I beg to move amendment 3, in page 8, line 25, at end insert—
(1) Within six months of the passing of the Finance Act 2014, the Chancellor of the Exchequer must undertake a review of the impact of the tax relief for married couples and civil partners introduced under this Chapter.
(2) The review must in particular include—
(a) a calculation of the proportion of married couples and civil partners who are eligible for the tax relief in the financial year 2015-16;
(b) an assessment of the impact of this tax relief on those who are neither married nor in civil partnerships;
(c) the cost to the Exchequer of this tax relief; and
(d) an assessment of alternative tax reliefs that would benefit a greater number of families.
(3) The Chancellor of the Exchequer must publish the report of the review and lay the report before the House.’.
With this it will be convenient to consider clause 11 stand part.
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.
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.
We know what the Chancellor thinks about this marriage tax allowance. He thinks that the idea is a turkey, both politically and economically. Indeed, an article in The Daily Telegraph went so far as to say—[Interruption.] I hear groans from those on the Government Benches. The article went so far as to say that the Chancellor
“loathes the idea. He is not a social conservative and hates the notion of bribing anyone down the aisle. He has made sure the marriage tax break will not come into effect until the very last weeks of this government—and it will be so small as to be unnoticeable. To resolve the impasse, Treasury officials were asked to see whether they could dump the agenda on to Iain Duncan Smith, so the Chancellor could wash his hands of it. But a tax cut has to come from the Treasury.”
I am sure my right hon. Friend the Chancellor is touched by the hon. Lady’s warm support. Will she share with the House her thoughts on, and specifically answer, the question asked by my hon. Friend Tim Loughton? Why did the Labour Government do nothing to support the institution of marriage in 13 years?
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 Tim Loughton does not seem to acknowledge the fundamental issues with the Government’s proposal.
“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.”
Order. I think we need shorter interventions rather than speeches—I would sooner save your voice for later.
On the basis of my hon. Friend’s insightful intervention, I am looking forward to his speech on this matter. He makes the point well, and it is the point that I am seeking to make. As the Chief Secretary to the Treasury has said:
“This policy is not about children and families…it does nothing for millions of families with children struggling to make ends meet.”
Does the hon. Lady agree that although this marriage allowance is not going to persuade people to go or not to go down the aisle, it does recognise what marriage and stable relationships really bring both to children and to the couples? Does she think that in 13 years the Labour party might perhaps have considered it?
Today, we are discussing the merits of this Government proposal in this Bill. We think it is a dud of a policy, and the Chancellor and the Chief Secretary seem to think so, too. I will set out all the reasons why it is a dud, but talking about whether the previous Labour Government considered this policy does not address the issues we are debating today—this policy and our amendment to it. If Government Members are so keen for there to be genuine support for families, for children and for marriage, they should welcome our amendment proposing a proper review on the impact of the tax relief that the Government are suggesting as part of this Bill and exploring alternative tax reliefs that could benefit a greater number of families and, potentially, a greater number of married couples, given the Government’s proposition’s clear deficiencies in recognising most marriages.
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.
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.
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.
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.
I am grateful to my hon. Friend for giving way and for making such powerful points. When these points are put to the Government, they always say that the financial circumstances are such that there must be cutbacks somewhere. Is it not ironic that the Government are putting forward a policy that is so badly thought out that if anyone were asked to choose a priority for public spending, this would not be it? Should we not be taking real measures to tackle problems such as the bedroom tax and the changes in universal credit, all of which will cause much more damage than any benefit that this will bring about?
Order. I appeal for shorter interventions. We have time, but Members cannot make a speech as an intervention.
My hon. Friend is right to highlight the disproportionate benefit of the marriage tax break to men. Does she not agree that the argument that couples will benefit as a unit completely fails to recognise financial coercion in relationships, and that those who get the money have the power?
