Background to the Research

• This report sets out the effects of the tax/benefit changes proposed by the Labour government elected in May 1997 on the incomes of women in NI. The implications of the measures detailed in the 1998 Budget are also assessed here, as are the proposals contained in the five Green Papers on welfare reform and one on Child Support.

Main findings

Welfare to work

• The government's welfare to work policy and gender-friendly employment legislation should have a beneficial effect on women's personal incomes.
  
• The most significant reform for women in NI is probably the introduction of the National Minimum Wage. This will increase women's incomes to a greater extent than men's.
  
• However NI is lagging behind as far as the National Childcare Strategy is concerned. Investment in childcare services here has not matched that in Great Britain. Given that pre-school care and education provision was already lower in NI than in Britain, this is particularly disappointing.
  
• New Deal programmes are welcome in that they make available some re-employment services to lone mothers and the female partners of unemployed men.
• Much of the government's strategy rests on the assumption that there will be job opportunities for women and that these are desired and will be taken up by women. Even apart from the questionable desirability of low paid part-time work in terms of women's financial security, there are added problems for women in NI. These include low levels of labour demand, social attitudes which are less favourable to mothers' employment, and poorer levels of childcare provision.

Increases in benefits for parents

• The Child Benefit and Family Credit increases will slightly improve the personal incomes of mothers.
• Under measures announced in the 1998 Budget, non-employed lone mothers with only one child will lose out slightly; similar mothers with more than one child, and especially those with more than one child under 11, will gain. Employed lone mothers will generally gain considerably from the Working Families Tax Credit. However there is a small group of employed lone mothers for whom this may not be true - those working for a small number of hours and earning below the threshold level of WFTC.
  
• For mothers as a whole, the rise in Child Benefit will increase the personal incomes of these women by 1.4% on average, and the incomes of lower earners by 3.8%. If the government were to tax Child Benefit for higher rate tax payers this would only affect less than 1% of female employees receiving Child Benefit.
  
• The increase in family premium for parents on Income Support and the increase in the rates paid for children under 11 means that the average incomes of women on Income Support would increase by about 5% and those of mothers by about 7%. However 29% of women on Income Support are not eligible for either increase. Overall, Income Support increases affect 8.1% of the working age female population in NI.
  
• By far the most significant measures announced in the 1998 Budget were the replacement of Family Credit by WFTC and the introduction of a Childcare Tax Credit within WFTC. In NI, a fifth of households with dependent children and at least one earner working less than 16 hours per week may be eligible for WFTC. Over two thirds of employed lone parents may be eligible and over a quarter of employed lone parents may be eligible for the maximum amount.
  
• Assuming 100% take up, WFTC could reach 5.1 times as many couples as did Family Credit and 1.76 times as many lone parents.
  
• WTFC and within it, Childcare Tax Credit, should have positive effects in terms of women's incomes insofar as the measures increase women's employment participation. The WTFC is similar to Family Credit in that there is still a relatively steep withdrawal of benefit as earnings rise and very high marginal tax rates if recipients also receive Housing Benefit. However, WFTC is unlike Family Credit in that provision for help with childcare expenses is different in nature and more generous.