Targeted Child Support: a solution but what’s the question?

Introduction

The issue of child income support policy has been under discussion for many decades going back as far as NESC (1979).[i] Indeed, one might argue that there has never been a clear policy on child support ever since the 1944 introduction of children’s allowances (now child benefit (CB)). More recently, some groups have argued for the taxation of child benefit (Commission on Taxation, 2009);[ii] some against (Commission on Taxation and Welfare, 2024).[iii] A number of studies (dating back at least to the Tax and Welfare Integration Group (TWIG) in 1996)[iv] have suggested a new targeted (i.e. means-tested) child support payment and the current Programme for Government includes a commitment to ‘explore a targeted Child Benefit Payment’ (2025, p. 101). The Department of Social Protection has recently published a Public Consultation on a potential Targeted Child Payment.[v]

One point that almost all the recent studies – with the exception of the 2012 report of the Advisory Group on Tax and Welfare[vi] – share is a failure to consider the overall context of child support policy. This paper examines this broader context and how a targeted payment might work in conjunction with child benefit.

Current child support

The main Irish child supports are set out in the table below:

Table 1: Current Child Support in Ireland

Working family payment (WFP, formerly Family Income Supplement (FIS)) is not really a child support payment at all though it is often included in this discussion. Rather it is a payment to support families in low-income employment and, implicitly, to encourage parents to participate in such employment.

Despite these range of payments, child poverty remains relatively high. The at-risk-of-poverty rate for children increased from 15.3% in 2024, to 16.9% in 2025 (over 200,000 children in total).[viii] In 2025, the Government agreed a new child poverty target of 3% or less, based on consistent poverty (which measures at risk of poverty and deprivation), to be achieved by the end of 2030. The most recent data show that the consistent poverty rate for children was 7.8% in 2025, down from 8.5% in 2024.  In that context, measures to reduce child poverty are obviously a priority. The recent studies and reports have shown that the most effective way to address child poverty (as measured by income and consistent poverty) would be to introduce a new standalone means-tested child payment in addition to child benefit, a second-tier if you will. This would replace child support payments (CSPs) and WFP. The basic design is set out below with the second-tier payment sitting on top of the universal child benefit and being gradually withdrawn (at a point and rate to be decided).[ix]

Figure 1: Indicative structure of a second-tier payment

The issues with this are twofold: first, reducing child poverty is a very important policy objective but it is not the only objective;[x] and, second, it is unclear how such a second-tier payment would work in practice and whether a real-world payment – as opposed to a theoretical model – would achieve the predicted benefits. These issues are discussed below.

Child support policy and child benefit

The potential objectives for child income support include to:[xi]

1. Provide universal assistance with the cost of child-raising to all families;
2. Target child-related assistance to families who are at risk of poverty;
3. Incentivise people to take up employment or, at least, avoid creating disincentives; and
4. Be neutral as to household formation so that, for example, a lone parent is not penalised for their status nor for a decision to live with a partner.

Child benefit (CB) obviously performs well under the first, third and fourth objectives. It does also target assistance to families at risk of poverty with the highest amount of expenditure going to the second and third lowest deciles (the lowest decile includes households who have relatively few children).[xii] However, it does not perform as well under this second objective as a more targeted benefit would, especially since CB is not currently subject to income tax.

Unfortunately, it appears that there has never been a specific benchmark for the amount of child benefit.[xiii] Indeed, the level of CB compared to earnings or inflation has fluctuated widely over the decades. Over the period from 1944 to the early 1980s, the relative generosity of the universal payment was allowed to decline (particularly in the period from 1958 to 1972) while the scope of the scheme was extended to cover all children. In the mid-1980s, the Fine Gael-Labour coalition decided to abolish child tax allowances and increase child benefit.[xiv] The mid-1990s Rainbow government, and later the Fianna Fáil-led government, focussed increases on CB leading to a recent peak in the early 2000s.

CB reached its peak (in nominal terms) in 2008 before being frozen and then reduced during the Great Recession. By 2025, the basic CB rate was still well below the 2008 peak. CSPs in contrast have increased relative to CB. As shown in Figure 2, CB has declined significantly since 2008 both compared to CSPs from 160% of the basic CSP rate in 2008 to about two-thirds of that rate in 2025 – and as a percentage of average earnings from almost 6% of weekly earnings in 2008 to only 3.5% in 2025.

