The move in Budget 2000 towards individualisation in the tax treatment of married couples has been widely attacked as unfair. In our view, the adverse reaction mostly reflects the context in which the Budget has set increasing individualisation, rather than its own merits.

In particular, it reflects the fact that it was not framed within a broader strategy for effective child income support for both one-earner and two-earner couples, and indeed families with no earner.

Increased independence in the tax treatment of husbands and wives is not a new idea: it has been debated in various reports and commissions over the past decade and was one of the key issues for reform highlighted by us in a recent ESRI publication.

We argued for a framework involving greater independence in the tax treatment of couples, together with substantially increased child benefit. This framework could address not only labour market concerns, but pressing social concerns about how best to provide effective support to all parents for the time and/or money costs of caring for children.

Looking first at the labour market side, under the old tax system both single people and each earner in a two-earner couple were paying the top tax rate even at average earnings. Restricting the transferability of tax bands between couples makes it easier to reduce significantly the numbers paying at the higher rate - benefiting both single people and dual-earner couples.

Such a shift does not represent discrimination against single-earner couples if we focus simply on tax and ability to pay. Compared with a two-earner couple at the same cash income level, one-earner couples save on the costs the partner would incur in working outside the home, and benefit from the work they do in the home.

But this is, of course, only one side of the equation: what about the children? We argued in our study that resources can best be targeted directly on children - whether in one-earner or two-earner families, or those with no one in employment - through universal child benefit rather than the tax system.

We argued that independent taxation and increased child benefit in combination could provide a framework in which to address the twin issues of the recognition of the childcare work done in the home and the need to address childcare costs for those in employment in an even-handed and neutral way.

Child benefit has the same cash value for families at different income levels, and unlike tax-based treatment of the family, it reaches all income groups. It is also a fair way of assisting both one-earner and two-earner couples with children, giving them greater freedom to make their own decisions about how best to care for their children.

The recent report by the official working group set up to examine the treatment of families under the tax and social welfare codes grappled with these issues.

Distributional analysis carried out by the ESRI for the group showed that individualised bands together with increasing child benefit produced gains for the bottom half of the income distribution. Restricting transferability combined with a mixed package of tax cuts, on the other hand, showed little gain for those at the bottom but spread the benefits evenly throughout the rest of the distribution.

Because Budget 2000 chose to cut taxes, mostly by reducing rates rather than increasing allowances, it embedded the individualisation of bands in a broader context where the top of the income distribution benefits disproportionately.

The Government's response to the controversy has been to introduce a £3,000 standard-rated allowance for one-earner families, where the spouse works at home to care for children, or an elderly or handicapped person. The overall Budget package, including this change, remains skewed towards the better off. But this is not because of the individualisation of tax bands.

We have compared the outcomes of the actual Budget (see table below), including the new allowance, and the alternative response which many critics urged on the Government, of widening the tax bands for one-earner couples.

This shows clearly that a return to the old system of doubled tax bands for all married couples would have further favoured high earners, whereas the Government's response has instead been of greater proportionate benefit to middle-income groups. Like all forms of tax relief, it does not reach the children of parents with incomes too low to bring them into the tax net.

In our view, substantially improved child benefit remains the most effective way to provide support in an even-handed manner to all, with the greatest proportionate benefit to the worst-off.

Tim Callan and Brian Nolan are research professors at the Economic and Social Research Institute. They advocated the policy of individualisation at a pre-Budget conference in September.