Finance (No. 2) Bill

David Burrowes Excerpts

Wednesday 9th April 2014 Commons Chamber

[Catherine McKinnell]

My hon. Friend makes an extremely good point. Our opposition to this measure is that it disproportionately impacts on women and benefits men and that it does not recognise five out of six households with children up and down the country who are, as we know, struggling to make ends meet.

[Mr David Burrowes (Enfield, Southgate) (Con)]

The problem with the hon. Lady’s point is that she is looking at married couples individually. The change is that, rather than wholly going down the route of an individualised tax system, as has happened in the past, this policy considers married couples. Married couples are benefiting and, if we asked them, they would say that they are benefiting as a couple and as a household. They are not hiving off men against women, which is what she seems to be doing.

[Catherine McKinnell]

The tax system works on an individual basis and this proposal introduces incredible complexity to the tax system. I shall cover that in more detail and explain the cost implications. Government Members obviously think that the costs are worth it, but I would be very careful about the concept that all married couples will happily share all their money and any tax gain—although, admittedly, we are talking about £3.85 a week. That seems to be rolling the clock back somewhat and assuming a level of communication within households that I do not think it is the Government’s place to assume.

Women are more than £26 a week—a week—worse off in real terms since 2010, and after significant progress under Labour, when the gender pay gap fell by more than 7%, it is now rising again for the first time in five years. The gap between women’s median weekly earnings in the private sector and the public sector has increased between 2009-10 and 2012-13 from 28% to 31%. The same gap for men has decreased from 17% to 14%. At the same time, the cost of child care places, which we debated at length yesterday, has risen by an average of 30% on this Government’s watch, five times faster than pay.

Analysis by the House of Commons Library shows that the Chancellor’s tax and benefits strategy since 2010 has raised a net £3.047 billion, or 21%, from men and 79%, or just under £12 billion, from women. That includes the Budget 2010 tax credit cuts, which took £2.7 billion from women and only £750 million from men, the 2010 spending review, under which reductions in child care support through tax credits took £343 million from women but just £47 million from men, and the three-year child benefit freeze, which has taken £1.26 billion from women and £26 million from men. That, of course, contrasts with the £3 billion tax cut that was given to the top 1% of earners in this country, under which 85% of the gainers are men, and this marriage tax allowance, under which 84% of the gainers will be men. This issue goes to the heart of the clause and of why we are tabling our amendment.

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[Alison Seabeck]

It is always interesting to follow the hon. Member for Peterborough (Mr Jackson). He and I have recently campaigned jointly on the future of our Land Registry offices, but I am afraid that we will be in different Lobbies this afternoon. I cannot agree with his assessment of the value of this tax change for a range of reasons.

Like many measures introduced by this Government, this one is disingenuous at best. It was brought forward to a fanfare of trumpets, after a great deal of pressure from Conservative Back Benchers, but it is basically unfair. I pick up a sense of that unfairness, which is driven through the tax system, when I do a street surgery every Saturday and in my postbag. That unfairness is what the public have the greatest problem with, whether in relation to the tax system or to other Government changes. It is also indicative of the problems we have seen in the House this week. We in this place do not read the public mood as well as we ought to at times, and this measure is yet another example of that problem.

[Mr Burrowes]

The hon. Lady is talking about fairness. Who is it fair for—the 80% of people in the OECD area who live in countries that recognise marriage in the tax system, or the 20% who live in countries that do not?

[Alison Seabeck]

Plymouth has one of the largest percentages of single parents in the country—I will return to that point—and my constituents think that the measure is unfair. How people in other countries view it is entirely up to them, but I can tell the hon. Gentleman that my constituents do not see it as fair.

The transferable allowance—a tax break of about £1,000—discriminates against millions of families, especially those headed by single parents, as well as against non-married couples. We know from the Office for National Statistics that there are about 2 million single-parent households. They find life complicated enough at the moment. They are being hit with the bedroom tax, while some will definitely not benefit from this tax change, and most feel that this Government are not on their side. They face the same challenges as married couples with children, but they face them alone. They have to survive on one income, and they are mostly not single parents from choice. Sadly, death, divorce and separation take their toll on relationships, and financial pressures mount in every one of those circumstances. What have this Government done? They have introduced a measure that will favour just a third of couples and just one in six families with children.

I am almost speechless about this measure. My hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) drew attention to the fact that men will benefit from it far more than women. She highlighted other areas in which men have disproportionately benefited from changes brought in by this Government—this predictably male-dominated Government—and that fact has not been lost on the electorate. Quite frankly, women feel that, for some reason or other, they are becoming second-class citizens in tax terms and all other terms. I am picking that up on the doorstep, and my guess is that we will see it reflected in the ballot box in the elections ahead.

