Frank Field compares apples to oranges for a headline

rwendland Thu Jun 14, 2007 at 11:35:57 PM GMT Print-friendly version Facebook

Frank Field today released a report press-released as "Frank Field MP: Government brutally discriminates against two-parent families", trying in part to make the case that tax credits favour lone parents too much.  This has been enthusiastically reported by the right-wing press. The problem is that he has, for his headline fact, made an incorrect (or at least grossly unfair) comparison.



For example The Times reports this in the first paragraph as:
Frank Field, who served as Minister for Welfare Reform, said that a single mother working 16 hours a week, after tax credits, gains a total income of £487 a week.

However, a two-parent family earning the minimum wage has to work 116 hours to gain the same income because the tax credits system does not make allowance for the second adult.

Frank has it seems compared the income of a single mum using £100/week childcare, inflating her tax credits and income by £80, against a two-parent family not using childcare.  If you take the after housing & childcare net income for Frank's example, the lone parent has £209.49, but the couple has £309.18 net income - £100 more, which well illustrates the nature of Frank's  mistaken/unfair comparison to get his headline. He's also chosen quite high-end private rented accommodation at £695/month for the headline comparison, so large numbers come out from housing benefit.

If we compare like-with-like, both with no childcare costs, we get the reverse:

A single mum with two children has to work 30 hours a week at minimum wage (£160.50) to get the same income after tax credits and housing/council tax benefits as just one parent of a two-parent family only working 16 hours a week at minimum wage (£85.60).
Not quite the thing to quicken the pulse of a right-wing journalist is it?

What on earth is Frank Field doing - inaccurately slagging off his Labour government, feeding right-wing sentiment, and loosing Labour votes. The Sun plays this as "Brown cheats working families", the Telegraph "How tax credits cheat working families".

The reality is both families get fairly similar credits/benefits. There are some valid points to be made about marginal deduction rate fairness when housing benefits and tax credits combine, and perhaps the system is a little too generous to single parents, but Frank's way of handling this is ridiculous for a Labour MP.

(For full details see the Tax Benefit Model Tables - April 2006.  It seems the research incorrectly compared tables 1.3g and 1.6d, when it should have compared tables 1.3f and 1.6c making appropriate adjustment for WTC 30-hour credit when it feeds in.)



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Frank Field compares apples to oranges for a headline | 11 comments (11 topical)

Frank Field compares big apples with small apples (#1)

by Mark Wadsworth on Fri Jun 15, 2007 at 10:26:15 AM GMT

FF messed up here - he was reading from the DWP's Tax and Benefit Model Tables for 06-07, Table 1.3d, which shows that Single Mum, two kids, 16 hours @ NMW, LA tenant, £150 per week childcare has net income (before housing or childcare costs) of £434 per week.

But somehow he quoted the figure from the top of the next page which says £487.

So the figure of 116 hours is also wrong, the Tables only do single earner households, so skip to Table 1.6b, if you assume a heroic 100 hours on the NMW (£535 pw), a two-parent, single earner family with NO child care costs also has net income of £434 (before housing costs but NO childcare).


Re: Frank F compares big apples with small apples (#2)

by rwendland on Fri Jun 15, 2007 at 11:52:44 AM GMT

Frank Field has certainly messed up big time - I hope he does the decent thing and apologise and try to get all the newspapers to publish corrections. This has been played big time in some of the media.

You have a plausible explanation for his mistake, but I have a different explanation that doesn't need as crass a mistake as reading numbers from the wrong page, so is more plausible I think. Do you have inside knowledge of the workings (which Frank does not publish in the paper)?

My take on the details of the incorrect comparison: Frank used DWP's Tax and Benefit Model Table 1.3g I think, 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. So the childcare credit mismatch is the only mistake.


[ Parent ]

Re: Frank F compares big apples with small apples (#3)

by Mark Wadsworth on Fri Jun 15, 2007 at 03:05:31 PM GMT

Well done! That is the best explanation I have seen so far, I am happy to withdraw my own (although that was a first stab yesterday morning after half an hour's research, at least I spotted straight away that his figures were wrong).

Then there is an intellectual point, should state payments towards childcare count as benefit spending/household income at all? The (nearly) free State education that most kids take up certainly doesn't, does it? So my take is that it shouldn't

So best to look at post-housing, post-childcare figure of £209 from Table 1.3g, pro-rate it up by the factor 4/3* for four-, not three-person household = £279.

Find net income after housing costs on 1.6d of £279, that's gross income of £550 = a mere 102 hours on NMW.

So Frank Field was not a mile off, my rough guess of 100 hours was spot on.

*Yes I know that to equivalise the incomes, a four-person household doesn't necessarily need 4/3 as much as a three person household, but as teh extra person is an adult, not a child, a factor of 4/3 can't be far off.


[ Parent ]

Re: Frank F compares big apples with small apples (#6)

by rwendland on Fri Jun 15, 2007 at 09:07:03 PM GMT

I agree this is a zone of the tables that well illustrates the problems with 93+% marginal deduction rates, which I agree should go no higher than maybe 80% anywhere. A simple solution looks tricky though, as they are seperate benefits; an integrated fix needs them merged into a single system. I guess a quick fix would be to reduce the tax credit 37% deduction rate in the income range housing benefits might be claimable, which would also help many struggling mortgage-payers. (I do think low-income mortgage-payers should get some housing help, after all much of a private rent goes toward loan repayment.)