My hon. Friend raises an important point and it goes to the heart of so many of the changes that this Government have made. So many of the decisions that they have made time and again in Budget after Budget have hit women hardest. Back in September 2011, a leaked No. 10 memo admitted that the Government had a problem with women, and promised a new communications campaign to turn things around, but it clearly has not worked. A key recommendation of a No. 10 communications campaign to be female friendly was to “focus on more visible women leaders”, but until this morning women made up only four of the 23 Cabinet members and that figure is now down to three. Let us not let the Deputy Prime Minister off the hook. Only four out of 25 Lib Dem Ministers are women—[Interruption.] Government Members are shouting, “What has that got to do with this measure?” I wonder whether one of them would like to intervene.
During her research for the debate, did the hon. Lady become aware of the fact that 93% of young teenagers still living with both parents are with married parents? That is quite a powerful statistic.
That is an interesting statistic. I know that the hon. Gentleman is committed to the principle of this measure, but I and other Opposition Members are trying to make the point that the policy is not only dud as regards its practical application but further compounds the unfairness in how the Government have made their decisions in Budget after Budget. Let us remember when hon. Gentlemen question what my point has to do with this measure that we know that the majority of gainers from the policy are men.
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.
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.
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.
We must consider this clause in the context of the current situation. We know that families up and down the country—in fact, all households—are facing a cost of living crisis. We have had three years of a flatlining, stagnating economy and households up and down the country have been paying the price for that. We have a Government who are introducing measures that will benefit a small proportion of married couples—only one in six households with children—and under which 84% of the gainers will be men, when we know that those who have paid the bulk of the price so far for the deficit reduction strategy that the Government have been pursuing have been women. It is a question of priorities, and this Government seem to have them completely wrong.
I think that Government Members would love to try to whitewash and erase from the memory of the public the past four years, three of which have had zero—that is, flatlining—growth in the economy. People will be £1,600 worse off on average in 2015 than they were in 2010 and whatever growth is happening in the economy now is happening despite, not as a result of, the Government’s economic policies. I urge hon. Members to exercise caution in saying that everything in the garden is rosy when people out there are struggling to make ends meet.
I am following the hon. Lady’s speech with great interest. For completeness, so that we have the full picture, can she say what proportion of tax is paid by men and what proportion of benefits are paid to women?
I am pleased that the hon. Gentleman has entered the debate, because the Liberal Democrats are key to today’s measure, and I shall go on to explain why. I think we know that there is long-term inequality. The mere fact that 85% of those who benefit from the tax cut from 50p are men speaks volumes about how this country is weighted. The majority of wealth is held by men. I understand the hon. Gentleman’s point, but I urge caution as the Liberal Democrats are in an interesting position today when it comes to how they will vote not only on this measure in the Bill but on our proposed review.
Does my hon. Friend agree that there is evidence stretching back over several decades that shows that when money is paid to the main carer of a child, usually the mother, that money is more likely to be spent on the children? A Government about to preside over a startling rise in child poverty should be mindful of that when they introduce a measures such as this.
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.
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.
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.
My hon. Friend is making a good case for the amendment. Only a third of families will get £200 a year extra, but the average family will be £974 a year worse off by the time of the next election, which shows the iniquitous state of affairs that the measure will create.
My hon. Friend makes an important point. I would add that it is not a third of families who will gain from the policy—it is a third of married couples. Five in six households with children, whom many would consider to be families—particularly the Opposition, but perhaps not the Government—will not gain anything from the policy, which only compounds the child poverty issue about which the Government seem complacent.
Does my hon. Friend not agree that the reading of the figures by Tim Loughton was highly selective? Perhaps the bottom half of the income distribution scale benefits from the measure, but the very poorest will not benefit at all, because they are not tax payers.
Absolutely. That is why many people, including married couples, will not gain anything from the policy, which is why I am astounded by the vehement support for a policy that does not properly recognise marriage in the tax system, which Government Members are usually keen to do.
