The Working Family Payment is an in-work support which provides an income top-up for employees on low earnings with children. It is designed to prevent in-work poverty for low paid workers with child dependents and to offer a financial incentive to take up and remain in employment.
Increasing the Working Family Payment income threshold for families with one, two or three children in recent budgets is a targeted measure benefiting low income families. Increasing income thresholds is a measure that is directly linked to household income and therefore directly supports low-income working families. As of June 2020 families with one, two or three children represented 86% of all Working Family Payment recipient households.
The full year cost of increasing the income threshold for families with one, two or three children, by €10 per week as announced in Budget 2021, is estimated at €21.4 million. If this measure were to be extended to all family sizes the additional estimated expenditure would be €2.6 million.
The Budget measure is, in particular, intended to target the most vulnerable families such as lone parent families - who are typically households with one or two children. Lone parents accounted for 49% of all Working Family Payment recipients in 2019. For the majority of these families the Working Family Payment is their primary source of income support from the Department.