HOUSING BENEFITS 2

Parents who earn less than £50,000 a year would be better off splitting up. Benefits and taxes are weighed so heavily in favour of lone-parent families that couples need to bring in twice the national average income before staying together has a financial advantage. Research by Patricia Morgan for the Institute of Economic Affairs think-tank, has provided more evidence that large numbers are either living apart or hiding the fact they are a couple just so they can hold on to tax credits and benefits.

Mrs Morgan found that the benefits system discriminates against couples to the point where those with less than a comfortable joint income would gain from splitting up. She said, "The temptation to pretend to live alone is enormous, considering the sums involved, and is particularly acute when the lone parent is on out- of-work benefits or a low wage. Joint income has to reach something like £50,000 gross for there to be no loss from declaring a relationship."

Using the Government's Tax Benefit Model Tables, Mrs Morgan gives the example of a mother of two who lives apart from her boyfriend. The couple have a combined gross income of £35,000. On a salary of £11,921, tax credits and benefits would boost her weekly wage of £200 to £228.65. If the couple lived together, loss of tax credits and benefits would leave them £3,584 worse off. Mrs Morgan said, "It is financially inadvisable to live as a couple unless their income takes them out of the reach of the welfare system altogether."

By 'faking it' and living apart, she said a couple with two children under the age of 11 could be up to £9,000 a year better off than those who co-habit. If both partners are unemployed, those who live apart gain an extra £1,288. If just the boyfriend is employed this brings in £2,160 more, and on a salary of £30,000 this means an extra £9,018 for those who live together. Her study follows research by the Office for National Statistics which shows 1.2million couples are 'living apart together'. (Source: Daily Mail, Mar/07)

Millions of the poorest people in Britain are facing a benefit increase of just 50p a week, the smallest rise in their payments for at least 30 years. Pressure groups attacked the Government, saying that the rises, which will come into force in April 2005, were objectionable and that a swath of society was being ignored. Millions of claimants of Jobseeker's Allowance (JSA), Housing Benefit and Income Support will see payments go up by just 1% in 2005, thanks to the operation of a government formula. The increase is the lowest since at least 1974, and less than a third of the 3.1% inflation rate.

Campaigners said that those losing out, the "forgotten poor", were being sidelined because of the Government's focus on pensioners and families with children. The decision has echoes of the row five years ago when a similar formula delivered a rise of just 75p a week in the state pensions, forcing the Government into a U-turn. The increase is based on the measure of inflation that excludes rent, mortgage interest payments and council tax for September, the Rossi index.

Rossi dropped to 1.0% in September 2004, the Government's Office for National Statistics said. This means 2.2 million people claiming income support will see their benefit rise by just 44p a week to £44.05. For under-18s the award is even more miserly, 33p to £33.38. The 835,000 people out of work eligible to claim JSA will see their benefit rise by 56p to £55.65. Almost three million people claim housing benefit but the level depends on their individual circumstances.

Paul Kenway, the director of the New Policy Institute, which campaigns for social justice, said a vast group of people had seen no real increase in benefits for several years. "This group is neglected," he said. "There's a real imbalance in the benefit system relative to kids and pensioners with sharp elbows. This group is not vocal and there are not charities shouting for them. They are seen as what the Victorians used to call the undeserving poor."

It was entirely right that the incoming Labour government had targeted working families with children, he said, but it should now broaden benefit reform. "There has not been any fuss over this but this Rossi increase is another turn of the screw for this group," he said. Paul Wheatley, a senior policy officer at Citizen's Advice, said the relative decline in income-related benefits meant the Government risked missing its poverty reduction targets.

"This 1% increase is worrying. It is rather objectionable when commentators and politicians accuse people of languishing on benefits when we are talking about £54 a week," he said. "These benefits are not linked to wages or even prices so they are building potential inequality into the system which, I think, needs to be reviewed as a matter of urgency." Paul Dornan, a policy adviser at the Child Poverty Action Group, said that it was also worried by the potential impact on children.

"Family income needs to be seen in the round. You cannot ignore the uprating of adult payments when considering the family's incomes, since family income may be made up of payments for both adults and children," he said. "If adult benefits, such as income support, fall in real terms this impacts on the family's spending power. To ignore that impact is a sleight of hand, making increases appear more valuable than they actually are."

Research by academics at the London School of Hygiene and Tropical Medicine found adults needed a minimum of £91 a week on which to live, almost twice income support. Philip Thornton

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