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Research published today by the Department for Work and Pensions using a longitudinal survey carried out by the Policy Studies Institute, explores changes in family circumstances over time. The survey, which was carried out for the first time in 1999, interviewed over 5,000 families with dependent children. A second wave of the survey was conducted in 2000, again involving interviews with over 5,000 families - 4,000 of whom had been interviewed in 1999. It examines the opportunities and constraints that face families moving into paid work, providing valuable information on in-work support and exploring issues of family welfare.

The reports which are to be published today form the second and third of three thematically distinct reports from FACS 2000 survey. DWP Research Report No. 164 'Low- and moderate-income families in Britain: Changes in Living Standards' by Sandra Vegeris and Steve McKay, examines changes in incomes and hardship, and DWP Research Report No. 165 'Low- and moderate-income Families in Britain: Family Change in 1999 and 2000, by Alan Marsh and Karen Rowlingson, explores family change. The first report in the series was published in January, and this examined work, childcare, and the initial effects of WFTC.

The main findings are as follows:

DWP Research Report 164: Changes in Living Standards

Family incomes

- The introduction of WFTC was a key change for families in the survey. Lone parents receiving WFTC in 2000 were on average 20 per cent better off than lone parents on Family Credit (FC) in 1999. Couples on WFTC were 11 per cent better off.

- Income for lone parents who were not working increased by two per cent and for couples who were not working income increased by three per cent.

- 44 per cent of lone parents had a higher income compared to the previous year, 32 per cent were worse off, and 24 per cent were on roughly the same. For couples on low/moderate income in 1999, by 2000 half (51 per cent) were better off, 33 per cent were worse off, and 16 per cent were roughly unchanged.

- Material Well-being

- Most family groups reported being able to afford more of the items on the material well- being scale (which measured ability to buy food, clothing, consumer durables, leisure activities). However, one in five non-working families reported being unable to afford some of the basic food items on most days.

Family finances

- More families reported being free of problem debt in 2000 (see notes), and there was a reduction in the number of families reporting multiple debts (four or more). However, a substantial number of families still had debts. Utility bills were the most common debt: 39 per cent of lone parents and 25 per cent of couple parents reported owing money.

Family hardship

Using a hardship index derived on measures of housing, savings, debt and material well- being:

- Non-working families were four-times more likely to experience severe hardship (3 or more problems) than those who were working.

- Families led by lone parents continued to be the worse off than couples.

- Families receiving WFTC in 2000 who would have qualified for in-work support under the 1999 Family Credit rules had lower hardship scores than families who had actually received FC in 1999. This is an indication that the extra money provided under WFTC translated to better living conditions for the families who received it.

Children and hardship

- Larger families experienced greater hardship than smaller families, in or out of work.

- When looking at children - rather than households - those in low income lone parent families were twice as likely to be in severe hardship as children in low income couple families.

Hardship, benefits and working hours

- Couple families who were not in full-time employment were three-times more likely to experience severe hardship than couples who were working full-time.

- Lone parents working 16-29 hours were twice as likely not to be in hardship, than those who were not working.

DWP Report 165 provides important contextual information on the characteristics and changes in the profile of families in Britain.

Characteristics

- The profile of lone parents has changed little during the 1990's but there has been an increase in couples with children cohabiting rather than married, almost doubling from 11 to 20 per cent between 1994 and 2000

- Cohabiting couples with children split up at twice the rate of married couples: 11 compared with 5 per cent between 1991 and 2000.

- Eight in every 100 lone parents in 1999 had a husband or partner in 2000

- Most lone parents are white but among Afro-Caribbean parents lone parenthood is relatively common. Almost one low-income couple in ten is Asian.

- Large families are a little more common among couples and nine per cent had four or more children in 2000 compared with five per cent among lone parent families. Large families are more common among those out of work.

Employment

- The rate of employment for lone parents stayed about the same between 1999 and 2000, at just under 40 per cent. Low-income couples were much more likely than lone parents to be working and 82 per cent had at least one parent in a job of 16 hours or more a week.

- Lone parents most likely to be in paid work included lone fathers and formerly married mothers. Those least likely to work were single never-partnered mothers. Lone fathers had the highest incomes and consequently the lowest take-up rate of WFTC. Lone parent workers were also likely to be older than non-workers.

- One in five non-working lone parents had a health condition that restricted their work and one in ten said that they had a child with a health problem that restricted their opportunities to work.

Child Support

- More than a third of lone mothers said that their children had no contact with their father.

- A quarter of lone parents received child support payments directly from a non-resident parent in 1999, this figure rose to 27 per cent in 2000. This proportion is smaller than in earlier surveys, but more payments are now made through the Child Support Agency and the DWP.

- Receipt of child support was higher among working lone parents: half received payments compared to 15 per cent of lone parents who were not working. Although some in receipt of IS may be unaware that maintenance is paid to the CSA or DWP.

Notes for editors

1. The sample was drawn primarily from Child Benefit records with booster samples from WFTC records. The survey is representative of all lone parents and of low/moderate- income couple families (couples earning up to 10 per cent above the maximum point of eligibility for WFTC, taking into account eligibility for the childcare tax credit) in Britain. Interviews with over 5,000 families were conducted between June and October 2000, 4,000 of whom had been interviewed during the first wave of the survey in 1999. Around half of the families participating were lone parent families. Main interviews were conducted with the 'mother figure' in the household, with partners interviewed where present and willing to participate. Inland Revenue contributed towards funding the survey.

2. Interviews have now been completed for the third wave of the survey, which has been extended to cover all couple families with children (ie, regardless of income). In wave three, it will be possible to compare the circumstances of low/moderate-income families with higher-income families. A further three waves of the survey are planned for 2002 to 2004, with contributions towards funding from a greater range of Government departments.

3. The research sampling framework was altered in 2000 to reflect the change in in-work support policy introduced with WFTC. As a direct result, the year 2000 cross-section contained families with higher incomes relative to the 1999 sample.

4. The less than/at least 16 hours per week of paid work distinction highlighted in the report's findings - represents the point at which families are eligible to claim WFTC. It is also important to note that the report counts 'non-working' as the respondent (and/or partner)not working 16 hours or more per week (some were working 1 - 15 hours).

5. Material well-being was defined as the ability of families to afford to buy goods and services. Families were asked about 34 items (food, clothing, consumer durables and leisure activities) on which they indicated whether they possessed the item (or took part in the activity) and, if not, whether this was because they did not want/need the item or because they could not afford it. Discussions focussed on the proportions of families who stated they would have liked an item but could not afford to buy it. The notion of affordability was subject to the respondents' judgement.

6. A 'problem debt' was defined as one that the borrower could not service, even to meet the minimum repayments required.

7. Year to year differences in material well-being were summarised in a relative material deprivation score (RMDS) constructed for each of the four consumer goods and leisure dimensions. The rationale behind the RMDS was that families who go without an item which many families already possess should be assigned more weight than families who go without an item that less families have i.e. taking into account the 'prevalence' of an item in the sample population.

8. The fieldwork for the research was conducted by the National Centre for Social Research.

'Low/moderate-income families in Britain: Changes in Living Standards 1999 - 2000' by Sandra Vegeris and Stephen McKay, DWP Research Report Series (no. 164) and 'Low/moderate-income Families in Britain: Family Change in 1999 and 2000, by Alan Marsh and Karen Rowlingson, DWP Research Report (no. 165) is published on 25th March 2002. A summary and copy of the report are available on the DWP website: http//www.dss.gov.uk/asd/asd5.

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