As I said, my constituency has an above-average number of single parents—roughly 38%—who, as I am sure other hon. Members will acknowledge, are struggling to make ends meet. It is wrong for the Government to encourage one type of relationship over another. The policy discriminates against widows, single parents and couples who both work, as well as parents who choose not to marry. Importantly, this tax break might discriminate against children who grow up in single-parent families, and against adults who leave abusive relationships.

In its recent report, “The Home Front”, Demos has argued:

“Evidence shows that it is the quality of relationships rather than relationship status which has the greater effect on…children’s outcomes. There is no evidence of a ‘marriage effect’, rather marriage is probably a proxy for more successful relationships… many married couples do not have children, making this proposal both moralising and inefficient, as it draws resources away from some of the most at-risk families.”

This is a tax change to please the Tory few, but it discriminates against millions of hard-working families. It should be scrapped. We should support the amendment, which demands a closer look at and a review of the measure’s impact, so I will support my hon. Friend in the Lobby this afternoon.

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[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.

[Mr Burrowes]

The married couple’s tax allowance is a starting point, but I want to revise my hon. Friend’s description of this being its debut. Marriage was recognised in the tax system until 2000. We are only properly restoring what countries across the world, including more than 80% of European countries, recognise. We are simply going back to what was the case. We should not have moved away from that recognition in the first place.

[Tim Loughton]

My hon. Friend is right. He has been a pioneer in this area for a long time. The previous Government abolished the recognition, and they had 13 years to try to do something about recognising families in the tax system. Despite the easy words of the hon. Member for Newcastle upon Tyne North, the previous Government did absolutely nothing in practice. That is the record on which they should be judged.

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[Steve McCabe]

I support the amendment and oppose clause 11. I fear that the clause shows all that is wrong with the modern Tory party. It is based on an illusion—the idea that the Tory party has some special affection for marriage that is shown in its policy actions. Conservative Members have been keen to say that Labour was wrong not introduce such a measure during our 13 years in government, but of course we were not wrong. Had we done so, we would have got into exactly the same mess the Government are in today. We would have been perpetrating a con on the electorate by pretending a level of support for married couples and families with children that our policy simply could not deliver. I have a great deal of respect for the hon. Member for East Worthing and Shoreham (Tim Loughton), but we have heard that he suffers from that delusion. He thinks that he is helping people with children, but in fact he is helping a narrow band of those people.

As we have heard, the policy is not a general recognition of marriage in the tax system. It is a policy for a few married couples and some in civil partnerships—perhaps as few as 3.4 million of the UK’s 12.4 million couples who are married or in civil partnerships. In some ways it is a classic coalition policy, because it does not really satisfy anyone. Those in the Tory party who favour traditional marriage never intended that the tax relief should go to those in civil partnerships—that was not what they were arguing for at the outset. [Hon. Members: “Yes, it was.”] No, it wasn’t. If Conservative Members want to tell me that the hon. Member for Aldershot (Sir Gerald Howarth) is a keen advocate of civil partnerships, I guess that they have missed his speeches and blogs in recent years.

[Mr Burrowes]

I am not sure whether the hon. Gentleman wants to look at his party’s manifesto, but if he looks at ours, he will see that it made a clear promise to the electorate that we are keeping today.

[Steve McCabe]

I am happy to say that I have looked at the Conservatives’ manifesto, and it did not spell out the narrow band of people whom they intended to benefit. It created the pretence that they would help all married couples. The hon. Gentleman has persistently said during the debate that everywhere else offers the system that we are discussing, but I looked it up while he was talking, and New Zealand, Sweden, Finland, Greece and Hungary do not have it, so his “everywhere else” may be wrong.

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[Jim Shannon]

I cannot comment on the technical figures—no doubt the Minister will say something about them when he sums up the debate—but I understand the point that the hon. Gentleman has made. The Government clearly have much to do. Indeed, we all have much to do in putting forward our views, but let us hope that those who have an opportunity to enter into a marital relationship will be able to benefit financially as well.

Although 90% of young people aspire to marry, marriage rates are at an all-time low, while cohabitation rates are rising. The reason why that matters can be expressed in many ways, but I shall do so by employing language that the Treasury understands. The cost of family breakdown has risen to some £44 billion per annum, and crucially, according to the Centre for Social Justice, of every £7 spent on family breakdown amongst young families, £1 is spent on divorce, £4 is spent on unmarried dual-registered parents who separate, and £2 is spent on sole registered parents.

