Taxation of Low-income Families

Debate between Gregory Campbell and Jeremy Lefroy

Wednesday 16th January 2019 Westminster Hall

[Jeremy Lefroy (Stafford) (Con)]

I beg to move,

That this House has considered taxation of low-income families.

It is a great pleasure to serve under your chairmanship, Sir David. As a Conservative and a Christian, I believe passionately in the importance of caring for those families who find themselves at the bottom of the income distribution. It is vital that there is a proper, decent safety net to enable families where the adults either are not in work or cannot work to have a decent standard of living, to live in proper homes and to have a proper income. At the same time, making work pay has been a priority for the Conservative and Conservative-led Governments since 2010. In this context, the effective marginal tax rate—the proportion of any additional £1 earned that one would lose in the form of tax, national insurance and lost benefits—is the key consideration.

If we look at a one-earner, two-parent family with two children, paying income tax and national insurance and in receipt of tax credits, we see that they face an effective marginal tax rate of 73%. That means that, as they look at the prospect of earning more, they will be confronted by the fact that they will get to keep only 27p from every additional £1 earned. If a 73% higher rate tax was introduced—I recall when it was well into the 80s; indeed, on unearned income it was 98% at one point—there would be an outcry from higher earning people and probably from the whole public. Yet that is the effective marginal rate of tax that we, though the system that we in Parliament are responsible for, expect low-income families to pay.

[Mr Gregory Campbell (East Londonderry) (DUP)]

I congratulate the hon. Gentleman on securing the debate. This is an issue that I and many others have taken an interest in for a long time. Does he agree that, particularly for those who are on full-time low pay, or part-time pay, if we gradually moved toward a position where the first £15,000 per annum was tax-free and there was no requirement to pay national insurance contributions on it, that would be a huge incentive against the black economy, as well as promoting people’s getting out of the working tax credits system and into employment, to try to work their way up through the salary chain?

[Jeremy Lefroy]

The hon. Gentleman makes an extremely important point. I shall refer to three reports today, but this one, “Make Work Pay: A New Agenda for Fairer Taxes” by the Centre for Policy Studies, suggests a tax and national insurance-free income of, I think, £12,000 a year, which is similar to what he suggests. I have a lot of sympathy for that. I would counsel against those who say that national insurance is a thing of the past and totally irrelevant; I believe in the importance of a social insurance contribution-based system, provided that it is progressive and proportionate, and I would not like to lose that, but I entirely agree with the principle of what he says.

Lest anyone wonder whether these high effective marginal tax rates are just an anomaly that, for some curious reason, only impacts one-earner, two-child families on 75% average wage, the point must be made that our high marginal rates are a problem for all family types: single parents, single-earner couples and dual-earner couples. One in three in-work families with dependants are likely to be facing high effective marginal rates. That is 2.5 million families—or 1.6 million couples—of whom 1 million are single earners, 600,000 are dual earners and 900,000 are single parents.

Put simply, any family paying tax and national insurance and receiving tax credits will be looking at an effective marginal tax rate of 73%. Families that, in addition to receiving tax credits, also receive housing benefit and council tax benefit will be looking at a marginal rate of 96%. Under universal credit, the 73% rate will increase slightly to 75%, but the 96% rate will come down to 80%. A 16% drop is significant, but an 80% effective marginal tax rate is still far too high. There is a lot that I would like to say about improvements that I would propose to universal credit, but that is a debate for another day.

Instead of encouraging aspiration, the combined impact of our tax and benefits system suffocates aspiration, trapping families in poverty. That is a burning social injustice that must be addressed. Much of the cause of our high effective marginal tax rates, particularly for single earner couples, is as a result of the introduction of independent taxation in 1990. Since then there has been little or no recognition of family responsibility in the tax system. Not recognising that responsibility in income tax, through a system such as elective joint taxation, has led to a tax arrangement that is anti- aspirational. It is interesting that the former Chancellor, Lord Lawson, wanted to include some kind of joint responsibility in the new system when it was introduced, but it was opposed by the then Prime Minister.

Families in poverty pay thousands of pounds of income tax, but then have to be supported by very inflated benefits, which offset the failure to recognise family responsibility but with the very costly downside of cripplingly high effective marginal tax rates that suffocate aspiration as the inflated benefits are withdrawn. In 2014 I co-authored a report with my hon. Friend the Member for Congleton (Fiona Bruce) and two other colleagues, “Holding the Centre: Social Stability and Social Capital”, which touched on many of the issues we are debating today, although not in such detail on this particular subject. As we noted in the report, many of the Government’s—all Governments’—most important goals rely on the contribution of families. However, too often that contribution is under-recognised and the impact of policy on these relationships ignored, under all Governments.

The report pointed out the vital role that family relationships play in our economic prosperity, wellbeing and the life of our children, as well as the cohesion and social stability of our nation, where growth and prosperity are underpinned by fairness, responsibility and community. The stability of marriage and supporting aspirational families are integral parts of the social capital of our country that leads to social stability and economic prosperity. A Government who draw on and nurture the wealth of our social capital, supporting families and strengthening relationships, can give people confidence about their future prospects and the ability and opportunity to see aspiration fulfilled.

