‘Making work pay’ is the keystone of New Labour's strategy to reduce welfare dependency. This strategy is especially directed at lone parents, through increased financial support for childcare, a specific ‘New Deal’ and reduced benefits for non-working lone parents. Reducing welfare dependency for lone parents has several possible objectives; minimising welfare expenditures, maximising the employment rate, improving the socioeconomic status of women, or improving conditions for their children. This article analyses the implications of each of these objectives for policy design, using evidence from other countries as well as the United Kingdom, and examines the internal coherence of New Labour's policy approach to lone parents and its coherence with other policies on the family and on lifelong learning. The potential effectiveness of ‘making work pay’ is examined through the findings of recent literature, leading to arguments for a carer's allowance.