In this context it is absolutely imperative that the state does not place any unnecessary obstacles in the way of those who wish to marry, yet that is exactly what we do on many occasions. Since 2000 we have had a tax system that is very much in the minority internationally, as the hon. Member for Peterborough said. Just over a fifth of people in the OECD area live in countries that do not recognise marriage or have some kind of couple allowance. The vast majority of those people live in just two countries: the UK and Mexico. Research by Pearson and Binder published by the public policy charity CARE demonstrates that in this context the tax burden on a one-earner married couple with two children on average wage has been consistently much higher in this country than across the OECD on average. In 2012, the latest year for which there are comparable data, the tax burden on a UK one-earner married couple on average wage was 45% greater than the OECD average, up from 42% in 2011. Moreover this burden was a staggering 80.4% of that placed on a single person on the same wage while the comparable OECD figure was just 55%. Figures sometimes blind us to the issues, but these figures illustrate the issue of fairness and balance and show what the Government are trying to achieve through the legislative change before us.

In this context is it any wonder that rather than opting for marriage, couples are opting for other arrangements? Clause 11 will begin to put this right, but this is only a very limited, partially transferable allowance that, far from creating a level playing field, let alone a little nudge to opt for marriage, will instead only erode the incentive not to marry. Clause 11 is thus a hugely important first step; it is a foundation upon which we must build.

On 10 April 2010, when announcing the detail of the Conservative transferable allowance policy, which was then worth 11.6% of the personal allowance, the Prime Minister was clearly bothered that the package was not more generous. He indicated his wish to see more and, speaking on “Sky News”, he blamed the current fiscal constraints and said:

“Of course I want to go further and I am sure that over a Parliament we would be able to go further but this is a good first step.”

I believe this is a good first step. I am on record in my constituency as asking for this. I have done articles for my provincial press, supporting this option of the married transferable allowance. I believe today we have a chance to move towards that, and I hope this House will decide very positively and clearly on this.

It is clear that all we are going to get in this Parliament is a 10% transferable allowance. Many people will be watching to see the Prime Minister make good his commitment to go further in the next Parliament. Perhaps the Minister can confirm in his response in what ways the Government are committed to doing more in the next parliamentary term to introduce a fully transferable allowance. That must be the No. 1 income tax priority for the next Parliament.

[Mr Burrowes]

I very much welcome clause 11 and not the amendment in the name of the Opposition.

Before coming here I had an interview with children who are taking part in the BBC “Newsround” consideration of Prime Minister’s questions. I did not have an opportunity to ask them about the transferable allowance, but as they grow into adulthood I suspect they will look back on the proceedings here and think it rather odd that we are trying to put down dividing lines and divide along party lines on the basic issue of marriage being recognised in the tax system. They will think it rather odd that people are trying to pit one family relationship against another, when this is a very simple and moderate measure that is recognised across the world.

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[Catherine McKinnell]

We have said very clearly that, rather than giving this tax break to only a third of married couples—some hon. Members say they are in favour of marriage, but only certain types, where one partner in the marriage stays at home—we would put that money towards all married couples and, indeed, all taxpayers by reinstating the 10p tax rate, which would benefit all marriages and all children in those households too.

[Mr Burrowes]

I hear what the hon. Lady says, but I am afraid that will not wash with the electorate. The reality is that the Labour Government abolished recognising marriage in the tax system, and Labour now needs to make up that lost ground and join the mainstream in the other OECD countries and across the world. The Opposition need to recognise that people support marriage.

[Alison Seabeck]

The hon. Gentleman is robustly sticking to his guns. All young people aspire to marriage. I aspired to marriage when I was 17, and I thought that my marriage was going to last for ever, because that is what everyone hopes. Does the hon. Gentleman accept, however, that this tax change will not deal with the fact that people whose marriages break up after, say, five years will lose the tax break at that point? How is that fair, when they are still bringing up their children?

[Mr Burrowes]

As I said, we need to look at ways of supporting such couples to stay together, not least for the sake of their children. Too many children see their parents breaking up. We need to look at the evidence in support of marriage, because these decisions need to be based on evidence rather than on moral judgments. We have heard statistics relating to adults’ and children’s health and well-being, which I will not repeat. Members have talked about public health benefits, and mention has been made of smoking and other issues. Leading research has stated:

“If marriage were a drug it would be hailed as a miracle cure.”

Why are the Opposition so keen to avoid a basic measure to recognise marriage in the tax system? Members should not take my word for all this. Let us go across the Atlantic and hear what Barack Obama wrote in “The Audacity of Hope: Thoughts on Reclaiming the American Dream”:

“Many single moms—including the one who raised me—do a heroic job on behalf of their kids. Still, children living with single mothers are five times more likely to be poor than children in two-parent households. Children in single-parent homes are also more likely to drop out of school and become teen parents, even when income is factored out. And the evidence suggests that on average, children who live with both their biological mother and father do better than those who live in stepfamilies or with cohabiting partners.”

