"Yes, I do think it's wrong that our benefits system gives couples with children more money if they live apart – and we will bring an end to the couple penalty".
David Cameron, Conservative Party Conference, 2008
"It is vital that we find a way of addressing welfare need without creating perverse incentives for the parents of children on low to modest incomes to live apart".
Frank Field MP, in Draper, D. (2009) Couple penalty 2008/9. London: CARE
We have some good news for David Cameron and Frank Field today. After careful analysis using our Minimum Income Standards research, we have discovered that there is no couple penalty in the benefits system.
To be clear, a 'couple penalty' would exist if two people are significantly better off (financially) living apart than living together as a direct result of government tax and benefit policy. If the reverse were the case, we could say there is a 'separation penalty' instead. Of course, in general it is cheaper for people to live together than apart because they can share the cost of items like furnishings and fuel bills. The issue is how far the additional needs of living apart are covered by the welfare system.
Let's take an unemployed couple with a seven year old child as an example. The minimum income they need, according to our research, is £322 per week to cover the cost of an adequate standard of living. The amount they actually get on benefits when they are together is £177, so they have a shortfall of £145, or 45% of what they need.
If they split up, with the child living with one parent, their combined needs would be £408 but their benefits would rise only to £201. The shortfall after breaking up would then be £206 or 51% of what they need. They would therefore be £62 a week worse off; compared with their needs, than if they had stayed together as a couple. These figures are shown in the graph below – the £62 is the difference between the two light red bars.
If you look at other scenarios for the same family type, where either one or both parents are in work on pay of £9 per hour, then the research shows they are £36 and £44 a week worse, respectively, if they split up. The figures vary depending on how many adult workers and children are in the family.
This research not only has implications for the (misplaced) debate about the couple penalty but also for the future design of Universal Credit. The consequence of statements about the couple penalty is that we should increase the gap between the single adult and couple elements of Universal Credit. To do so on this basis would be a clear mistake.