Finance (No. 2) Bill

Debate between Catherine McKinnell and Tim Loughton

Wednesday 9th April 2014 Commons Chamber

[Catherine McKinnell]

It is a pleasure to serve under your chairmanship today, Mr Hoyle. I rise to speak to the Opposition’s amendment to clause 11 regarding the coalition’s proposed tax relief for married couples and civil partners. Before I begin, let nobody be in any doubt that the Opposition believe that marriage and civil partnerships are a force for good in society. Making a binding lifelong commitment to a partner in that way is truly to be celebrated. Let us not pretend, however, that the Government’s marriage tax allowance, introduced by clause 11 of this year’s Finance Bill, is anything other than a complete and utter dud of a policy.

[Tim Loughton (East Worthing and Shoreham) (Con)]

If that is the case, why in 13 years did the Labour Government not do a single thing—such as introducing a transferrable tax allowance, for example—to recognise married couples in the tax and benefits system? They did not do a single thing.

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[Catherine McKinnell]

The proposal under consideration only gives any sort of tax benefit, small though it is, to a third of married couples. I am surprised that Government Members are not more keen to explore the potential alternatives to this dud policy.

[Tim Loughton]

rose—

[Catherine McKinnell]

Let me make some progress. We are left in a position in which the Minister now finds himself trying to defend a policy that neither his boss nor his deputy support. It is an absolute farce, but clearly Government Members do support it, and quite vehemently. I hope to persuade them to consider the Opposition amendment and take a second look at the policy. If that fails and the policy is implemented in the Finance Bill, I want them to agree to review its impact within six months of its implementation to ensure that it is having the maximum benefit for the maximum number of people.

What is it about this policy that is so bad? Frankly, it is hard to know where to start. Let us begin by looking at who will benefit from this highly restrictive and very complicated measure, which will allow couples to transfer up to £1,050 of their income tax personal allowance to their spouse with effect from April 2015. Of course it applies to married couples and those in civil partnerships, but not just to any old marriages or any old civil partnerships. No, the Government have decided that there is a very particular form of marriage or civil partnership that they wish to recognise in the tax system. Unintentionally, misleading statements were made by the Prime Minister to this House—[Hon. Members: “What!”] Unintentionally, I said. The marriage tax allowance introduced by clause 11 applies only to those couples where one spouse is a basic rate taxpayer and the other does not use their full personal allowance. That scenario has been described by the “Don’t judge my family” campaign as a fantasy 1950s family with a breadwinner and a home maker. The policy will therefore exclude married couples and civil partners on the very lowest incomes where both spouses earn below the income tax personal allowance; couples where both spouses, possibly both basic rate taxpayers, have incomes higher than the personal allowance and therefore have no unused portion to transfer; and couples where either spouse pays the higher rate or the additional 45% rate, with an ever increasing number having been drawn into the 40 pence rate under this Government.

How many people are we taking about? How many households across the country will benefit from the Government’s flagship policy for supporting families? Their own recent estimates suggest 4.2 million couples, which equates to a grand total of one in three married couples and civil partnerships in this country. Two thirds of married couples and civil partnerships will not benefit from a policy intended to recognise marriage in the system.

[Tim Loughton]

I agree that there is a flaw in what the hon. Lady is discussing. Presumably, like me, she wishes to see that relief being extended not just to those on the basic rate but to a greater number of married couples with children. That is the logical conclusion of what she is saying, unless she admits once and for all that the Opposition do not support marriage in the tax system.

[Catherine McKinnell]

We have a much better suggestion as to how the money that has been allocated to the marriage tax allowance can be used to support millions of taxpayers up and down the country, including families with children. So what about those families with children who are hoping in vain for any sign of support from this Government whose tax and benefit changes will result in households being, on average, £974 a year worse off by 2015 than they were in 2010? The Exchequer Secretary, who is in his place, has conceded that of Britain’s 7.8 million families with children, just 1.4 million will benefit from this policy. Yes, that is right—one in six families with children will gain from this marriage tax allowance. To put it another way, five in six families with children will not get a penny from this Government’s flagship policy to support them.