These issues are vital, and therefore I note with pleasure that the Strengthening Families Manifesto group of Conservative MPs, led by my hon. Friend the Member for Congleton and by Mr David Burrowes, the former Member for Enfield, Southgate, has recently held an inquiry into making work pay for low-income families. The report was published this morning to coincide with this debate. My hon. Friend will outline in greater detail some of the report’s specific findings and recommendations. I underline the call in the report for the Chancellor to review formally the effective marginal tax rate for families, assessing the reasons why work does not pay for so many families and evaluating the possible solutions, with a particular focus on the tax system and the recognition of family responsibility.

International Men’s Day

Debate between Gregory Campbell and Jeremy Lefroy

Tuesday 14th November 2017 Westminster Hall

[Jeremy Lefroy (Stafford) (Con)]

I beg to move,

That this House has considered International Men’s Day.

It is a privilege to lead this debate. I thank the Members of all parties who have shown their support for it by being here today, and particularly my hon. Friend the Member for Shipley (Philip Davies), who has led debates about International Men’s Day in the last two years.

International Men’s Day, which is on 19 November, is now marked by 70 countries around the world and has been part of the annual events calendar in the UK since 2010. Its objectives, which apply equally to all men and boys, include the promotion of role models, a focus on male health and wellbeing, the improvement of gender relations and gender quality, and the creation of a safer world for us all. In the UK, International Men’s Day takes a gender-inclusive approach and therefore believes in ensuring that issues affecting women and girls are resolved, too. The themes in the UK this year are: making a difference for men and boys, and how we can give men and boys better life chances.

I stress that International Men’s Day is international. Although I am sure we will speak a lot about matters in the UK, we should not forget the challenges affecting men and boys around the world, which include boys having to be soldiers and the targeting of men, which we have seen in the conflicts in the middle east. That is not at all to forget what happens to women and girls. We must remember what is going on around the world, but I will concentrate on the situation in the UK. There is so much to talk about. All I can really do is skirt across a number of issues, but I know that hon. Members will go into other areas in more depth, and I welcome their remarks.

I will start with role models. I would like to recognise the huge number of men in the UK who work positively every day for their families and their communities, and who actively promote equality not just in their words but in their actions. People often ask, “Where are the male role models who can inspire other men and boys?” The answer is that they are in every community, but they often need to be encouraged to share their experiences—their difficulties as well as their successes. By their very nature, good role models are often reticent to speak about themselves and often do not even recognise themselves as role models. They think they are just doing their best, often in difficult circumstances. I think of a close friend who, as a leader of an organisation that works with hundreds of young people in north Staffordshire, is a great role model. He would be the last person to recognise himself as a role model, but he is, including to me.

How can we support such people? I suggest that promoting people publicly as role models is not necessarily the best way, and it is certainly not the only way. Everyone has their failings, and some of the media like nothing better than to raise someone up only to knock them down when they turn out to have feet of clay, as we all do. However, supporting the work of genuine but often unassuming role models who have a positive influence on men and boys and on women and girls can be really effective.

It is not difficult to identify them. Ask most local councillors, community workers, police officers and police community support officers, and they will know people who are great role models on the ground. We should see how they can be supported in their work, and perhaps supported to expand it. I have seen great and lasting work in my constituency and elsewhere by people in the scouting and guiding movements, boxing clubs and Duke of Edinburgh’s award groups, as well as by open youth groups run by committed professionals and volunteers.

The Government’s answer to problems is often new initiatives involving new organisations, which are given substantial sums of money but fold when that money runs out. In my opinion it is much better, where possible, to help existing people or organisations that have a proven track record over many years, but they are often the last to be considered for support.

I turn to health and wellbeing. Men are more likely than women to die prematurely; one in five men dies before the age of 65. Mortality under the age of 75 from cardiovascular diseases is twice as high among men as women, and it is three times as high among men for diseases that are considered preventable. Mortality before the age of 75 from cancer is almost twice as high among men as women, and it is 17% higher in cases of preventable cancer. There is so much more work to do to improve men’s health.

[Mr Gregory Campbell (East Londonderry) (DUP)]

I congratulate the hon. Gentleman on securing this debate. Does he agree that one of the issues is improving male awareness about health? If the television breaks down, we men get the TV repair person in; if the lawnmower is not working, we take it to the gardening shop; and if the car breaks down, we take it to the garage, but we seem to be reluctant to go to our GP when we are suffering from a mental or physical health issue. We need to ensure that everybody—but particularly men, who have been reluctant to deal with personal health issues—goes to their GP or to the relevant health professional when they have such issues.

[Jeremy Lefroy]

I totally agree; the hon. Gentleman anticipates what I was about to say. As he says, there is clear evidence that men are less likely than women to seek help when they are sick. That is certainly true of me. I have sometimes been reluctant to go to the doctor in case it turned out that I had something serious, as if the very act of seeking help would make it more serious than it was. I do not think it is just me. I did not want to confront the possibility of having a serious illness.