We have heard statistics to back that up today. Barack Obama went on to say:

“In light of these facts, policies that strengthen marriage for those who choose it…are sensible goals to pursue. For example, most people agree that neither federal welfare programs not the tax code should penalise married couples.”

He did not want to go against the Bush tax plan, and he recognised that it contained aspects of the Clinton welfare policies, but he wanted to ensure that proposals to reduce the marriage penalty would enjoy strong bipartisan support. It is a shame, given the bipartisan support for recognising marriage in the tax code across the Atlantic, that no such support exists here. We should learn the lessons and take a leaf out of the book of Barack Obama.

I mentioned that the children who were interviewed earlier for BBC “Newsround” would have been confused as to why anyone would disagree with this basic measure. Let us look at the recent history, since 2000, when marriage was not recognised in the tax system. We have heard many of the reasons behind the brokenness of Britain under Labour. One was the lack of recognition of the importance of marriage, not so much culturally as financially. That has certainly played a part, which is why there is a commitment at the heart of Conservative policy to reverse the 15 mistaken years of a system that did not recognise marriage.

One of the criticisms of transferable allowances for married couples is that they amount to giving a few privileged people a bribe to get married. It has been suggested that we are being discriminatory, but where is the discrimination in the tax system? According to the Institute for Fiscal Studies, the couple penalty facing those considering whether to marry is significant, at £44.70 a week, rising to over £85 per week for couples with children under 16. It is that group who have been discriminated against for many years. Our limited but important transferable allowance provision will begin to erode the discrimination and create a level playing field for those couples. Far from creating any kind of privilege, it will simply remedy an injustice that has been going on for 15 years in refusing to recognise the huge policy benefits of recognising marriage in the tax code.

We have heard that marriage is popular, but it is not popular only with a privileged minority. It is an aspiration that goes across social cohorts, and particularly among young people, 90% of whom aspire to marriage. Many of those people do not take up the opportunity to marry, however, and we need to look at the reasons for that. The transferrable allowance will not mean that all those people will suddenly get married. They will have to find an appropriate partner, for a start, and their marriage will of course be based primarily on love and being well-matched. The bottom line is an issue of social justice, however. Why are there particular barriers to marriage among poorer communities? People in those communities have just the same aspiration to marry, but fewer of them do so. We have to recognise that financial and cultural barriers are involved.

[Sir Edward Leigh (Gainsborough) (Con)]

No transferrable allowance will make anyone get married or stay married, or even encourage them to get married. The whole point is that when one person in a married couple—usually the woman—stays at home to look after the children, they are uniquely disadvantaged by the benefits system. This is simply a question of justice; we are righting an injustice in the benefits system.

[Mr Burrowes]

My hon. Friend is quite right. We are simply talking about justice. The Government need to take a lead in this area. The culture can change in many ways, but one way we can take a lead is through the introduction of a small financial instrument to recognise marriage in the tax system. That is what we are doing today, and it will help to bring about a change of character across the whole country.

[Sheila Gilmore]

For many poorer couples who are living together, whether they are married or not, the benefits system does indeed have a couples penalty. Would the hon. Gentleman be interested in campaigning to end that?

[Mr Burrowes]

If the hon. Lady looks at the Conservative party manifesto, she will see in it a recognition of the couples penalty. Sadly, there was no money left by the previous Government, but we want to do a great deal to correct that legacy of injustice that they left us. The couples penalty is one example among many. The discrimination is increasingly happening among couples with children, and the transferrable allowance will at least start to right those wrongs.

I am keen to give the House the opinions of others as well as my own. The Institute for Fiscal Studies has clearly demonstrated that the transferrable allowance is progressive, so I invite all those who support progressive policies to join us in the Lobby when we vote on this measure. It was suggested earlier that we are taking a partial view in relation to the IFS, but I understand that about 70% of the benefit will go to those in the lower half of the income distribution. I am not sure whether anyone has yet corrected the comments from the IFS. Anyone who is concerned about family responsibilities should also recognise that this measure does something that has not been done for 15 years—namely, recognising family responsibilities in the tax system.

This is an issue of trust, certainly for the Conservatives, who put this measure in their manifesto and who want to retain the trust of the electorate. This is a vital first step, albeit moderate, towards fulfilling that manifesto commitment. We will also seek to give further recognition to marriage in an increased transferable allowance. We are fulfilling our vow to the electorate, however. At the election, people will look back at this debate and see that the Opposition were not supporting marriage. The electorate will remember that. I urge all Members to support marriage.