"Children First" & Second Family Children: Analysis of the issues and options
by Barry Pearson
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Examples of household cash flows

All incomes are net, per week. The no-sharing case is assumed. Child Benefit & other benefits are included and treated as net income for all calculations (except NRP CSA formula liability, which is based on pure net income - gross income less tax & NI). Maintenance is assumed to be spent on the children.

Examples 1: NRP earns consistent income (say £300)

Example 1a: All parents earn about the same

All parents earn £300, 2 children in each family.

1st family PWC spends £64 on children, and retains £256.

1st family NRP spends £60 on 1st family children, £60 on 2nd family children, and retains £180.

2nd family other parent spends £64 on children, and retains £256.

1st family children receive the equivalent of £124.

2nd family children receive the equivalent of £124.

1st family retains £256 after spending on the children.

2nd family retains £436 after spending on the children.

Conclusion: all children benefit to the same degree, and there is no specific hardship in the 2nd family. The difference between the 1st family & 2nd family retained incomes is less than the difference between 1st family & 2nd family total net incomes, but given the responsibility of the NRP towards children in the 1st household, this is expected. There is no justification for a modification to the basic formula here.

Example 1b: PWC doesn't earn, NRP-partner earns

PWC has no income, 2nd family parents earn £300, 2 children (under 11) in each family.

1st family PWC spends £9 on children, retains £36.

1st family NRP spends £60 on 1st family children, £60 on 2nd family children, and retains £180.

2nd family other parent spends £64 on children, and retains £256.

1st family children receive the equivalent of £69.

2nd family children receive the equivalent of £124.

1st family retains £36 after spending on the children.

2nd family retains £436 after spending on the children.

Conclusion: "PWC not working" is a common case. Here, the 2nd family children are much better off than the 1st family children. The 2nd family has vastly more to spend after looking after the children than the 1st family. A 2nd family modification would be a injustice added to a deprived situation for the 1st family.

Example 1c: PWC & NRP-partner don't earn

NRP earns £300, other parents don't earn, 2 children (under 11) in each family, hence Income Support for PWC.

1st family PWC spends £5 on children, retains £20.

1st family NRP spends £60 on 1st family children, £60 on 2nd family children, and retains £180.

2nd family other parent spends £4 on children, and retains £16.

1st family children receive the equivalent of £64.

2nd family children receive the equivalent of £64.

1st family retains £16 after spending on the children.

2nd family retains £196 after spending on the children.

Conclusion: given the bias towards the 2nd family there is no justification for a modification to the basic formula here. The 1st family are at poverty levels (they are probably totally dependent on Housing Benefit & Council Tax Benefit), and any modification would be unjust.

Example 1d: PWC earns much more than NRP

PWC earns £600, NRP earns £300, NRP's partner doesn't earn, 2 children (under 11) in each family.

1st family PWC spends £124 on children, retains £496.

1st family NRP spends £60 on 1st family children, £60 on 2nd family children, and retains £180.

2nd family other parent spends £4 on children, and retains £16.

1st family children receive the equivalent of £184.

2nd family children receive the equivalent of £64.

1st family retains £496 after spending on the children.

2nd family retains £196 after spending on the children.

Conclusion: (this is a rare case). The difference between the households in retained income is exactly the same as the difference in earned income. The PWC actually spends more than twice as much as the NRP on the 1st family children (although the difference arises from Child Benefit). The 1st family children are much better off than the 2nd family children, but this is simply because the 1st family parents earn three times as much in total as the 2nd family parents

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Page last updated: 3 November, 2002 © Copyright Barry Pearson 1998