Good public health work has been done to ease people’s fears of seeking medical help if they think something is wrong—I think the NHS recognises that—but there is a greater need for health education, starting at school, to promote healthy lifestyles and to encourage people to consult their doctor early if they believe something is not quite right. I have recent personal experience; a close friend, who was not yet 50, had his cancer caught too late because, due to the nature of his job, he understandably attributed the symptoms to work-related stress when they were in fact much more serious.

Men should not worry that they will waste valuable NHS resources by going to their GP because they have unusual discomfort in their stomach, a persistent cough or problems passing water. Any NHS professional would prefer to allay their patient’s fears by showing that the problem is not serious—or, if it is serious, to catch it early and hence greatly improve the prospects of cure.

We have a serious problem with mental health among men and boys. Some 76% of all suicides in the UK last year were among men. That is 4,287 lives lost to suicide—more than two and a half times the number of deaths on the UK’s roads. The suicide rate has fallen in the last 35 years, and I welcome that, but the fall has been greater among women than men; it has fallen by 50% for women, which is wonderful, but only 14% for men. Suicide is the leading cause of death of men between 20 and 49.

The Samaritans commissioned research on the issues surrounding male suicide, which I will go into in some detail because they are so important. It found that men from the lowest social class who live in the most deprived areas are up to 10 times more likely to end their lives by suicide than those in the highest social class from the most affluent areas. This is undoubtedly a matter of inequality. Men in mid-life are most at risk, which surprised me. Men compare themselves against a masculine gold standard, to which having a job and providing for the family are essential, especially for working-class men. Men—I speak here from personal experience—are far less positive than women about getting formal emotional support for their problems, and when they do it is at the point of crisis. There is also a well-known link between unemployment and suicide; unemployed people are two to three times more likely than those in work to die by suicide, which is why combating unemployment is an absolute moral mission.

Developing Countries: Jobs and Livelihoods

Debate between Gregory Campbell and Jeremy Lefroy

Wednesday 15th June 2016 Westminster Hall

[Jeremy Lefroy]

I am most grateful to my hon. Friend for that intervention. He is doing fine work as a trade envoy for Nigeria, which is vital, because British investment around the world will help to create jobs. The prosperity fund will provide opportunities for people to develop that work. I entirely agree with my hon. Friend.

The 2013 World Development Report estimated that, globally, 200 million disproportionately young people are unemployed, with a further 620 million young people neither working, nor looking for work. Due to age profile and population growth, the report estimates that a further 600 million jobs will need to be found in the next 15 years just to keep employment rates constant. Personally, I would put that figure even higher, at closer to 1 billion.

[Mr Gregory Campbell (East Londonderry) (DUP)]

I congratulate the hon. Gentleman on securing this debate. He is discussing the figures and alluded to the fact that we would like to go further. Does he agree that it is almost a pipe-dream that the sustainable development goal that appears to indicate the elimination of poverty and unemployment, particularly in developing countries, will be achieved by 2030? We really need radically to reassess what we are doing to achieve that goal.

[Jeremy Lefroy]

The hon. Gentleman makes a valuable point. One reason why I called for this debate is because not nearly enough work is going on around the world. The UK is taking a lead, but he is absolutely right that much more needs to be done here and around the world.

In many countries, much of the work is subsistence agriculture and low-income self-employment—that is true for something like 50% of the 3 billion people working worldwide. Making ends meet is extremely difficult. I have to admit that all the figures I have cited are imprecise and sometimes speculative, which is a problem. We do not have accurate data, but I hope we will see more in future. It is about not only data but action, but action depends on good data.

The World Development Report found that: first, there are too few productive waged jobs in modern, formal sectors; secondly, most people are engaged in very low-productivity, seasonal or subsistence work in both rural and urban areas; thirdly, there are large gaps in job opportunities for women, youth and marginalised groups; fourthly, much work is in poor conditions, or is unsafe or risky, including in formal employment; and fifthly, many labour market-related institutions are ineffective, including skills institutions.

Tropical Diseases

Debate between Gregory Campbell and Jeremy Lefroy

Tuesday 27th October 2015 Westminster Hall

[Mr Gregory Campbell (East Londonderry) (DUP)]

I congratulate the hon. Gentleman on securing this debate. Does he agree that while significant progress has been made, the fact that 200 million new cases of malaria have been reported this year alone calls into question our legitimate and worthwhile attempt to try to eliminate malaria in the next 15 years?

[Jeremy Lefroy]

I entirely agree with the hon. Gentleman. Between 450,000 and 500,000 people—they are mainly children—are dying unnecessarily every year from the disease. How did the tremendous progress—I stress that huge progress has indeed been made—happen? Principally, reliable long-term funding enabled the development and implementation of various interventions, including prevention through insecticide-treated bed nets and the development of vaccines, and diagnosis through the rapid diagnostic tests that enable people, particularly children, to be diagnosed with malaria in the village, rather than having to come to a laboratory in a town when the malaria may be severe.