The policy does nothing for widows, widowers, lone parents, long-term co-habiting couples, the 300,000 children living with grandparents or kinship carers or for the spouse who has left their partner for good reason, perhaps because of domestic abuse. It will not help the wife who has been left to bring up the kids after the husband has run off with another woman. If her husband chooses to marry that other woman, who have the Government decided will get the reward within the tax system? It is him.

How much will the allowance be worth for those lucky married couples who will be eligible? Just how much value are Ministers putting on the role of marriage in our society? Yes, for the one in three couples who will benefit, it could be worth up to £200 a year, almost £3.85 a week. To put that into language that people on the Labour Benches might understand—that is just over one pint of beer or a one-off peak game of bingo a week! Who does the Government expect to reap the benefits from this largesse? Let us take a look at their own assessment of the equality impact, which clearly states that while

“couples will benefit as a unit...the majority...of individual gainers will be male.”

But it is not just any old majority. The Government’s own assessment indicates that a staggering 84% of individual gainers will be male.

Before last year's autumn statement, we knew that the net impact of this Chancellor’s tax and benefit changes since 2010 would hit women three times harder than men, not least as a result of his decision to give a £3 billion tax cut to the top 1% of earners in this country, 85% of whom just happen to be men. As a result of the autumn statement 2013, in which the marriage tax allowance was confirmed, that appalling record has worsened even further, such that the Chancellor’s tax and benefit strategy is now hitting women a staggering four times harder than men, raising a net £3.047 billion from men, and £11.628 billion, or 79%, from women—[Interruption.] I hear the word scandalous uttered from a sedentary position, and I quite agree.

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[Catherine McKinnell]

My hon. Friend makes an incredibly pertinent point, and expresses her case powerfully. Child poverty is set to increase by a staggering amount under this Government, and the Institute for Fiscal Studies has clearly said that that is a direct result of the tax and benefit changes that they have implemented. The measure, which Government Members are keen to support, will do nothing to alleviate child poverty or to turn the tide of increasing child poverty over the next few years.

[Tim Loughton]

The hon. Lady has cited the IFS, which has conducted an analysis of the distributional impact of the transferrable allowance, demonstrating that it is profoundly progressive, disproportionately benefiting those in the bottom half of the income distribution scale. Perhaps she would read us all the research, rather than a selective part of it.

[Catherine McKinnell]

The hon. Gentleman is incredibly selective. If he genuinely believes that the policy will transform the Government’s appalling record on child poverty and the impact of their tax and benefit changes on women, he is deluded.

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[Tim Loughton]

During consideration of last year’s Finance Bill, when my hon. Friends and I put forward in an amendment the concept of the married couple’s tax allowance—the hon. Lady can look this up in the record—I specifically said that the allowance would apply both to civil partnerships and to married couples on enactment. That has never been in question, and the allowance should be absolutely consistent. The law now, however I may have voted, is that we recognise same-sex marriages and that the tax and benefit advantages that go with marriage must be applied to those new circumstances. That is not an issue. There are many issues that we may debate, but that is not one of them.

The Labour party did not and continues not to recognise marriage in the tax and benefit system. Labour chooses to ignore the fact that marriage, whether we like it or not, happens to be the most stable environment in which to bring up children. I was slightly surprised by the lengthy contribution of the hon. Member for Newcastle upon Tyne North because, given her previous role as shadow children’s Minister and her great interest and expertise in that area, she did not once elaborate on the benefit for children of an arrangement such as we are seeking to introduce. As far as I am concerned, the heart of what we should be achieving is the creation of greater stability for children, and it so happens that marriages do that best of all.

[Catherine McKinnell]

The Opposition are committed to supporting families and children. The fact is that this marriage tax allowance benefits only one in six households with children and only one in three marriages. Although the hon. Gentleman is making a passionate speech, the policy completely fails to address the issue.

[Tim Loughton]

That is a good reason for going further. The debut of a married couple’s tax allowance in this Bill is a starting point, and it is the first recognition of marriage in this country’s tax and benefit system. I would like to include many more married couples, particularly concentrating on those with children under the age of five. That is where the allowance can have the greatest impact. We need to provide the greatest stability for young children in their most formative and impressionable years.