To conclude the point that I am making about the impact of the measure, I shall give one example of the women who are particularly hard hit by it: low-paid, new mums, who are losing almost £3,000 during pregnancy and their baby’s first year as a result of cuts to child benefit; cuts to the health in pregnancy grant; the axing of the higher rate of tax credit for families with babies under one; restrictions in the Sure Start maternity allowance; and the Chancellor’s “mummy tax”, which will cost new mums £180 by 2015 in real terms—not to mention cuts in public services and the disappearance of Sure Start centres, with three closures a week, which will impact on mums, dads, families and, indeed, married couples up and down the country for years to come.
The policy is a total turkey in terms of its reach and the benefits it brings. Even the Chancellor thinks so, as does the Chief Secretary to the Treasury—and I am sure that we will hear what the Exchequer Secretary thinks later in the debate—but what about its cost and complexity? Surely, Ministers must have learned from the child benefit fiasco, and would not seek to introduce a new, complex aspect to the taxation system—that fiasco must have given them a few grey hairs—or one that might require significant additional administration and input from the taxpayer. Oh—but they are doing so! Her Majesty’s Revenue and Customs has issued a tax information and impact note on the policy that suggests that it will have an Exchequer impact of £515 million in 2015-16, rising to £820 million by 2018-19.
The note is a little less candid about how much the policy will cost HMRC to administer and how many additional staff will be required at a time when the HMRC budget has been slashed and its work force significantly depleted. It simply states:
“HMRC will incur additional costs on the introduction and administration of the transferable allowance. The highest expenditure will be in 2015-16, when HMRC will introduce the application processes to enable everyone who is entitled”— which is not many—
“to benefit from the transfer. During 2014-15, HMRC will refine its costs as part of its work on the new IT to provide on-line services for customers, other customer support and the new internal IT to link spouses and civil partners’ income tax records.”
Given the lack of clarity in HMRC’s impact note, I submitted a written question on the issue, to which the Exchequer Secretary kindly replied and explained:
“The detail of how this policy will be administered by HMRC is being developed.”—[Hansard, 12 February 2014; Vol. 575, c. 642W.]
Perhaps the Exchequer Secretary would enlighten us about exactly what impact the policy will have on HMRC, which is already coping with the loss of 18,700 full-time equivalent staff, or 26% of its work force, between 2010 and 2016? Equally concerning is the impact that the policy is expected to have on employers. The Government’s tax information and impact note neatly sums up the problem, clearly stating that
“it is estimated that in 2015-16, the cost across 1.6 million employers and pension providers of processing PAYE tax codes to reflect transferred allowances may be up to £5.8 million. In subsequent years, the additional cost across employers and pension providers may be up to £0.8 million. There are also likely to be negligible one-off costs in 2015-16 due to employers and pension providers familiarising themselves with the change to the legislation.”
The cost to employers of processing this shabby policy is thought by the Government themselves to be up to £5.8 million in its first year. Surely there are better ways for that money to be spent. The Institute for Fiscal Studies indicates that the precise costs of this policy for the Government, HMRC and employers
“will depend on the rate of take-up, as people will presumably have to make an active claim to HMRC to benefit, and the extent to which individuals change their behaviour in order to qualify.”
My hon. Friend will have attended previous debates on this issue. Indeed, only yesterday in the Chamber, lectures were being given by Government Members about the need to simplify the tax code. Does she not find surprising the support for measures such as the one that we are debating today?
Indeed. Government Members often lament red tape and the complexity of the tax system. I am not entirely sure that they will be thanked for adding to it in this way and putting the burden of implementation on employers.
The apparent onus on taxpayers proactively to apply for this allowance is a concern that has been raised more widely. The Low Incomes Tax Reform Group has pressed the Government to ensure that a claim for the marriage tax allowance can
“be made on paper, as well as online; digital exclusion affects disproportionately people on low incomes, the very people to whom this relief is directed. It is particularly important that a paper copy is available since, in some cases, taxpayers will seek assistance from the voluntary and charitable sector with, perhaps, only one spouse being physically present at such meetings.”
