Active Labour Market Policy for Lone Parents: the UK Context

Jonathan Portes

Chief Economist

UK Department for Work and Pensions

Our overall labour market strategy..

• Macroeconomic stability• Labour market flexibility• Anti discrimination law and policy• Making work pay• Active labour market policy

Making work pay: tax credits and the minimum wage

Gains to work for lone parents (30 hours, minimum wage)

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

200000

Loss

No

chan

ge o

r ga

in o

f le

ss t

han

£5

Gai

n of

less

tha

n £1

0

Gai

n of

less

tha

n £1

5

Gai

n of

less

tha

n £2

0

Gai

n of

less

tha

n £2

5

Gai

n of

less

tha

n £3

0

Gai

n of

less

tha

n £3

5

Gai

n of

less

tha

n £4

0

Gai

n of

less

tha

n £4

5

Gai

n of

less

tha

n £5

0

Gai

n of

less

tha

n £5

5

Gai

n of

less

tha

n £6

0

Gai

n of

less

tha

n £6

5

Gai

n of

less

tha

n £7

0

Gai

n of

mor

e th

an £

75

Gai

n of

less

tha

n £8

0

Gai

n of

less

tha

n £8

5

Gai

n of

less

tha

n £9

0

Gai

n of

less

tha

n £9

5

Gai

n of

less

tha

n £1

00

Gai

n of

less

tha

n £1

05

Gai

n of

less

tha

n £1

10

Gai

n of

less

tha

n £1

15

Gai

n of

less

tha

n £1

20

Gai

n of

less

tha

n £1

25

Gai

n of

less

tha

n £1

30

Gai

n of

less

tha

n £1

35

Gai

n of

less

tha

n £1

40

But system is complex and MDRs high

-

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

20.00 120.00 220.00 320.00 420.00

Gross Income

To

tal In

co

me

Take home pay Working Tax Credit Child Tax Credit Housing Benefit Council Tax Benefit

Considerable success..

30%

35%

40%

45%

50%

55%

60%

65%

70%

1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

lone mothers (pre-1992), lone parents (post-1992)Note: between 1992 and 1996 the data has not been regrossed to take into account the results of the 2001 census.

But much more will be required

40%

45%

50%

55%

60%

65%

70%

75%

Spring 04 Spring 05 Spring 06 Spring 07 Spring 08 spring 09 spring10

Lo

ne

par

ent

emp

loym

ent

rate

Business Case Current Performance Trajectory required for 70% by 2010

New Deal for Lone Parents

Programme structure:

– Mandatory work focused interviews to “sell” the programme

– But programme participation purely voluntary – Open to all lone parents on benefit– Help with access to childcare, jobsearch, training;

but still workfirst approach– Piloting further elements: in work credit,

worksearch premium, more childcare support

Implications for evaluation

- Voluntary nature raises selection issues - But correlation between take-up and outcomes

suggests it’s not the usual problem- And is NDLP really a “programme” – or is it about

information/signposting? - Suggests that how and by whom at least as important

as what- If key role of NDLP is catalytic, how do we isolate

effects?

Key future issues

- Explaining heterogeneous outcomes: geography, health status, ethnicity, etc

- New Deal for Lone Parents Plus: evaluating a package of interventions

- Quasi-mandatory work-related activity