Oral Answers to Questions

Debate between Catherine McKinnell and Tim Loughton

Monday 16th April 2012 Commons Chamber

[Tim Loughton]

The simple answer is absolutely yes. It is frustrating that despite examples of good and best practice in local authorities up and down the country in a matter where speed is of the essence and where people are focused entirely on the best outcomes for children, there are other local authorities—I fear that my hon. Friend’s is among them—where that is not the case. The adoption scorecard will ensure that local authorities that are not pulling their weight or doing the best by children are named and shamed, and ensure that they get their act together and up their game, because it should be in the best interests of the children.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

Ofsted’s latest report also stated that there was little evidence that delays were caused by social workers seeking the perfect match, which the Government have so far focused on. Rather, Ofsted mentioned parties to court proceedings demanding repeat assessments because they lacked confidence in social workers’ reports. What are the Government doing to tackle the issues that are really slowing up adoptions, rather than simply chasing easy headlines?

[Tim Loughton]

Given how much work we did before the general election, and how much we have done since, on the whole gamut of adoption, the hon. Lady will know that chasing easy headlines is the least of my concerns. I am concerned about getting a better deal for children who find themselves in the care system through no fault of their own. That means dealing with children’s services departments that are not treating adoption as a priority, dealing with the family justice system, which is too slow and tardy, and ensuring that every step of the way we are focused on getting the best outcomes for children who find themselves in the care system. That is not an easy headline; it is something that the Government place a great priority on.

Oral Answers to Questions

Debate between Catherine McKinnell and Tim Loughton

Monday 16th January 2012 Commons Chamber

[Tim Loughton]

My hon. Friend raises a good point, which is why at every stage of the journey of that child who comes into care, we are giving them a leg up and additional support. They will automatically all qualify for the pupil premium to give them a chance of catching up with children who are lucky enough to come from their birth family’s home. We are giving them advantages on the replacement for education maintenance allowance. We are giving special bursaries for those few—too few—who go to university. We need to close that gap, and we are giving them priority access to some of our best schools as well. If we can get them better education by giving them that leg up, they stand a better chance of being able to compete with the rest of their cohort in this country, and that has taken far too long.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

Stability is crucial for securing better outcomes and adoption has been a key focus for the Government to date, but what steps is the Minister taking to promote, transparently measure and publicly acknowledge success in increasing not just adoptive placements, but much needed permanency for all looked-after children through special guardianship, long-term fostering and kinship care?

[Tim Loughton]

The hon. Lady is right to flag up the importance of permanence. As far as I and the Government are concerned, there is no hierarchy of care here. It is what is the most appropriate form of care for that individual child. For most, it is foster care. We need more good quality foster care placements. For others, it is a residential children’s home. We need more good quality placements. But for others—a small number—adoption is the best form of permanence, as are special guardianship orders. I believe there are more children in care at present for whom adoption has not been considered and for whom it would be the most appropriate course of action, which is why we are spending so much time on making sure that we have an adoption system that is fit for purpose in the best interests of those children.

Oral Answers to Questions

Debate between Catherine McKinnell and Tim Loughton

Monday 21st November 2011 Commons Chamber

[Tim Loughton]

The whole point of the pupil premium is to give extra resources for schools that can be used exactly as they see fit for their own pupils. If a school wants to use a large or a small part of the pupil premium for that activity, that is entirely a matter for the head and the school.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

Learning outside the classroom includes encouraging healthy eating through breakfast clubs, but new research suggests that one in eight breakfast clubs closed this year and that half of those remaining are under threat. What would the Minister say to the chief executive of Greggs, which funds breakfast clubs for 7,000 disadvantaged children across the country, who recently questioned the coalition’s priorities and the fact that it is able to find £250 million to fund weekly bin collections but is unable to pledge support for the rising number of children coming into school hungry?

[Tim Loughton]

I was in Leeds recently, where I awarded on behalf of the Prime Minister a big society award to the founder of Magic Breakfast, which is a voluntary organisation providing breakfasts and doing some fantastic work—in that case, with a local bagel maker renowned in the city. It is providing fantastic breakfasts for the kids, and I was lucky to see this great job being done rather well. In other places like Liverpool, however, which is run by the Labour party, the decision has been taken to reduce some of the breakfast clubs. That is a matter for local authorities; other places are doing it well, and the hon. Lady should look at some of these innovative schemes rather than look to the Government to provide everything.