LITRG goes on to urge that
“the claim/election process will be made as simple as possible—preferably a joint election rather than separate claim and election.”
I look forward to the Minister’s response to those concerns.
The complexity of the Government’s marriage tax allowance proposal has been commented on by the IFS, which stated, when the measure was first announced:
“One striking feature of the policy is that it complicates the income tax system. A transferable personal allowance for married couples capped at £1,000 and then withdrawn using a cliff-edge at the higher-rate threshold is not the simplest to understand. It is three years since another cliff-edge at the higher rate threshold was announced at the 2010 Conservative Party conference as a way of effectively means-testing Child Benefit, only to be removed and replaced with a less egregious taper at Budget 2012. The amounts involved here are less than in that case, which perhaps explains the willingness to cliff-edge again rather than implement a taper. Nevertheless, 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.”
One might think that, as my hon. Friend Sheila Gilmore pointed out, a Government who have so boasted about being committed to tax simplification would want to avoid further complicating the system. At the launch of the Office of Tax Simplification, the Chancellor commented:
“A decade of meddling and intervening has made the tax affairs of millions of families and businesses across the UK extremely complicated. We need to sort out this mess.”
What does the Office of Tax Simplification make of the marriage tax allowance, which will clearly make the tax affairs of couples and employers more complex? We do not know because, in the words of the Exchequer Secretary in response to a written question I tabled:
Why on earth not? What could Ministers possibly fear from the outcome of such an assessment?
It may be clear now that the Opposition oppose the Government’s marriage tax allowance and will vote against clause 11. We believe that the marriage tax allowance is perverse and unfair. It is a poorly targeted use of resources and is overly complex, and our amendment to clause 11 presses the Government to undertake a proper review of the cost, the impact and the benefits for those who will receive it and for the overwhelming majority of married couples and families who will not benefit at all.
Amendment 3 calls on the Government to ensure that any such review includes an assessment of alternative tax reliefs that would benefit a much greater number of families, because we are not just opposing the marriage tax allowance today. Indeed, we have said that a future Labour Government would scrap this policy and use the money saved, together with funding from a mansion tax on properties worth over £2 million, to reintroduce the 10p starting rate of tax, meaning a tax cut for 24 million people on low and middle incomes, by contrast with the 4.2 million couples who will benefit from the marriage tax allowance. Crucially, almost half of those benefiting from a new 10p tax rate would be women.
We know that the Liberal Democrats are apparently implacably opposed to the policy introduced by clause 11 and secured a deal in the coalition agreement to go so far as to abstain on the measure. I believe it was before the 2010 general election that the now Deputy Prime Minister described the Conservatives’ proposal for a transferable tax allowance for married couples as
“patronising drivel that belongs in the Edwardian age.”
I know that Liberal Democrats have, as some might say, an irritating habit of saying one thing before a general election, then doing precisely the opposite—university tuition fees and the VAT bombshell spring to mind—or of saying one thing at any point in the electoral cycle and doing precisely the opposite: for example, 46 Lib Dem peers voted to retain the bedroom tax just 24 hours after their party president, Tim Farron, said it was something his party could not “continue to support”.
Although the Liberal Democrats may be thinking about abstaining on clause 11 as it stands, it is difficult to see how they could sit on their hands this afternoon and vote against our reasonable amendment.
We know that the Lib Dems apparently secured the policy of free school meals for every child in reception, year 1 and year 2 from September 2014, reportedly in exchange for agreeing to abstain on the marriage tax allowance. We of course back the policy, having piloted the idea in government in County Durham and Newham, with excellent results, but there are very real concerns about the way in which the policy was announced, and how it will be implemented. The initial pledge was for a “hot, nutritious meal at lunchtime”, but that is now being described as an aspiration. Ministers are now simply referring to a free, nutritious school lunch.