But using these particular tables for your analysis is not a good idea, it's highly likely someone renting a £695/month private house would be able to earn a lot more than NMW (in the high-wage south-east, or well educated). I agree net post housing/childcare income is a better comparison - wish Frank Field had done that.

Also I suspect 4/3 is too high a ratio given the fixed household costs, and that poor households often skimp on adult spending for the kids. Be interesting to see some research. If we assume a third is fixed costs, the ratio comes out as 5/4.

If we do 5/4 on tables for a LA tenant (1.3a and 1.6b) it doesn't come out too bad. Lone parent on 16-hour NMW gets 212.52 net after costs (1.3a £85.60 earnings). To get 5/4 married couple has to earn £300 (1.6b £263.04 net after costs), which is 56 hours NMW between the two of them (40 + 16). So in this more plausible comparison case, the outcome is fairly reasonable compared to sole parent.

If we were to do the calculation using a more common slightly-above-NMW rate, the difference would further narrow. 

Lone parents do sometimes come out a little better, but I think that was done to counter the historical statistically higher levels of child poverty for lone parents. Perhaps now that should be eased back a bit.

 


[ Parent ]

Now we are getting somewhere... (#7)

by Mark Wadsworth on Sat Jun 16, 2007 at 12:27:50 AM GMT

R Wendland, thanks.<p>The Citizen's Income Trust's up to date suggestions for welfare reform will hopefully be official soon, which is straight-down-the-middle welfare simplification.<p>As and when, I will flag it up here at Labour Home, or you can check out their website.<p>Then we can have the same argument again, only starting from the middle, not from opposing ends (if you see what I mean).


[ Parent ]

Re: Now we are getting somewhere... (#8)

by rwendland on Sat Jun 16, 2007 at 11:07:49 AM GMT

You do still need to produce the equivalent of the Tax Benefit Model tables for your proposal, so we can see the ramifications and interactions properly. Reducing marginal deduction rates too much will defocus resources on the most poor, risking the recent improvements in child poverty. Although you say your proposal is just a simplification, it seems to me it will significantly reduce help to those most in need.  You could try to disprove this with a version of the tables (perhaps extended to take in some non-rental sector examples) - a serious fleshed-out proposal needs that.


[ Parent ]

Re: Now we are getting somewhere... (#9)

by Mark Wadsworth on Sat Jun 16, 2007 at 11:43:43 AM GMT

Send me an email gmwadsworth at gmail dot com


[ Parent ]

Actually, Frank was right, in a roundabout way ... (#4)

by Mark Wadsworth on Fri Jun 15, 2007 at 05:08:52 PM GMT

Please see my summary here.


[ Parent ]

Re: Frank F compares big apples with small apples (#5)

by Mark Wadsworth on Fri Jun 15, 2007 at 05:10:46 PM GMT

Actually, this link is better.


[ Parent ]

Re: Frank F compares big apples with small apples (#10)

by rwendland on Sat Jun 16, 2007 at 02:28:17 PM GMT

You are using the unlikely combination of of people earning national minimum wage being able to rent a £695/month private house. I think a more realistic scenario to compare would be £5.80/hour (school cleaner or School Meals Supervisory Assistant pay-rate) and rented accomodation.

I'm just off for the w/e, so that will have to wait until next week.

NB I see This is London has actually published Frank's DWP table figures, but makes light of the childcare situation difference.  Presented as if Frank intended to compare lone-parent with childcare against two-parents without childcare. Wonder if this is post-mistake spin, or if that was intended from the start.  It is of course ridiculous to suggest two-parents would work >40 hours each without childcare.


[ Parent ]

The Times finally picks up on this (#11)

by rwendland on Wed Oct 03, 2007 at 09:47:15 PM GMT

Nice to see the dead-tree press, in the shape of The Times, finally picks up on this blog entry. Alice Miles in "A child could see this policy is rubbish" (October 3, 2007) seems to lift much of the facts:

It is not the case that couples who stay together are penalised and paid less in working tax credits than lone parents, an error parroted by people who are too well paid to know. Both families get the same. The Tories have been using a grossly misleading comparison, first cited by the Labour MP Frank Field, to back up their case. Mr Field has said that a single mother working 16 hours a week, after tax credits, gains a total income of £487 a week, but a two-parent family earning the minimum wage has to work 116 hours to gain the same income.

If you take childcare and housing costs out of it (for some reason Mr Field put the lone parent in rather expensive private rented accommodation, which is totally unrealistic), the lone parent in fact has £209.49, but the couple has £309.18 net income. Look at any honest statistics: single-parent families are far more likely to be poor than two-parent families.

Doesn't really explain it was unequal child-care treatment was the main part of Frank Field's mistaken comparison, but at least it shows the nett figures.


Frank Field compares apples to oranges for a headline | 11 comments (11 topical)