Steve McCabe
Main Page: Steve McCabe (Labour - Birmingham, Selly Oak)Department Debates - View all Steve McCabe's debates with the HM Treasury
(10 years, 1 month ago)
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Catherine McKinnell
The answer lies in what I have already said; the Labour Government did a huge amount to support all families up and down this country, particularly families with children. Even the Chancellor seems to agree that £3.85 a week is not going to bribe anybody down the aisle or persuade anyone to stay in a marriage if they decide they are going to leave it. The question asked by the hon. Member for East Worthing and Shoreham (Tim Loughton) does not seem to acknowledge the fundamental issues with the Government’s proposal.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Does my hon. Friend agree that one difficulty with this proposal is shown in the analysis by the Institute for Fiscal Studies? Robert Joyce, the senior research economist there, says:
“The policy is not a general recognition of marriage in the income tax system”.
So the argument that has been made by the Government is false, in the sense that it gives an impression about this policy which is not actually true. He goes on to say that
“it is difficult to escape the conclusion that an income tax system which makes some people worse off after a pay rise has something wrong with it.”
The Chairman of Ways and Means (Mr Lindsay Hoyle)
Order. I think we need shorter interventions rather than speeches—I would sooner save your voice for later.
Mr Jackson
I will come to the specifics later. However, my hon. Friend—I am pleased to call him that because we serve on the Public Accounts Committee together—will know that many of his constituents in Redcar on low wages have benefited from our personal allowance changes. Indeed, many of them have been taken out of tax altogether, as have people across the north-east of England. He will know, too, as will the Opposition spokesperson, that unemployment has significantly fallen in the north-east and there are now more jobs available than in 2010. [Interruption.] We will not take any lectures from Labour, which doubled youth unemployment between 1997 and 2010.
I would have hoped that Labour Members supported these proposals, particularly this clause, because they are progressive. The Institute for Fiscal Studies has produced a very helpful chart demonstrating how the provision will disproportionately benefit those in the lower half of the income distribution—a point astutely made by my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton). This is not a provision for the middle classes, as Labour critics sometimes suggest. The truth is that the failure of our income tax system to have regard for marriage in recent years has been very odd, as the Prime Minister said in response to a question from the right hon. and learned Member for Camberwell and Peckham (Ms Harman) in June 2010:
“I simply do not understand why, when so many other European countries—I remember often being lectured when I was on the other side of the House about how we should follow European examples—recognise marriage in the tax system, we do not. I believe that we should bring forward proposals to recognise marriage in the tax system…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.]
Steve McCabe
The difference is that the tax provisions on Christmas parties and parking bicycles are extended to all. This provision is for a very narrow segment of married people and those in civil partnerships; it is hardly an example of a general principle of marriage.
Mr Jackson
I do not think we all attend Christmas parties or cycle. [Interruption.] The more serious point, which I will elucidate further if the hon. Gentleman will generously allow me, is that there is demonstrable evidence that the institution of marriage has a positive net impact on society, cumulatively, particularly on children. There is nothing ignoble about using the tax system in a mature democracy to support behaviour that is good for society overall.
Tim Loughton
Absolutely. It sends out a very poor message to those people for Labour to say that marriage is very nice, but we will not recognise it in the tax and benefit system.
Frankly, it is those who oppose this measure—we have heard them again today—as some sort of 1950s throwback who are being judgmental about how certain people choose to live in their relationships. Disgracefully, they are seeking to pit working mothers and dads against stay-at-home mothers and dads, who are no less, and often more, hard-working. That certainly applies to the increasing number of stay-at-home dads who have made a conscious decision to give up a career because they think that is how they can best bring up their children. The state should respect that.
My support for a transferable married couple’s tax allowance has never been based on a moral stance on types of relationship. My concern, as one might expect from someone who formerly had responsibility in government for children, has always been based on what is best for children. That is why I favour the allowance for families with young children.
Quite simply, if a 15-year-old is living at home with both parents, there is a 97% likelihood that their parents will be married. There is a one in 10 chance that married parents will split up by the time their child reaches five, but a one in three chance that unmarried, cohabiting parents will split up by that time. As the Centre for Social Justice has shown, those who do not grow up in two-parent, married families are 75% more likely to fail at school and 70% more likely to be involved with drugs or to have alcohol problems. The Joseph Rowntree Foundation, which I have already quoted, has identified poorer outcomes for children from separating families. Importantly, a stable home can raise a child’s chances of escaping the poverty trap by 82%. Let us not forget that family breakdown, the prevention of which is the thrust behind this measure, is costing us £46 billion. That is about £1,460 for every taxpayer in this country every year. Marriage accounts for 54% of births but only 20% of break-ups among families with children under the age of five.
