Benefit changes since 1997 are turning Britain into 'the lone-parent capital of the western world', according to a report today from the Centre for Policy Studies, a centre-right thinktank.

It said the number of children growing up with only one parent had risen by a quarter to 3.2m in the seven years since Labour came to power. This was a higher proportion than elsewhere in western Europe, and meant the UK was about to overtake the US.

"This is hardly surprising, since in effect family breakup is heavily subsidised by the state ... A lone-parent household raising two children on welfare costs the public purse more than £11,000 a year in benefits alone," said the report by the policy analyst Jill Kirby.

The typical two-parent, one-earner family on an average income of £24,000, with a mortgage and two young children, was just over £1 a week better off than a lone-parent household entirely dependent on welfare.

"If Mr and Mrs Average split up, their weekly income after tax and housing costs increases by 35% from £223 to £301, if the husband pays maintenance." If he evaded it, their combined income went up by 65% to £369, the report said.

"The cost to the taxpayer if Mr and Mrs Average separate is between £8,450 and £12,000 a year." The total cost by the time the children grew up might be over £100,000, because after separation parents paid less tax and got more benefits.

The Cambridge economics professor Bob Rowthorn said in a foreword to the report: "This system is unfair to intact families which are often struggling to make ends meet. By encouraging lone parenthood, it is also corroding the social fabric."

But the Treasury responded that the income quoted for "Mr and Mrs Average" was lower than the actual average, and was set at the exact cut-off point for a tax credit. Their mortgage as a proportion of their income was also far above the average. It dismissed the report as "predictably selective and misleading".

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