The 'Family Package' and the Cost of Children

Abstract

This paper presents an assessment of the appropriate value of the per child increment in the Family Package of income support measures for families with children. The assessment is carried out by comparing the proposed structure of payments with the results of research on the 'costs of children'. Aspects considered include the average cost of each child, the changing costs of children with age, economies of scale, and the distinction between income and expenditure patterns. It is concluded that despite the significant increases in relative payments to families with children further increases are still warranted, both to the basic rates of child payment and to the relative value of Mothers-Guardians' Allowance. Other features of the package such as the constant per child increment, whilst in conflict with the results of research on the costs of children, can be justified as compensation for the additional demands on savings and other resources faced by larger families.