Figure 2: Child Benefit, 2008-2025

International experience

There have been a range of international examples of targeted child payments, all quite different in design. These include payments from Canada, Scotland and the UK. As set out below, these vary in structure and role.[xv]

Table 2: International Child Payment Examples

Canada Child Benefit (introduced in 2016) is a payment administered by the Canada Revenue Agency in respect of children under 18.[xvii] The amount of CCB is based on adjusted family net income and is reduced once the income exceeds CAN$37,487 p.a. (about 50% of average earnings). Studies estimate that the introduction of the CCB reduced poverty by 11% in 2018 in families headed by a single mother and by almost 17% in two-parent families, compared to the rate in 2014. Research also found no statistically significant change in the employment rates of single and married mothers compared to their counterparts without children following the introduction of the CCB.

In the UK, child tax credit (CTC) was the main means-tested benefit supporting families with children, from 2003 until it was replaced by universal credit (Oulson and Wernham, 2025). It was payable in addition to a universal child benefit although this was, in effect, made subject to an income limit in 2013 (the High Income Child Benefit Charge). For out-of-work families, or families with incomes below a certain threshold, it included a basic amount payable to all families with children, called the family element and an additional amount for each child. CTC replaced a range of child payments including child-related top-ups to a number of other benefits (the equivalent of our CSPs). CTC was introduced as part of a suite of reforms of the welfare system (including a Working Tax Credit) so it is more difficult to isolate the impact of CTC alone. The reforms did lead to significant falls in poverty, e.g. CTC reduced the poverty gap for working households by between 20-30% (Hicks and Lanua, 2028). However, in terms of participation in paid employment, the Joseph Rowntree Foundation found that CTC had a negative effect on the probability of moving into work (and that this was larger for lone mothers) but had no significant effect on working hours for those in employment (Chzhen and Middleton, 2007).

The Scottish Child Payment is a second-tier payment (in addition to existing UK child benefits) which is paid to persons in receipt of universal credit with children. Studies estimate that SCP will keep 50,000 children out of relative poverty in 2026-27, with the relative child poverty rate five percentage points lower than it would be without the payment.[xviii] Research also indicates that the SCP has not in practice reduced labour supply, including for secondary earners (Nesom et al., 2025).

What would an Irish targeted child support payment look like?

All proposals assume that a targeted payment is additional to CB but none specify what CB (see below). The academic proposals for a targeted child payment (TCP) would appear to envisage a stand-alone payment rather than one linked to existing payments (which we already have in CSPs).[xix] This would mean that all those claiming a payment would have to be means-tested. However, the consultation document (pp. 11, 22-23) suggests that this entitlement would be automatic for those already in receipt of another means-tested payment. This later approach would mean higher take-up and less administration. However, it would also mean that, contrary to the original intention (see diagram above), the TCP would not be withdrawn gradually but would be lost suddenly when entitlement to the underlying payment ceased creating a ‘cliff edge’.[xx]

In any case, there would clearly be tens of thousands of people who would have to be means-tested in the normal way or, if a standalone payment was adopted, over 100,000. This would add significantly to the work involved in introducing the payment and would be likely to lead to lower take-up.

In addition, the academic studies appear to assume that the new payment would replace the existing models. They indicate that (depending obviously on the details of a payment) while many people would benefit, there would also be some losers. In the model discussed by Doorley et al., (2025) for example, carers with children could lose up to 10% of household income (or more in a small number of cases). It might be difficult to present such a reform in a positive light even if the vast majority of those affected would gain. A more likely option might be to introduce the new payment for new claimants while migrating existing claimants to the new system but allowing those who would be better off on the old system to retain entitlement. This again adds complexity and (some) cost, at least in the short-medium term.

