APPENDIX 1
Memorandum submitted by Professor Ruth
Lister (TAB 61)
SUMMARY
(i) Drawing on recent research, supported by
the Joseph Rowntree Foundation, two operational recommendations
are made concerning the payment of Working Family Tax Credit in
one-earner couples. These are that:
payment to the caring parent should
be presented as the default position in such couples;
where payment is made through the
pay packet, it should be separately identifiable and, if practical,
the Inland Revenue should inform the caring parent of the amount.
These measures are essential if the payment
is to be safeguarded as money earmarked for meeting the needs
of children in the family and if the Chancellor's admirable Budget
objective of putting women and children first is to be achieved.
(ii) The research also indicates the importance
of sensitivity in operating the extension of the New Deal to the
partners of unemployed claimants.
INTRODUCTION
1. This brief memorandum addresses two practical
issues arising from measures announced in the 1998 Budget, drawing
on recent research conducted for the Joseph Rowntree Foundation
(JRF):[1]
the provision of choice as to payment
method for one-earner couples claiming the working families tax
credit (WFTC);
the extension of the New Deal to
the partners of job-seekers allowance (JSA) claimants.
These are both welcome developments but their
effectiveness will depend very much on how they are operationalised.
WORKING FAMILIES
TAX CREDIT
2. The JRF study demonstrated the continued
importance of the issue of the distribution of resources within
the family. It confirmed the findings of earlier research that
the best way to ensure that household income is allocated to children
is to put it in the hands of mothers. When men controlled family
income they were more likely to retain a proportion of it as personal
spending money for themselves. This was especially true in relation
to their wages which were seen by both partners as "his"
to allocate. Wages conferred on men (but not on women) an entitlement
to personal expenditure. In almost two thirds of families, men
exercised this entitlement to the detriment of the family as a
whole. Women, on the other hand, were more likely to "go
without" in order to prioritise their children's needs.
3. Women felt that replacing family credit with
a payment through the pay packet would risk diminishing their
access to a vital weekly budgeting tool. They were adamant that
income for children should be paid directly to mothers. The importance
of weekly payments was also emphasised in some cases. In inegalitarian
households, where the father's wage is not distributed fairly,
the loss of family credit could materially disadvantage children.[2]
4. In its Third Report, the Committee recommended
that "families be given the choice to receive Working Family
Tax Credit either in the wage packet or by cheque or bank transfer
to the principal caregiver if they so wish and at the same frequency
of payment as that available under Family Credit" (paragraph
6). It also, in its conclusions, expressed "concerns about
the transfer of income from women to men which might be a consequence
of the move to paying Working Family Tax Credit through the wage
packet" (paragraph 22).
5. The Government's acknowledgement of this
issue and its proposal to offer a choice of payment method to
one-earner couples is therefore welcome. The key issue now is
whether choice can be presented in such a way as to prevent such
a transfer of income from women to men, which could undermine
the Chancellor's admirable goal of putting women and children
first.
6. The JRF study suggests that choice will not,
of itself, necessarily solve the "purse to wallet" problem.
This is not just a problem of where the couples cannot agree on
the claim form; in such instances, the Government has indicated
that "the present presumption is that, where the couple disagree
about which of them is to receive the credit, it would normally
be paid to the partner who mainly cared for the children".[3]
Important as this is, it will address only the tip of the iceberg,
as it is probably unlikely that many couples would want to reveal
a dispute of this kind to officials. The bigger problem is, in
fact, where there is not a dispute as such because the woman does
not even feel able to stake a claim for the credit to be paid
to her.
7. The power relations associated with women's
lack of an independent income mean that, in inegalitarian families,
mothers are unlikely to be able to express a preference let alone
exercise the choice to receive the WFTC payment. Moreover, it
is not only in extreme cases of an imbalance of power between
partners that women are at a disadvantage. In "male breadwinner"
couples, women are dependent upon their partners' goodwill in
accessing sufficient money to care for their families. There may
be an initial presumption among eligible families that the WFTC
should go to the father as the "breadwinner". As one
woman commented: "If you're getting family credit and it's
the man that's working I suppose some men would think, I'm earning
it, it's my money. When you get family credit now, it goes to
the woman even if it's the man that's working, so at least the
woman knows she's got something there each week rather than having
to ask her husband for it."
8. A few of the men interviewed had initially
expressed minor surprise or even irritation that family credit,
based on their wages, was paid to their partners. Nevertheless,
as a result of this method of payment, they saw the logic of what
came to be seen as money for collective family needs, typically
spent on children, being paid to the mother. If the social security
system itself channels payment to the mother, this seems to act
as a legitimation of payment to her for both partners.
9. It is therefore essential that payment to
the mother is not presented as a reduction in the father's take-home
pay. For instance, in questioning Mr Martin Taylor, a member of
the Committee presented the option of choice in the following
way:
Why could not the Inland Revenue offer that choice
and say: "Look, normally we would expect to pay this through
the pay packet but because we are sensitive to this issue about
getting money to children, we are offering the family, perhaps
the mother in particular, an option as to whether it can be paid
as a credit into her post office (sic) or through the post office
or whatever", HC 423 Q355.
