Transferable Tax Allowances

Andrew Selous Excerpts

Wednesday 28th November 2012 Westminster Hall

[Andrew Selous (South West Bedfordshire) (Con)]

It is a pleasure to follow my hon. Friend the Member for Congleton (Fiona Bruce), and I congratulate my hon. Friend the Member for Peterborough (Mr Jackson) on securing this important debate.

My contention is that marriage is too important an issue for us to be neutral about. We need to be unashamedly positive about its benefits. In doing so, we are not in any way being negative about people who have any other lifestyle. As has already been said, the tax system sends a multitude of messages about things that we approve of and disapprove of. We send positive signals about bicycling to work and Christmas parties—this morning, there is talk about putting up the unit cost of alcohol—and that is all done through the tax system. It is perfectly logical and sensible to do the same on an issue as important as marriage, which has such profound effects on family life, on outcomes for children and on social justice in this country.

I shall briefly repeat the benefits of marriage. When parents split up, their children are 75% more likely to fail at school, 50% more likely to have alcohol problems and 40% more likely to have serious debt problems. It is a shocking fact that by the age of 15, a child is more likely to have a television in their bedroom than a father who still lives at home. As my hon. Friend the Member for Congleton said, for children aged 15 who still live with both parents, 97% of the couples in question are married.

In 1972, there were 426,000 marriages in England and Wales. By 2010, that number had declined by 43% to 241,000. We should not brush that aside, because it is a matter of great concern. We need to try to reverse the trend in order to achieve positive outcomes for children. If we look at other developed countries, we find that Britain is unusual in not having some form of transferable allowance. We have had a lot of statistics already, but the one that stands out for me is that single-earner couples in the United Kingdom are paying over a third more in tax than those in any other major developed country. It is Britain that is the odd one out. If we were to bring in the transferable tax allowance, which is in the coalition agreement, we would be getting the United Kingdom back in line with almost all of our major international competitors.

The Heritage Foundation in the United States has published some interesting data, based on US Census Bureau figures, which show that married school leavers have a lower poverty rate than that of single university graduates. That is a powerful figure. We rightly tell children in this country that it is good for their future to finish school; we would think it extraordinary if people said anything else. We know that people will have better life chances and higher incomes if they complete their schooling, but, as I said earlier, we need to be unashamedly positive about marriage and we need to send out the signal about the beneficial effects of marrying before having children. Bringing in the transferable tax allowance is just one part of sending that message to society.

I have already given the figures for the decline in marriages, which is steep and alarming and needs to be reversed. However, we need to measure such matters more carefully. I contacted Central Bedfordshire council before this debate to get the marriage figures in the two registry offices in my constituency. In 2011-12, in Leighton Buzzard and Dunstable, there were 183 marriages, which was slightly more than the year before and fewer than the figure in 2009-10. Those are the sort of figures that Members of Parliament should be aware of, because it is very true that we value what we measure and we measure what we value. I am proud to be here supporting my hon. Friend the Minister, and asking him to fulfil what was in our election manifesto, which he and I stood on, and which is in the coalition agreement. Publicly, the Government have said that they will do this; it is the right thing to do, and I am pleased that so many colleagues are here this morning to make this important case.

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[Mr Burrowes]

I am grateful to my hon. Friend for that intervention. It is a time-limited contract, unlike other marriages, but the issue is that there are also good fiscal reasons why this partnership, or relationship, should seek to have as a priority the implementation of this promise, despite the differing views in the coalition.

We need to tackle the Deputy Prime Minister’s argument; he freely expressed his views in one way, so we are free to express our views in another. As has already been mentioned, he said in December 2011:

“we should not take a particular version of the family institution, such as the 1950s model of suit-wearing, breadwinning dad and aproned, homemaking mother, and try and preserve it in aspic.”

It is important for us to make the point very clearly and to emphasise, as hon. Friends do, that the Deputy Prime Minister and others, such as the Opposition, are wrong about the two-parent family and wrong about the motives of others. Indeed, their arguments are old and very much out of touch with the British public, and they are themselves increasingly preserved in aspic. We are not harking back to the outdated 1950s model, and it is very condescending to caricature not only our views in that way but the married people up and down the country and those who want very much to support marriage. Marriage is a popular institution—increasingly so—and it is one that the public welcome.

We simply believe that marriage is best for children and for society, and the evidence supports us. A review by the Institute for Fiscal Studies of the research in this area, which has already been mentioned, shows unequivocally that

“children raised by two happily and continuously married parents have the best chance of developing into competent and successful adults.”

The evidence provides clear support for implementing policies that encourage couples to stay together, and shows that married couples with children are far more likely to stay together than their unmarried counterparts.

It has already been quoted, but it is important to keep repeating the evidence of the “Breakthrough Britain” report, which was published by the Centre for Social Justice. It demonstrated that children born to unmarried parents have a nearly one in two chance of seeing their parents split up by the age of five, whereas for children whose parents are married the figure is only one in 12. That is a huge difference that the state cannot ignore; indeed, the state needs to recognise it properly.

We all recognise that stability clearly matters. Most single parents undoubtedly do a fantastic job raising their children in difficult circumstances. We are not here to judge or to make moral judgments on people’s relationships, but the evidence is very clear that on every significant measure children who are brought up in married families do better on average than those brought up in other relationships.

[Andrew Selous]

Does my hon. Friend agree that this is particularly an issue of social justice for poorer people? Wealthier people—if they are able to do so—can of course transfer their unearned income to their spouse in the form of dividends, rents, interest and income, and make use of a transferable allowance, whereas poor people cannot. This is therefore about doing the right thing by poor people, because wealthier people can already take advantage of what we want for everyone.

