Contrary to popular belief, there is not a systematic penalty for couples with children on low incomes who stay together.
Under Universal Credit, new conditions will apply, but its value will be based on basic out-of-work entitlements. It would be misguided to alter the relative value of these entitlements to favour couples over singles based on the false assertion that out-of-work benefits currently contain an incentive to split up.
This paper found that:
- In calculating penalties for staying together or separating, the Minimum Income Standard (MIS) provides a well-researched basis for comparing living costs for different types of family, and suggests that Government's equivalence scales have underestimated how much cheaper it is for two people to live as a couple than separately.
- The benefits system does not provide a different proportion of an out-of-work family’s daily living needs if they live together or live apart. This is true whether MIS or official assumptions are used to compare what incomes families need for an equivalent living standard under different living arrangements.
- A couple penalty only exists for dual earner families on low incomes under particular assumptions: that the relative needs of singles and couples are as arbitrarily described in an equivalence scale rather than as shown in researched evidence.