I am therefore surprised that nowhere in any of the contributions from Labour Members in support of the amendment did they touch on the outcome for children. That is the most important target at which the measure is aimed. The poorest 20% of married couples are more stable than all but the richest 20% of cohabiting couples, as my hon. Friend the Member for Peterborough (Mr Jackson) said.
Clause 11 alone will not solve all the problems I have set out. I am not naive enough to suggest that £210, or whatever the result is, will represent the difference between staying married and getting divorced or between getting married and cohabiting. However, it does send out the clear and strong message that we value couples who take the decision to bring up their children within marriage. There is a need to address the lack of a level playing field in bringing up children between couples who are not married and those who are. There are 2.2 million households in which one partner is in full-time work and the other is not earning. Those households include 1.2 million children and 700,000 of them include a youngest child who is under the age of five. Those are the families we should start with. Those are the families who deserve our support and recognition most of all. This clause, at last, goes some way towards rectifying that.
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.
Alison Seabeck
Does my hon. Friend share my concern that the new Financial Secretary to the Treasury and Minister for Women voted against same-sex marriage, and therefore takes a slightly ambiguous position on the matter?
Steve McCabe
I am afraid that is true. I know that some people will not be comfortable with having to be reminded of that, but it happens to be the case.
To return to the point that the Government’s position is slightly misleading, we know that the Prime Minister himself has been confused about it. Like his hon. Friends, he thought that he was introducing a policy for all married couples paying the basic rate of tax. I can imagine that, in this day and age, it is pretty hard for the poor Prime Minister to keep up with the all the shifts and machinations in his Government, but surely there is something wrong with a policy that deludes even the Prime Minister into thinking he is giving a tax break to all married couples paying the basic rate, which he is not. Thank goodness we have had the opportunity to set the record straight in this debate; otherwise the poor man might have gone around the country perpetrating that calumny. People might have begun to doubt his work on other things, as well—his whole judgment might have come into question. Thank goodness we have had the chance to challenge that idea.
We certainly need to review the policy, because were it to be extended to the nearly 9 million married couples who pay the basic rate of tax, as the Prime Minister implied, it would cost considerably more than the Chancellor’s projections. For that reason alone our amendment, which asks for a review, is crucial. We need to know exactly what the policy will cost and what it would cost were it to meet the Prime Minister’s aspirations.
As we have heard, the policy will give £200 back to 3.4 million couples, but other Government policies will have made the average family £974 a year worse off by the time of the election. Some 85% of the tax allowance will go to men. Perhaps that harks back to the good old days of Tory marriage—I do not know—but in this day and age I do not think the policy will be broadly accepted by women up and down the country. As we have heard, it will not be available to married couples whose income falls below the personal allowance. [Interruption.] I think the hon. Member for Suffolk Coastal (Dr Coffey) has something stuck in her throat. If she wants to intervene, I—
The Chairman of Ways and Means (Mr Lindsay Hoyle)
Order. We are not having two Members on their feet. Let us see if I can help—Mr McCabe, are you giving way?
Dr Coffey
I thank the hon. Gentleman. This point has been made before, but we cannot have such a recognition in the tax system for people who do not pay tax. However, the Government have taken many other measures for them, including ensuring that Labour’s fuel duty escalator did not operate. If it had, fuel would be 90p a gallon more, or £450 a year for the average household.
Steve McCabe
The hon. Lady is right, and Government Members have attempted to make that point before. She is absolutely right that the VAT rise put enormous pressure on both petrol costs and all sorts of other family incomes.
At its best, the Government’s measure will reward about 3.4 million of the country’s couples who are married or in civil partnerships with £4 a week. That is the figure from the Institute for Fiscal Studies, but if the Government have better figures and want to challenge the IFS, that will be welcome. I would be interested to know not only the cost of the tax relief but the administrative costs of a £4 a week benefit for 3.4 million couples. It does not strike me as the best way to reduce the overall costs of tax collection or harmonise the system.