Many thousands of schools across the country simply do not have the facilities to ensure this provision. The Liberal Democrats have stated that around £80 million of the additional £150 million capital funding required for the project will come from an underspend in the Department for Education and an additional £70 million would be new money from the Treasury. [Interruption.]
I hear hon. Members on the Government Benches chuntering from a sedentary position. They seem very disturbed by the Liberal Democrat policy of free school meals and do not see how it is linked to the marriage tax allowance. Would they like to confirm that that was not an agreement, as has been reported?
Order. The advice is not needed. There is a definite link, and if Members were to listen a little more closely, they would understand where the link is between the choice and where the money can be spent. Less advice and more listening might help all of us.
I thank the Deputy Speaker for his clarification. The link is clear. It is to do with the allocation of resources and the agreement that has been made. It also goes fundamentally to the heart of the Liberal Democrats and how they intend to vote on the matter. We believe they are likely to abstain on the measure, although we have not had that confirmed. We hope and assume that although they will abstain on the Government’s motion in relation to implementing the marriage tax allowance, they will support our call for a review. If the measure goes through, they would have as much of an interest as we would in ensuring that it is properly reviewed and monitored in the months to come, and that the Government take seriously the proposals for possible alternatives that benefit a larger number of families throughout the country.
The Opposition believe that the money allocated to the marriage tax allowance could be put to much better use elsewhere. That is why we have pressed the Chancellor to scrap it, and to use the money to give tax help to many more working people instead, including more married couples and more families.
The Bill is inadequate as it entirely fails to recognise the cost of living crisis facing many households, including families and married couples, throughout the country, and does nothing to address the problems that people are facing. The review proposed by amendment 3 would be an important first step in looking at how the Government can allocate the available resources to help more people than a few carefully selected types of married couples who they have deemed should benefit.
Does my hon. Friend agree that one of the problems of the married couples tax allowance as proposed by the Government is the situation of what might traditionally have been called the deserted spouse, often the wife who was left? What would happen in that situation? That is a very real issue to be answered.
Order. May I say once again that we must have shorter interventions? I know that many Members wish to speak. We have been going for a long time and have not even got to the Back Benches yet.
I would be interested to hear what Government Members think about the fact that this provision could very much reward men who desert their spouses, leave them with the children to care for, and then receive a tax benefit, but only if they marry the woman they ran off with.
I will be interested to hear what the Minister and Government Back Benchers have to say about the total inadequacy of this policy in terms of its outreach, implementation, cost to Her Majesty’s Revenue and Customs, and cost to employers to implement. I urge all hon. Members, particularly the Liberal Democrats, although they are severely under-represented today, to support us. We are grateful to Ian Swales for being here. I hope that he will not sit on his hands and will back our amendment.
For the avoidance of doubt, I will be voting against Labour’s amendment. Although Catherine McKinnell is a very engaging spokesman for her party, her speech was mischievous, disingenuous, mealy-mouthed, patronising, leftie drivel—typical middle-class, tofu-munching, Guardian-reading Labour nonsense that said, “We know best what’s good for working people, not you.”
The hon. Lady referred to our friends the Liberal Democrats. I am disappointed that more of them are not here. It is awfully hard to dislike the Liberal Democrats, but it is well worth the effort.
I am delighted that in clause 11 the Government have brought forward this very important change in the tax system, for which I have consistently campaigned since the last general election. We retain the bond of trust with the electors by introducing a proposal that we promised at that time to introduce by the 2015 general election.
I assure the hon. Gentleman that I do not eat tofu, although I do not think that those who do need to be quite so insulted. Are we to assume from his comments that he is wedded to this policy regardless of how inadequate its reach and implementation will be?
The hon. Lady’s comic timing is exemplary. I will develop my more detailed arguments, if she will allow me, given that she had the thick end of 46 minutes to develop her own. That is probably the record for an Opposition spokesman—or spokesperson—although I accept that it was on the Opposition’s amendment.