It is difficult to see, and the consultation document does not try to explain in detail, how a new payment would replace WFP which is calculated in an entirely different manner to CSPs (i.e. based on actual earnings versus a target amount for families of different sizes) without there being significant winners and losers. The consultation (p. 25) indicates that one role of the proposed working age payment would be to fill this gap. But this would mean that the proposed TCP is, in part, dependent on another (largely separate) reform. An alternative would be to simply leave a residual WFP in place which again adds complexity.

Impact on child benefit?

But a key question is what impact would the new targeted approach have on child benefit? While the consultation document states that ‘the payment would not affect the universal Child Benefit payment’, this appears to mean only that CB will remain universal. There is no explicit commitment that CB would not be reduced – even in nominal terms – but, as we have seen, child benefit has been significantly reduced in real terms in recent years, leading to a fall in investment in child income support. It is difficult to see that a new targeted approach would not lead to a further withering in investment in the universal CB. How does this fit with an objective of universal assistance with the cost of child-raising for all families?

This is one area where the ‘paradox of redistribution’ arguably applies (Korpi and Palme, 1988).[xxi] This is the argument that universal benefits – such as child benefit – attract more widespread public support and lead to higher levels of investment which counter-intuitively lead to higher levels of redistribution, as in the Swedish welfare state which is both quite universal and highly redistributive. In contrast, targeted benefits to specific groups may receive less political support and less investment.

Conclusion

The current focus on a targeted payment is like designing the upper story of your house without have any idea what the ground floor looks like or where you are going to put the stairs. In addition, it seems inevitable that a ‘real-world’ TCP will be more complicated than the theoretical model. This is not to say that a targeted child payment cannot work: we already have one (CSPs) and it does. And there are several examples of targeted payments in other countries which are effective. However, these are quite different in design so the issue is not whether we should have a TCP but what exactly it should look like and how well a real-world model would work.

In order to decide this, we must first decide the role of the universal child benefit. Some may argue that universal payments should be abolished. In my view, there is a compelling argument for making the payment more targeted by increasing and taxing it on a cost-neutral basis. There are also arguments for not doing so. However, there is no case for allowing child benefit to wither on the branch (as it is currently doing) without a clear discussion as to whether this should be the policy approach.  It is not suggested here that a purely universal approval be adopted but rather that, as studies have shown, ‘targeting within universalism’ is the best option (Van Lancker and Van Mechelen, 2015). But in order to do this, we need to know what universalism means in concrete terms.

References

Chzhen, Y and Middleston S (2007), The Impact of Tax Credits on Mothers’ Employment, York, Joseph Rowntree Foundation. https://repository.lboro.ac.uk/articles/The_impact_of_tax_credits_on_mothers_employment/9598403/files/17238836.pdf

Doorley, K., Sándorová, S., and Maître, B. (2025). The effect of child-related benefits on child poverty and deprivation in Ireland, Economic and Social Research Institute, Dublin. https://www.esri.ie/publications/the-effect-of-child-related-benefits-on-child-poverty-and-deprivation-in-ireland

Hick, R., & Lanau, A. (2018). ‘Tax Credits and In-Work Poverty in the UK: An Analysis of Income Packages and Anti-Poverty Performance.’ Social Policy and Society. Advance online publication. https://doi.org/10.1017/S1474746418000118

Johnston, H.  (2021), Towards a More Integrated Income Support System, NESC  at https://www.nesc.ie/publications/towards-a-more-integrated-income-support-system-151-5/

Korpi, W. and Palme, J. (1998) ‘The Paradox of Redistribution and Strategies of Equality: Welfare State Institutions, Inequality, and Poverty in the Western Countries’, American Sociological Review, Vol. 63, No. 5, 661-687. https://doi.org/10.2307/2657333

Marx, I and Salanauskaite, Li and Verbist, G, (2013) The Paradox of Redistribution Revisited: And that it May Rest in Peace? IZA Discussion Paper No. 7414  https://www.iza.org/publications/dp/7414/the-paradox-of-redistribution-revisited-and-that-it-may-rest-in-peace

Nesom, S. and K, Stewart and E, Tominey. (2025). Does the Scottish Child Payment weaken work incentives? 25/60. London: Institute for Fiscal Studies. https://ifs.org.uk/publications/does-scottish-child-payment-weaken-work-incentives 

