When it pays to be single: While the Tories castigate lone mothers, the benefits system seems to encourage them, says Mary Campbell

MUCH has been said in recent weeks about the growing number of lone parents, culminating in the vilification of single mothers by speakers at the Tory conference last week. Underlying the criticism have been two assumptions: that lone parents represent an increasing and unaffordable drain on the Exchequer, and that means should be found - perhaps by limiting access to council housing or denying state allowances for a second child - to curb their numbers.

Would it not be ironic, therefore, if it were the current benefit system itself that was causing mothers to go it alone? This would mean that a Tory government - a government that trumpets the nuclear family, financial incentives and the decline of the state - had presided for 14 years over an increase in single parenthood that was partly encouraged by financial incentives in the structure of state benefits. It would also mean that the supposedly uneducated 'sluts' who have babies without getting married understand this 'market' much better than all those Oxbridge-educated ministers.

Given the ferocity of recent discussion, the subject of lone parents and their cost is likely to figure prominently when the Chancellor meets Treasury colleagues, advisers and civil servants at his pre-Budget strategy meeting today. Rather than rush into proposing cuts, that meeting should first analyse what message the benefit system is sending to recipients.

In one sense at least the Treasury's guns will be on target: lone parenthood has grown by nearly 40 per cent in the past five years. Department of Social Security statistics record nearly 1.5 million lone-parent families in 1992-3. More than 60 per cent of these received the benefit available only to the poorest in the country: income support.

But most lone parents are alone from circumstance rather than choice. More than 60 per cent are divorced, separated or widowed; and many more are alone because the mothers or fathers of their children have deserted long-term relationships. More than a third are effectively self-sufficient - the only extra state benefit they claim is the pounds 6.05 one-parent benefit, which is not means-tested. For the rest, statistic after statistic shows that lone mothers include some of the poorest people. Any policy on lone parenthood must start from an acknowledgement of these facts.

The DSS attributes the big rise in lone parents to many factors:

'changes in the legal framework for divorce and marriage; in social attitudes; in the relative economic prospects of young men and women; in rates of divorce, separation and births outside marriage; and in the characteristics of lone parents'. This could be interpreted to cover almost anything. But two assertions are not spelt out, and yet warrant further research. One is that social security benefits give poor parents more money if they live apart. The other is that poor mothers retain more control of their meagre resources if they live alone.

Take the case of two 19-year-olds, call them Tom and Jean. Both depend wholly on benefit. Jean is about to have their baby and will therefore qualify for council housing. If Tom moves in with her they could bring in the following benefit between them: income support, pounds 69; dependent child, pounds 15.05; family premium, pounds 9.65; making a total of pounds 93.70.

If Jean goes it alone, she might be able to claim: income support, pounds 44; dependent child, pounds 15.05; family premium, pounds 9.65; lone parent premium, pounds 4.90; making pounds 73.60.

As a single man, Tom can also claim pounds 34.80, making a grand total, between the two of them, of pounds 108.40 - 16 per cent (or pounds 14.70 a week) more than if they were living together. This would be a tidy pay rise for any couple. Even if Tom's income is brought down by pounds 2.20 - the minimum he could be liable for if the Child Support Agency were to step in - there still seems to be a handsome profit on living apart.

For Tom and Jean there is a clear financial incentive to live separately. So far, however, the evidence that this financial incentive is influencing young couples' behaviour is at best inconclusive.

For a start, many parents on benefit continue to live together despite the financial incentives to do otherwise. A new government study sets out the latest academic position: 'This important area of fertility study so far lacks systematic analytical enquiries which can show, on an international basis, whether welfare benefits do or do not have a clear relationship with births outside marriage, the proportion of families that are single parent families and so on.' (New Perspectives on Fertility in Britain, OPCS.)

Another study, by the university academics Jonathan Bradshaw and Jane Millar (Lone Parent Families in the UK, HMSO), found that for only 1 per cent of lone parents in 1989 was financial benefit the main reason for their being alone.

If Michael Howard and Peter Lilley are to develop a rational policy that actually finds solutions to the problems, they must do the research before changing policy. But there are two ways in which lone-parent benefits could be cut immediately.

