Lone Mothers, Family Credit and Paid Work

Social security payments are typically thought of as being aimed at those who are not in paid work, whether because of age, ill health, caring responsibilities or involuntary unemployment. The great bulk of social security expenditure does go to such groups, and most social security recipients fall outside the paid labour market. But there is a potential role for social security in encouraging paid work, by giving benefits to those in work on low incomes which shift the balance between in-work and out-of-work income. The principal such benefit in the UK is family credit (FC), which replaced family income supplement in 1998. FC entitlement exists for low-paid families with children, provided they work 24 hours per week or more. Receipt of FC should guarantee a substantially higher net income than is available while out of work. In 1990 there were 313, 000 families receiving FC, of whom 40 per cent were lone-parent families.