Fairness for Families

The Government is committed to building a fairer and more inclusive society in which everyone can contribute to, and benefit from, rising national prosperity.

The Government is reforming the tax and benefit system to tackle child poverty and ensure decent family incomes. The reforms ensure that support is available to all families with children, in recognition of the costs and responsibilities which come with parenthood. Those who need the greatest support, including families on lower incomes, those with children under one, and parents of disabled children, receive the most help.

Since 1997, financial support for families with children has been increased significantly. Reforms so far include:

record increases in Child Benefit to £15.75 a week for the first child and £10.55 for subsequent children. As announced in Budget 2002, from April 2003, the rates of Child Benefit will rise in line with indexation to £16.05 and £10.75 respectively;
the introduction of the Children's Tax Credit in April 2001, now worth up to £529 extra a year for around 4.6 million families and, since April 2002, up to £1,049 a year for families in the year of a child's birth;
the introduction of the Working Families' Tax Credit (WFTC) which benefits over 1.3 million families - around 500,000 more than previously received Family Credit. On average, these families are now receiving over £40 a week more under the WFTC than under Family Credit; and
increases in the children's allowances in Income Support and other income-related benefits, including a doubling in real terms of the rates for children under 11.

As part of the next steps in tax and benefit reform, Budget 2002 introduced a new system of support to help families, tackle child poverty and make work pay. This includes the introduction, from April 2003, of the new Child Tax Credit from April 2003 to provide a single, seamless system of income-related support for families with children.

As a result of the Government's personal tax and benefit reforms since 1997, including the changes to national insurance contributions and the income tax personal allowance announced in Budget 2002, by April 2003:

families with children will be, on average, £1,200 a year better off, while those in the poorest fifth of the population will be, on average, over £2,400 a year better off in real terms;
a single-earner family with two young children on half average earnings of £14,100 will be £3,490 a year better off in real terms; and
a single-earner family on average earnings of £28,200 and with two children will be £310 a year better off in real terms.

Internal Links

Budget 2002 Chapter 5
Pre-Budget Report 2002 Chapter 5

Also see

Child Poverty Page
Taxation, work and welfare documents
Balancing Work and Family Life: enhancing choice and support for parents (January 2004)

External Links

Tax Credits website