A Frank Field Calculation

Another attempt at explaining that Frank Field calculation from Mark W via email:

Frank Field used DWP's Tax and Benefit Model Table 1.3g, which gives £486.59 (nett pre costs) for 16 hours NMW, a perfect match for his £487 splash; but that includes credit (but not payment) for £100/week childcare. He then compared this with Table 1.6d, same except married-couple with no childcare; to exceed £487 nett here you need £620 gross earning - at £5.35 NMW this makes 115.9 hours, again a perfect match for his incorrect 116 hour claim. (this explanation by Rwendland at LabourHome).

 

It can be argued that childcare costs should not count as household income/welfare spending, in the same way as the "free" state education does not so count. So, let's look at post-housing, post-childcare incomes instead. Our single Mum from Table 1.3g has £209 post housing/childcare income. On the basis of eqivalised incomes, a two-adult, two-child household needs a 40% higher income, i.e. £293 per week. To arrive at a post-housing/childcare income of £293, the single-earner in Table 1.6d needs to earn £600 gross, or 112 hours at the NMW. So Frank Field was pretty close whichever way you argue it.

 

Or to look at in the way Patricia Morgan does, if Single Mum meets Unemployed Man, and he moves in, how many hours does he have to work to keep total income at same level? Her household's net income is currently £209 and his is £57 (Income Support rate, 2006-07), makes £266. Go back to Table 1.6d, find £266 in the post housing/childcare column, that's £500 gross he needs to earn, or 93 hours at NMW.

 

So the message is, if Unemployed Boyfriend moves in and Single Mum gives up work to look after kids, he has to work at least 93 hours (and give up his free social housing) for them to break even. If that's not discouraging work and marriage then I don't know what is.