[Mr Burrowes]

I agree, and it is very important that we recognise the clear data that make that point. The Centre for Social Justice has said that the difference in family breakdown risk between married and cohabiting couples is such that even the poorest 20% of married couples are more stable than all but the richest 20% of cohabiting couples. It is very important to recognise that this issue is one of social justice.

We recognise that most of the serious social problems that face us have their roots in the breakdown of the family. It is important for Conservatives to recognise and to make the point clearly that we support marriage. Far from making the case for the 1950s model of supporting marriage that I referred to earlier, we want a thoroughly modern and progressive measure that is underpinned by social justice.

As my hon. Friends have said, we are out of step with the majority of other developed countries. Most of the individuals living in OECD countries who are in a system that does not recognise spousal obligations are in either the United Kingdom or Mexico—and that cannot be right. Among highly developed economies, the UK is on its own in operating a tax system that ignores spousal obligations.

As my hon. Friends and I have said, this is an issue of social justice. The Institute for Fiscal Studies and others have made it very clear that, if a transferable allowance were implemented, 70% of the benefit accrued would go to those who are currently in the lower half of the income distribution level. The introduction of a transferable allowance would also reduce the number of children living in households below 60% of the median income, and that is where we want to be.

It is important that we properly urge the Chancellor—my hon. Friends and I have clearly done that this morning—to make good our collective promise and introduce a transferable allowance for married couples with young children. That is where the focus is. We recognise that it is not adequate simply—in a minimalist way—to have a partial transferable allowance that would be worth—what?—£150 a year, or £3 a week. That would also open us up to some criticism. We need to focus on and target married couples with young children.

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[Catherine McKinnell]

I apologise to the hon. Gentleman; I was going to pay tribute to his comments a little later. I am facing the Conservative Benches, and I take his point.

Many Members have mentioned the Liberal Democrat party, which was very ready to abandon its principles on tuition fees and the VAT bombshell, which it campaigned so hard against. However, Liberal Democrat Members have said clearly that they refuse to support this policy in principle, although no concrete proposals have come forward, so we still do not entirely know what they will do or whether they will support the proposal in its final form. We await clarification on that too.

At a time when families up and down the country are being hit hard by cuts to tax credits, a squeeze on their living standards, rising prices and frozen wages, with pensioners losing their tapered relief, and young people finding it harder than ever to get into work, many people will find it regrettable that Conservative Members’ focus today is on securing a tax break for a limited number of married couples. The previous Labour Government based their help for families on need and on a clear and targeted approach to alleviating child poverty, rather than on distinguishing between particular family structures.

If the policy the Government announce is the same as that set out in the Conservative party’s manifesto, it will, as Members have acknowledged, be worth just £2.88 a week. Furthermore, it has been targeted at an extremely narrow group: the only people who will be able to claim this tax benefit will be married couples where one partner earns above the income tax threshold and the other does not; whether the couple has children will be entirely irrelevant.

[Andrew Selous]

rose—

[Catherine McKinnell]

I know the hon. Gentleman has raised concerns about that matter.

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[Andrew Selous]

The previous Labour Government recognised family breakdown as a cause of child poverty; indeed, the Treasury Minister and I were shadow Ministers when the Child Poverty Act 2010 went through the House. Would the hon. Lady like to confirm that now? Will she acknowledge that family breakdown is a significant cause of child poverty?

[Catherine McKinnell]

What is rather counter-intuitive about the arguments being put forward today is that this tax incentive, small though it is, would be targeted at the very families that are not in dire straits. Members seem to be turning their backs on children in families that are facing the difficulties they have described. Unmarried couples, including those with children, have lost out on tax credits—many have had their tax credits cut because they cannot find more hours of work—or have been hit with housing benefit cuts, but they will not benefit from these changes. If a marriage ends for circumstances entirely out of somebody’s control, or if they are widowed or have to flee the marriage because of violence, they will lose the proposed benefit, but it could still be available to the perpetrator of the domestic violence, who could get married again. Nor would this benefit be available to married couples where both partners are working, unemployed or low earners.

Hon. Members have mentioned analysis by the Institute for Fiscal Studies, but that analysis shows that this benefit will be available to only 32% of married couples. This policy is meant to recognise marriage in the tax system and to send an important signal that we value couples and the commitment people make when they are married. Do Members believe that only 32% of marriages should be valued, while the other 68% are of less value and less worthy?

[Catherine McKinnell]

Unfortunately, I do not have much time. I appreciate this is an important subject, and I would like to give Members more time, but I want to finish my comments.

I strongly disagree with the hon. Member for Enfield, Southgate, who attempted to dismiss out of hand any notion that this policy recognises not marriage in general but just one type of marriage, where one partner is the breadwinner and the other stays at home. He dismissed the Deputy Prime Minister’s comments that such things are a throwback to the Edwardian era, but that is a sincere concern for many people.

I appreciate the comments of the hon. Member for Strangford (Jim Shannon) and the sincere manner in which he made them, but I disagree with him. Designing the system in a way that penalises all couples and families that do not fit in with one specific model, regardless of need, sends out a strong signal—intentionally, it would seem—that one type of family is worth more than another and that one type of parent is worth less than another. That is a very dangerous signal to send to children. It is unfair and out of touch, and is not the best way to support families in the tough times of 2012.

[Andrew Selous]

Will the hon. Lady give way?

[Catherine McKinnell]

I do not have much time, and I wanted to make a final point. The hon. Member for Cities of London and Westminster (Mark Field) made a powerful point, which I would make too: the Government, while talking about promoting or supporting marriage in the tax system, are removing valuable child benefit for many families and children.

Unfortunately I have run out of time, but I will be interested to hear what the Minister has to say in response to my concerns and those of other hon. Members.