Oulton, M and Wernham, T. (2025). ‘How did tax credits transform the UK welfare system?’  Institute for Fiscal Studies. https://ifs.org.uk/articles/how-did-tax-credits-transform-uk-welfare-system 

Roantree, B. and K. Doorley. (2023). Poverty, income inequality and living standards in Ireland: Third annual report, Economic and Social Research Institute and Community Foundation Ireland, Dublin  https://www.esri.ie/publications/poverty-income-inequality-and-living-standards-in-ireland-third-annual-report

Sweeney, J. 2008. ‘Second Tier Child Income Support: The Case for Innovation’ in Journal of the Statistical and Social Inquiry Society of Ireland Vol. XXXVII, 45. https://www.tara.tcd.ie/items/4f1a5a09-8e3a-4178-bfeb-e4883eff9546

Van Lancker W, Van Mechelen N. Universalism under siege? Exploring the association between targeting, child benefits and child poverty across 26 countries. Soc Sci Res. 2015 Mar;50:60-75. doi: 10.1016/j.ssresearch.2014.11.012

[i] https://www.nesc.ie/publications/alternative-strategies-for-family-income-support/

[ii] https://researchrepository.ucd.ie/entities/person/cd39d56f-20ab-48e7-9973-db13a8930fea

[iii] https://www.gov.ie/en/commission-on-taxation-and-welfare/publications/report-of-the-commission-on-taxation-and-welfare/

[iv] https://archive.org/details/reportofexpertwo0000irel

[v] https://www.gov.ie/en/department-of-social-protection/consultations/public-consultation-on-potential-new-working-age-and-targeted-child-payments/ The consultation also proposes a new working age payment which is not discussed here. This is not in fact a working age payment in the sense of a payment to all people of working age (as discussed in the Department’s 2010 report on a single social assistance payment for people of working age or the NESC (Johnson, 2021) paper) but rather a reform on the existing jobseeker’s allowance which would also replace WFP. This is potentially a major reform of the system but, whatever the proposal’s merits, they are not clearly supported by statistical or other evidence. Nor is there any assessment of impact or cost.

[vi] https://www.rte.ie/documents/news/mangan-report.pdf

[vii] Formerly known as increases for a qualified child (IQCs) and, before that, child dependant allowances (CDAs).

[viii] https://www.cso.ie/en/releasesandpublications/ep/p-silc/surveyonincomeandlivingconditionssilc2025/poverty/

[ix] This diagram is taken from Sweeney (2008).

[x] And, of course, current projections look only at the immediate impact of specific measures rather than the long-term effect.

[xi] This draws in part on the 2010 Department of Social Protection review of child income support https://www.gov.ie/en/irish-government-economic-and-evaluation-service-igees/igees-publication/review-of-child-income-support-and-associated-spending-programmes/ That report correctly accepted that was no clear overall statement of policy and that individuals components had tended to wax and wane over time.

[xii] The limited evidence available suggests that increases in child benefit led to increased spending on child-related items.

[xiii] The 2012 Advisory Group argued in favour of introducing a targeted payment while retaining a universal benefit but did not attempt to establish a benchmark for CB.

[xiv] It was originally intended to tax child benefit and abolish child dependant allowances but due to fiscal difficulties these were instead retained and later increased.

[xv] Note that the studies use different methods and definitions so the figures quoted here are not directly comparable.

[xvi] Now rolled into Universal Credit.

[xvii] https://www.canada.ca/en/department-finance/services/publications/federal-tax-expenditures/2026.html

[xviii] Bringing Hope, Building Futures: Tackling child poverty delivery plan 2026-2031 – annex 5: Cumulative Impact Assessment at https://www.gov.scot/publications/bringing-hope-building-futures-tackling-child-poverty-delivery-plan-2026-2031-annex-5-cumulative-impact-assessment/

[xix] See, for example, Roantree and Doorley, 2023; Doorly et al. 2025. 

[xx] This is similar to the current Scottish Child Payment but that is at a lower rate than the likely TCP.

[xxi] More recent studies (e.g. Marx et al., 2013) have shown that this thesis does not apply in all contexts but it is suggested here that this may be one area where it does.