The first is fraud. It is a big tribute to Mr Lilley's policy on fraud so far that newspapers have been noticeably empty of tales of poverty- stricken citizens wrongly targeted by the DSS fraud squad. They have evidently shown sensitivity on the small fry and targeted the big-timers. Lone parents do not seem to have been much targeted so far. But there is certainly much fraud in lone parentland. Bradshaw and Millar concluded: '10 per cent of those on income support appear to be receiving income support to which they were not entitled.'

Many of the infringements were too small to merit attention, especially given the basic poverty of the group. But their study shows there is room for savings without bringing back the bed sheet snoopers.

The second way of cutting benefits to lone parents is to encourage more lone mothers into relationships by giving them financial security when they are not alone.

In Bradshaw and Millar's study, 6 per cent of lone parents said that 'money or financial problems' were the main cause of separation or not living together, while a further 10 per cent gave this as a contributory factor. Of 29 women interviewed in depth, a quarter had experienced financial problems, with former partners having too much control over, or squandering money. Among a group who had moved in with a partner but remained on income support, 'there is no increase in equivalent income and nearly half of the repartnered mothers said they felt about the same or worse off than when they were a lone parent'.

When a man and a woman living together claim income support, either partner can technically be chosen by mutual agreement to make what must by law be a joint claim. In practice, the claim is almost always made by the man and the girocheque goes to him, so he gets the cash. Only with great difficulty can a woman override a 'mutual' decision that the man gets the money: it is hardly surprising that many mothers whose likely partners are also on income support feel more secure financially if they stay alone.

To overcome this, Mr Lilley could make the payment of benefit separate even where the claim is joint. On the same principle as child benefit, the caring parent would get the giro for half the adult part and all the parenthood part unless she specifically proposed otherwise; the other partner would get the other half of the adult part. This would give cohabiting and married women more control over the money that comes in for them and their children.

The Government could also examine whether housing tenure laws discourage unmarried parents from living together as a family, by reducing the security of the remaining tenant if one tenant leaves.

Reforming benefits to give equal amounts to lone and cohabiting or married parents would be difficult. The only logical answer is to extend the individual basis of assessment from the tax system into the means- tested part of the benefit system. But, since benefit levels for the vast majority of 'worthy' lone parents are so low, this would have to mean more being spent on benefits for couples rather than less on benefits for lone parents. With a government deficit of more than pounds 45bn, this is out of the question at present.

So what else can Mr Lilley do? As with all benefits, the real solution would be to get more parents, married or single, into paid employment. The Government might cut lone-parent benefit costs by a specific small change in policy being put forward by the National Council for One Parent Families and others: an addition to lone parents' family credit to cover child care.

It would not cost much to help the majority of lone parents, more than half of whom have only one dependent child. The DSS could impose a cap on this extra family credit. For the minority of single parents with more than one child it may be better for the children, as well as cheaper, to go on paying the lone parent to provide the care.

But, for single and married benefit claimants alike, the biggest incentive to get back to work could come from changes at the margin of the tax and benefit system. The introduction of family credit has done wonders to reduce the poverty trap (for which the Government deserves more recognition). But the state still takes at least 70p in every pound from 500,000 families struggling out of benefit into earnings: surely, this of all governments should agree that what is in effect a 70 per cent marginal tax rate is a disincentive to work: 75,000 poor families have a marginal 'tax' rate of 90 per cent or more.

Norman Lamont has pointed the way to pay for reducing the impact of this poverty trap: make all tax allowances (including pension contributions) offsettable only against the 20 per cent rate and use the proceeds to increase the personal allowance and the 20 per cent band. Hundreds of thousands - maybe millions - of benefit claimants and low earners would be taken out of tax altogether.

This in turn would make it easy for the Government to end the ludicrous situation whereby some benefits are not taxed, regardless of the recipient's total income. Conservatives talk about means-testing child benefit but do the opposite: deduct it from income support for the very poor and fail to tax it when it increases the income of the rich.

This proposal would also neatly solve the problem of compensating those just above the benefit line for VAT on heating fuel.

Illustration by Amanda Hutt