‘pretend to live apart’

Date: September 15, 2013

Quarter of a million couples pretend to live apart

  • Over 240,000 couples with children are pretending to live apart to claim lone parent benefits
  • Couples with children are up to £7,100 better off if they are not married and pretend to live apart
  • The Marriage Foundation calls for the introduction of an additional child benefit for married couples with a child under three to counteract the existing ‘couple penalty

Around a quarter of a million of couples are claiming lone parent benefits, while continuing to reap the benefits of a two-parent household.
A report by the think tank, the Marriage Foundation, has revealed a significant discrepancy between the ONS figures for the actual number of lone-parent households in England and Wales, and the number of people who are claiming lone parent benefits.
ONS figures show that there are currently 1.986 million lone-parent families in England and Wales. However, the number of lone-parent tax credit beneficiaries total 2.226 million, according to HM Revenue and Customs data.
This leaves at least 240,000 couples with children are pretending to live apart. As not all lone parents make use of their legitimate claim to tax credits, the number of illegitimate claimants is likely to be even higher.
Cohabiting couples who claim the tax credits illegitimately stand to gain up to £7,100. Parents with two children can benefit from up to £9,985, whilst parents with three children can increase their income £11,917 by pretending to live apart.
Harry Benson of the Marriage Foundation, who wrote the report said: “It is indefensible that parents who are in committed, stable relationships should face such significant penalties for staying together, to the extent that some pretend to be separated, in order to avoid penalisation.
“This financial pressure must be particularly exacerbated as new parents, who would like to bring up their first child together in a shared household, but are unable to because of the gap it would leave of up to £7,100 in their annual budget.
“These couples who have not made the decision to commit to each other will be strongly dissuaded from doing so by the tax system. There is statistical evidence of this link between the early years of parenting and difficulty in staying together – half of all reported family breakdown occurs before a child’s third birthday.
“It is irresponsible for the Government to continue this disincentive to make relationships work. They should be striving to encourage solid relationships, which are key to avoiding expensive social problems further down the line.
“The type of relationship that is statistically least likely to end in family breakdown is marriage. Only a quarter of couples who split up in the first three years of their child’s life are married.
“As the children get older, the proportion increases in the favour of marriage. 93 percent of couples who remain intact until their child’s fifteenth birthday are married.
“This is why the Marriage Foundation is calling for the Government to introduce an additional child benefit in order to counteract the existing financial penalties for married couples.
“Specifically we propose this additional benefit to apply to married mothers with their first child under three, in order to help unmarried new parents, who want to live together and also to get married.
“A benefit worth, say, £2,000 per year would cost £1 billion to the Exchequer. Unlike the much-touted £150 married tax break, it has a reasonable chance of encouraging more couples to live together and marry.
“As family stability increases, the temptation to pretend to live apart reduces, and thus in the long run, the scheme could become cost neutral or indeed save the tax payer money.
“If we take into account the fact that children who have experienced family breakdown are more likely to be involved in truancy, juvenile delinquency and worklessness, the savings made by this scheme are even higher.”
ENDS

Notes to editors:

For media inquiries please contact Beatrice Timpson on: 07803 726977
Harry Benson is available to be interviewed on: 07515 699187.

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