Transferable Tax Allowances

David Burrowes Excerpts

Wednesday 28th November 2012 Westminster Hall

[Mr Stewart Jackson (Peterborough) (Con)]

It is a pleasure, Mr Turner, to speak under your chairmanship for the first time, and it is a great honour to have the opportunity to put these important issues before the Chamber.

One of the key policy focuses in the run-up to the general election, and one of our key election manifesto commitments, was the introduction of a transferable allowance to recognise marriage in the tax system. The commitment to introduce the necessary legislation was included in the coalition agreement—for the avoidance of doubt it was on page 30—with provision also made for the Liberal Democrats to abstain.

The transferable allowance proposal was the main headline-grabbing recommendation among many other recommendations arising from the Conservative party’s social justice policy group and its two reports “Breakdown” and “Breakdown Britain”. Both reports highlighted the centrality of family breakdown to many of the social problems facing Britain today, which are a real issue, as I see in my constituency and as my hon. Friends will see in theirs. The reports recognised that the lack of policy support for marriage—the relationship at the heart of a stable family life—was not helping.

Britain is unusual in having a tax system that does not include any spousal allowance or credit. The group was very clear that addressing that shortcoming and recognising marriage in the tax system through a transferable tax allowance would help to bring us back into line with international best practice, and define the best way forward.

Before going into a more detailed presentation of the rationale for the transferable allowance policy, it is important to be clear from the outset about its importance to my party, as is reflected by the Prime Minister’s frequent references to it. When speaking as the Leader of the Opposition in response to the publication of “Broken Britain” in 2007, he said:

“I welcome this report’s emphasis on the family, and on marriage, as the basis for the social progress we all want to see…Britain is almost the only country in Europe that doesn’t recognise marriage in the tax system”.

He continued:

“Our support for families and for marriage puts us on the side of the mainstream majority, on the side of a progressive politics, on the side of change that says we can stop social decline, we can fix our broken society, we can and will make this a better place to live for everyone.”

In July 2008, in Glasgow, the Prime Minister continued to affirm that stance by saying that

“when it comes to perhaps the most important area of all, families, we will take action not just to support marriage and family stability”.

He told parents:

“your responsibility and your commitment matters, so we will give a tax break for marriage and end the couple penalty.”

Furthermore, in 2010, during the run-up to the general election, during a speech in Doncaster, my right hon. Friend seemed to become even more vociferous in his support for marriage, saying:

“I absolutely feel at my very core that recognising that relationships matter, that commitment matters and, yes, that marriage matters is something we should not say quietly but something we should say loudly and proudly.”

He continued:

“What is so backward looking in a country where we have social breakdown and social problems of saying that committed relationships, encouraging people to come together and stay together is a bad thing? Of course it isn’t, it’s not outdated”—

I hope that the Deputy Prime Minister is listening—

“if you look around the European Union, if you look around the OECD, we’re almost alone in not recognising marriage in the tax system. And why do we…think that with our appalling record of family breakdown that somehow we are in the right position and everyone else is in the wrong position; we’re not, they’ve got it right and we have got it wrong.”

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

The Conservative party is standing up for marriage in the House. With the exception of the representative from the Democratic Unionist party, the hon. Member for Strangford (Jim Shannon), 14 Conservative Members account for all the Back Benchers in the Chamber, so we are clearly showing that the only party on the side of marriage is the Conservative party.

[Mr Jackson]

As usual, my hon. Friend makes an excellent point. It will be noted that family policy is low on the agenda for Her Majesty’s Loyal Opposition.

The Prime Minister has said during Prime Minister’s questions:

“I believe that we should bring forward proposals to recognise marriage in the tax system. Those in our happy coalition will have the right to abstain on them, I am happy to say, but I support marriage. We support so many other things in the tax system, including Christmas parties and parking bicycles at work, so why do we not recognise marriage?”—[Official Report, 2 June 2010; Vol. 510, c. 428.]

That was a seasonal reference. I could go on, but I hope that I have made the point that delivering transferable allowances, about which we have talked so much, is now of central importance if we are to be deemed to be reliable and trustworthy.

--- Later in debate ---

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

I congratulate my hon. Friend the Member for Peterborough (Mr Jackson) on securing this important and timely debate as we lead up to the 2013 Budget. It is timely in the sense that the clock is ticking in terms of our fulfilling our clear promise on this issue, which was made both in our manifesto and in the coalition agreement.

I am proud to champion marriage, as we all are. In addition, I am proud of the fact that the Prime Minister has also been a clear champion of marriage—consistently so—both before the election and as Prime Minister. His words in the run-up to the 2010 election were very clear. He said:

“I absolutely feel at my very core that recognising that…marriage matters is something we should not say quietly but something we should say loudly and proudly.”

What my hon. Friends have said loudly and clearly today is that marriage matters and that we need to show in the tax system that it matters. It matters not only because we say so but because it is a social institution that provides many benefits to the whole of society, although today we are particularly focusing on the poorest, who we consider will benefit from marriage being supported by the state.

Given the commitment in our manifesto and, indeed, in the coalition agreement, I recognise that I do not need to convince my hon. Friend the Minister of the principle of recognising marriage in the tax system. We will leave it to the Opposition—indeed, to the hon. Member for Newcastle upon Tyne North (Catherine McKinnell), who is the lone Opposition Member here today and whom we will hear from shortly—to try to justify why we should continue where the previous Government left off, which is not only failing to recognise marriage but discriminating against married couples in the tax system. The issue facing the Government today is not “if” but “when and how”.

Given the opt-out for the Liberal Democrats under the coalition agreement, the Deputy Prime Minister—as he has always been referred to—last year decided freely to express his opposition to supporting marriage in the tax system. He is free to do so. We are a coalition. I am not sure that we would describe ourselves as a “marriage”, or a cohabitation. It is a relationship that certainly was not formed on the basis of love but on the basis of fiscal reasons, to tackle the huge deficit and the legacy left by the previous Government.

[Mr Stewart Jackson]

The sad thing is that we are heading for divorce. [Laughter.]

[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.

[Fiona Bruce]

Perhaps I could mention that some polling from the Centre for Social Justice has found that more than 80% of adults agree that more should be done to help parents who wish to stay at home to bring up their children in the early years. Does my hon. Friend agree that support for child care does not always mean that child care needs to be outsourced, and that some of the best support can be to help parents to stay at home to bring up their own children?

[Mr Burrowes]

I heartily agree with my hon. Friend. We need to look in the round at the benefits of child care—the social and economic benefits. Many of us know the value of well-supported care at home, which we sometimes do not properly quantify. That is a message that we need to amplify.

In conclusion, we are on the side of some of the poorest families in Britain, and we can help them by fulfilling the promise in our manifesto and in our coalition agreement. An unimplemented promise would not be a promise kept. We need to implement our promise properly and fully in the Budget of 2013.