As was acknowledged earlier, the transfer of allowances reintroduces an element of joint taxation, a measure that the Tory party sought to abolish when it moved to individual taxation as long ago as 1990. The hon. Member for Enfield, Southgate (Mr Burrowes) talked about all the countries that recognise marriage, but the move to individual taxation is a much bigger trend in tax systems across the world. It seems to me that it is the Tory party that is moving in the wrong direction, because as we have heard in this debate, Conservative Members want to move to a fully transferrable tax system. They want to go back to the days of old, and that is exactly what they are going to do. [Interruption.] I think the hon. Member for East Worthing and Shoreham has something to say. Would he like me to give way to him?
Tim Loughton
The hon. Gentleman tantalises me too much. Will he undertake that, in the highly unlikely and disastrous event that there is a Labour-led Government after the next election, he wants this tax allowance to be abolished in their first Finance Bill, so that 3.4 million married couples—or 4 million or however many—will no longer benefit from it because of Labour’s warped priorities?
Steve McCabe
I have never thought of myself as someone who tempts the hon. Gentleman, but I can give a commitment that a Labour Government would move to a fair tax policy. That is what this is all about, which Conservative Members fail to recognise.
Steve McCabe
As I said, I am in favour of fair tax. I say it again, so that the hon. Gentleman understands. That is the problem with his party’s policy—it is unfair. If the policy is for only some civil partnerships and married couples, we could target it better. He and I share common ground on one group—people with children—whom we might want to help through the tax system. However, how on earth have we got into a situation in which only 1.4 million couples with children benefit from a proposal? That is an example of a policy that completely fails to do what he would like.
Fiona Bruce
The measure sends out a clear marker from the Government that marriage works. That is why it is important. I absolutely agree that it will not be an incentive, but I hope it will be an encouragement. I hope it is a start that will be built upon.
On old age, 90% of all care beds in hospitals and care homes are occupied by unmarried men and women. Couples who separate and who have never been married are less likely to support each other in old age and, apparently, their children are less likely to support their elderly parents.
On the positive side, the commitment that marriage requires in terms of the emotional, economic and social investment in the relationship in turn generates security, health and longevity. As we have heard, even the poorest 20% of married couples are more stable than all but the richest 20% of cohabiting couples. The health gain from marriage could be as large as the benefit from giving up smoking, leading some researchers to suggest that, if marriage were a drug, it would be hailed as a miracle cure. I could continue, but the evidence is legion.
None of that is to suggest that all married families enjoy better outcomes than any single-parent family or cohabiting couple. Clearly, there are dysfunctional married families and successful single parents and cohabiting couples. However, the weight of evidence is firmly in favour of stable, publicly committed married families being the most beneficial structure.
Steve McCabe
I am interested in what the hon. Lady is saying. I am not exactly sure what the source of the evidence she quotes is, but does the evidence draw any distinction between the impact on married couples of whom both partners work and the impact on married couples of whom only one partner works? Has that distinction influenced this tax policy?
Fiona Bruce
This tax policy increases the opportunity for choice. Many mothers and fathers want to stay at home and do not want to go have to go out to work. I appreciate that the financial implications of the policy are small but, none the less, the policy says, “We value you and your role in society if you want to stay at home.”
If we are serious about finding effective solutions to community breakdown and to the poverty that blights parts of Britain characterised by family breakdown, educational failure, economic dependence, indebtedness and addictions, supporting marriage is one way to do so. The public support that, contrary to the view of the hon. Member for Plymouth, Moor View (Alison Seabeck), who is no longer in her place—[Interruption.] I apologise. She is in the Chamber, but in a different place. I endeavoured to intervene on her because, according to a YouGov poll, 85% of people support giving financial recognition to married couples through the tax system, and 83% of the public think that tackling family breakdown is important. Even more starkly, according to the Centre for Social Justice, half of lone mothers think it is important that children grow up with a father.
Yes, the proposal will cost the Exchequer—I believe the shadow Minister said it will cost some £550 million—but that is dwarfed by the cost of family breakdown which, in 2012, had risen to some £44 billion. It is estimated by the Relationships Foundation to have an equivalent cost to the UK taxpayer of £1,470 a year each. Of course, that figure is still rising—currently £46 billion and increasing.
Support for marriage, therefore, simply cannot be dismissed as giving money to those who are already comfortable. As we have heard, this proposal will disproportionately benefit those on the lower half of the income scale, but it is much more than that. It is a matter of social justice. Supporting marriage is progressive. It is the right thing to do, not only for individuals but for the beneficial public consequences it promotes. If arrangements have beneficial public consequences, such as good environmental conduct or saving for one’s pension, it is established practice that such public benefits are recognised by the tax system. So it should be with marriage.