This has been a long time coming—
Indeed—47 minutes, as my hon. Friend says. However, it has definitely been worth waiting for.
In presenting a 10% partly transferable allowance, clause 11 may not yet be worth a huge amount, but it is of seminal importance in supporting marriage in the tax system. For the past 15 years, our tax system has been unusual in not recognising marriage, or indeed any other aspect of family responsibility. Our fiscal policy has been extraordinarily individualistic. Clause 11 changes that by inserting into our system of independent taxation the transferable allowance that former Chancellor Nigel Lawson, the architect of independent taxation, has argued it always should have had. I genuinely believe that qualifying the individualism of our current fiscal policy should be something we can all agree on, and that should appeal to Labour Members. The Opposition spokesperson failed on two occasions to answer the specific question of why, in 13 years in office, her party failed to support the institution of marriage in the tax system in any meaningful way. That is regrettable on her part, because it is disingenuous to say, “We disagree with the policy but, incidentally, this is how you can improve it.” It is churlish and mean-spirited from a party that claims to support the family in the tax system, and children as well.
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 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 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?”—[Hansard, 2 June 2010; Vol. 510, c. 428.]
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.
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.
Not at the moment. I know the hon. Lady is very keen, and I am sure she will try to get in later.
Given the scale of the public benefits associated with marriage, it is not at all surprising that most people in the developed world live in countries that recognise marriage, as I said earlier in an intervention. There are numerous examples of this benefit that I could highlight, but given the constraints on time I will mention just a few. Regardless of socio-economic status and education, cohabiting couples are between two and two and a half times more likely to break up than equivalent married couples. Women and children are significantly more vulnerable to violence and neglect in cohabiting, rather than married, families. Three quarters of family breakdown in families with children under five comes from the separation of non-married parents. Children are 60% more likely to have contact with separated fathers if the parents were married. Separated fathers are more likely to contribute to their child’s maintenance if the parents were married. Growing up with married parents is associated with better physical health in adulthood and increased longevity. Children from broken homes are nine times more likely to become young offenders, accounting for 70% of all young offenders.
I respect the fact that the hon. Gentleman is being very careful with his use of words in saying that there is an association between marriage and some of the outcomes he describes. What he cannot demonstrate, however, is whether there is cause and effect, because we do not know whether there are other personal characteristics that make those couples more likely to be married and whether they also result in those beneficial outcomes.
I will not take issue with the hon. Lady’s intervention, because it is quite sensible. Nevertheless, the evidence-based data in support of marriage in the tax system have been accumulated over a very long period and are very clear. It is incumbent on the Government not to disregard that evidence, but to take account of it in formulating their fiscal policies.
The list goes on and the findings are put in context by the fact that the Relationships Foundation calculates that the costs of family breakdown amount to £44 billion per annum and that family breakdown outside marriage is the real driver. As the Centre for Social Justice has demonstrated, of every £7 spent as a result of the breakdown of young families, £1 is spent on divorce, £4 on unmarried dual-registered parents who separate, and £2 on sole-registered parents. That is why the Prime Minister was absolutely right to say in response to a question about how the policy could reduce the deficit:
“If we are going to get control of public spending in the long term in this country, we should target the causes of higher spending, one of which is family breakdown. We should do far more to recognise the importance of families, commitment and marriage”.—[Hansard, 2 June 2010; Vol. 510, c. 429.]
I am aware of the arguments that the relationship between marriage and better policy outcomes is merely a coincidence and that the real driver for those better outcomes has nothing to do with marriage and is based on other considerations, especially income. Those arguments simply do not make sense. Apart from anything else, the fact that the millennium cohort study demonstrates that the poorest 20% of married couples are more stable than all but the richest 20% of cohabiting couples makes it plain that marriage is a significant, independent determinant of stability.
Will the hon. Gentleman consider the involvement of other variables? For example, those who are married are likely to be together for longer than those who are not and who split up, and the length of the relationship is likely to contribute to the stability of the children and their relationship with their parents.