10. Unfortunately, by presenting payment through
the pay packet as the norm, this approach could undermine women's
ability to exercise the choice to receive the payment. Instead,
both publicity about the WFTC and the actual claim form should
legitimate payment to the mother as the default position in male
single- earner families. The current claim form makes clear that
the woman is the claimant and that the choice as to how payment
is made (i.e. into a bank or building society account or through
the post office) is hers.[4]
It should be possible to design the form in such a way as to provide
an additional section for one-earner couples which states that
in such couples "the WFTC will normally be paid to the partner
at home in recognition of their responsibility for meeting the
everyday needs of the children. But that if both partners would
prefer for payment to be made through the earners' pay packet,
then tick here".
11. It is recognised that the Government might
consider that this weakens the WFTC's role in promoting work incentives.
However, if it serious about the credit's other objectives of
tackling child poverty and strengthening the family, then it will
do all that it can to ensure that the money gets into the hands
of the person responsible for meeting the children's everyday
needs.
12. Where the WFTC is paid through the
pay packet, it is very important that it is separately identifiable
in the earner's pay slip. If practical, the Inland Revenue should
also notify the carer at home of the amount of the credit. This
would help to identify the payment as separate from the wage and
as money that is earmarked primarily for the children and the
family's collective needs and would strengthen the woman's hand
in gaining access to the money. As noted above, women as well
as men in the JRF study tended to accord ownership and control
of the male wage to the male wage-earner.
13. Notification to the mother would also mean
that she had the necessary information to inform the Inland Revenue
should the couple separate. Otherwise, it is quite possible that
the father could continue to receive the WFTC when he was no longer
eligible.
NEW DEAL
FOR THE
PARTNERS OF
JSA CLAIMANTS
14. The Budget proposed that in childless couples,
under 25-year-old partners of unemployed claimants should be required
to participate in the New Deal. Older partners would be offered
a variant of the New Deal for lone parents, through a number of
pilot projects.[5]
The JRF study throws some light on how this opportunity might
be received in couples with children.
15. It showed how the benefits systems currently
discourages the partners of unemployed people from seeking work.
In particular, it found that rules for claiming Jobseeker's Allowance
(JSA) reinforced the work patterns of those couples who subscribed
to a traditional male breadwinner model. The stringently enforced
"actively seeking work" requirements diminished the
couples' ability to respond to changing child-care needs and employment
opportunities. Where couples wanted to exploit such opportunities
for whichever partner had the best prospect of success, sharing
child-care put them in a very difficult position. One JSA claimant,
for example, who sometimes looked after his child during the day
to allow his wife to promote her embryonic business, had been
warned about contravening the rules. These rules, which require
one partner to be the full time job-seeker, will need to be amended.
16. Over a third of couples interviewed were
willing to share breadwinning responsibilities and such couples
might be expected to respond positively to the proposals to open
up the New Deal to the partners of unemployed claimants. Even
the larger group, who continued to subscribe to a more traditional
male breadwinner model, also showed signs that they were willing
to adapt to new kinds of employment opportunities. But sensitivity
will be needed in bringing about change in the face of some women's,
as well as men's, personal investment in more traditional work
patterns. This has important implications for how the partners'
New Deal is presented to both claimants and their partners. Training
of officials could usefully include awareness of gender and, in
the case of some minority ethnic groups, cultural issues.
17. In the longer term, as Martin Taylor observed,
"the extension of availability requirements to both partners
may strengthen the case for separate benefit payments".[6]
This raises difficult issues of social security policy that the
Committee might wish to explore at some future date.
June 1998
1 J Goode, C Callender, R Lister (1998), Purse or
Wallet? Gender Inequalities and Income Distribution within Families
on Benefit, Policy Studies Institute. This memorandum incorporates
comments from Jackie Goode and Claire Callender. Back
2
Another possible danger raised by a number of commentators, but
not explored in the study, is that payment through the man's pay-packet
could lead to pressure on a female partner not to take paid work. Back
3
Written answer by Dawn Primarolo MP, House of Commons Hansard,
31 March 1998, col. 452. Back
4
According to the Family Credit Helpline, the only circumstances
in which family credit is paid to the man (other than in cases
of "mental incapacity") is if the marriage breaks up,
he gets custody of the children and becomes the claimant in his
own right as a lone parent. In couples, the payment is always
to the woman. She can authorise payment into her partner's account
or can authorise him to cash the book (by countersigning it) but
she cannot "sign the book over to him" and she remains
the official recipient. Back
5
This means that they will not be provided with a training or education
option which could be of particular value to women wanting to
return to the labour market. Back
6
M Taylor (1998) Work Incentives, HM Treasury. Back
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