I accept that, which is why I think it is unbecoming to focus on £3.85. We are not arguing that this is merely an issue of monetary transaction. It is about accepting that the inherent benefits of marriage are good for the individuals involved and, principally, their children, as well as for families, communities and society as a whole. We have the evidence.
Is my hon. Friend aware of the work of Harry Benson of the Bristol Community Family Trust, who has found that during early parenthood the single biggest predictor of stability is whether parents are married, even when age, income, education, benefits and ethnic group are taken into account?
My hon. Friend makes a very strong point. I pay tribute to her for the work she has done in this area and I hope she will continue to do it. I look forward to hearing her contribution later.
Does not the hon. Gentleman’s argument highlight the inadequacy of the Government’s proposals, in that they benefit only a third of married couples and only one in six households with children? If they want to recognise marriage in the tax system, they should recognise marriage, not a certain type of marriage and a certain few married couples.
The hon. Lady is engaging in a certain degree of amnesia. When her party was in government, it took 7% out of this country’s gross domestic product during the financial crisis. It left us with a disastrous legacy of debt and a huge deficit, which meant that we had to take very difficult decisions. We have to lay the blame for that at her party’s door. That is why we cannot be more innovative in how we approach the tax system. We are, as always, constrained by the legacy of a disastrous Labour Government. Labour always leaves office with more people jobless and the country in trouble.
I will give way later, because I am sure the hon. Lady will not forget my comments.
The purpose of clause 11 is not to try to make people get married, but to remove the obstacles to those who wish to marry, which is different. Marriage should at the absolute minimum be a credible, accessible option for all eligible couples. However, the failure of our income tax system—unlike that accessed by the majority of people living in Europe—to recognise marriage means that the fiscal obstacle to marriage is a real concern. The size of the couple penalty in this country, as outlined by the Institute for Fiscal Studies, is deeply worrying.
No, I will not give way—not even to the hon. Lady.
As others have noted, the social policy charity Christian Action Research and Education conducted an annual international tax comparison for 2012—the latest year for which we have comparative data—which demonstrated that the burden on a one-earner married couple on an average wage was a significant 45% greater than the OECD average.
It is not acceptable that we should make the option of marriage inaccessible in this country, and so much more so than the OECD average. Clause 11 will take a vital first step in the direction of addressing that problem, but the limited nature of the partially transferrable allowance means that it will only begin to erode the incentive not to marry. We must go much further in the next Parliament to create a genuinely level playing field. Given the huge public policy benefits of marriage, there is a compelling case for a nudge to marry, although a level playing field would be a massive step forward.
I am sorry, but how many people in this Chamber thought, “Oops! I can’t get married because I’ve got a fiscal obstacle in the way,” given that the average cost of a wedding is about £10,000?
I know that this debate is apposite because the hon. Lady recently tripped along the path of happy matrimony, on which I congratulate her, albeit belatedly. I am not sure whether the issue of £3.85 came into it for Mr Raynsford.
If I could move on before we dwell too long on the hon. Lady’s love life, I have read in many places that the provision discriminates against widows and widowers, people who leave abusive relationships and working couples. The hon. Member for Newcastle upon Tyne North regurgitated that argument earlier, but it completely misunderstands the policy.
First, if the widow or the widower was the homemaking spouse, their personal allowance would not die with their working spouse; it would automatically return to them so they could benefit if they re-entered the job market. Secondly, dual-earner couples already benefit from individual personal allowances, so they are already benefiting from both allowances. Thirdly, on those leaving abusive relationships—this is a very important issue and it would be remiss of the hon. Lady not to raise it—if a marriage ends, the homemaking spouse, who had previously transferred the tax allowance to their spouse in paid employment, would be required to take back their allowance because the marriage had ended. It would not be stolen from them by their former spouse.
If the argument is that this policy does nothing for widows and widowers, my response is that that is true of many policies. Most policies have a sharp focus: if we responded to every policy solution by saying, “What about those who won’t benefit?” the implication would be that we should introduce only polices that affect everyone equally. However, in the real world, where we often need specialist and focused policies, that is simply not possible. There is nothing to stop us bringing forward another policy specifically to help widows and widowers—I am sure that Treasury Ministers are listening on that issue—and public policy makes provision for them in other ways. Many widows and widowers were once in one-earner families and will therefore welcome clause 11 for family members who are now in such a position. In short, I warmly welcome clause 11.
On the current drafting, the failure to make provision for a tapered withdrawal of the 10% transferable allowance is an oversight that should be corrected for fairly obvious reasons. I very much hope that the Exchequer Secretary will put that right through a Government amendment on Report.
I congratulate the Prime Minister and Chancellor on introducing this seminal provision. I very much hope that the whole House will recognise its significance in qualifying the individualism of our tax system and reinserting some recognition of the importance of family responsibility. It is a first step that will help to make the option of marriage less inaccessible to those on average and below-average incomes, because it is about social equity as well. We must build on it in the next Parliament; and with a majority Conservative Government, we will.
It is always interesting to follow 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.
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 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.
“it offers a marriage tax allowance which will help only a third of married couples, rather than a 10 pence starting rate of tax which would help millions more families”.
Coming from a party that dispensed with a 10p tax rate when it was in government, those reasons show inconsistency and brass neck, while the opening speech of Catherine McKinnell made a good case for extending the transferable married couple’s tax allowance to make it fairer and more inclusive.
Amendment 3 does not offer outright opposition. It is a fudged amendment, which calls for a review, including
“a calculation of the proportion of married couples and civil partners who are eligible…;…an assessment of the impact…;…the cost to the Exchequer…; and…an assessment of alternative tax reliefs”.
For starters, we know all that. There is a contrast between that and the Labour Opposition’s new clause 1 on child care provision, which was considered yesterday. It asked for a different sort of tax relief or public subsidy, but it did not have any conditions attached to it about a review after six months, a calculation of the proportion of people who benefit, or an assessment of its impact.
The Opposition are entirely disingenuous and inconsistent. Why do they not just come out and say, “We fundamentally—completely and utterly—disagree with and oppose the concept of transferable married couple’s tax allowances”? Why have they not done so in the amendment that we are debating? That would have been more honest, and we could then have had a proper debate. I think that the Opposition are being disingenuous.
On the subject of inconsistency, the hon. Gentleman voted against giving same-sex couples the right to marry, so having opposed that union, does he now support their having a tax break?
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 Catherine McKinnell 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.
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.
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.
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.
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.
Very simply, because the number of marriages went down. The change in the divorce rate is a simple statistical manifestation of the number of marriages.
The role of the Liberal Democrats, who are heroically represented here today by the lone star hon. Member for Redcar (Ian Swales), have perhaps been more honest about the married couple’s tax allowance, which they have never supported. Their leader has some bizarre reasons for not supporting it, but they have been absolutely honest. If they had not been involved in some sort of deal, of which we are completely oblivious, they might have been here to vote against the measure, and of course we are very disappointed that they are not here.
The measure will benefit 4 million couples, including 15,000 in civil partnerships and hopefully a good many who adopt the new status that Fiona O'Donnell mentioned earlier. My hon. Friends and I welcome the last-minute inclusion of the transferable married couple’s tax allowance in this Finance Bill. The allowance was promised in our manifesto, and it will initially be worth up to £210, but I contrast that with the up to £10,000-worth of subsidies rightly being made available for child care assistance—albeit that that will be available also for higher rate taxpayers whose household earnings may be as high as £300,000—which is still very far from a level playing field. That is why some of us, when the economy has recovered to the extent that it needs to recover after the car crash of 13 years under Labour, ultimately want to see a fully transferable married couple’s tax allowance—the full £10,500-worth, not just 10%. The married couple’s tax allowance is linked to the personal allowance in the Bill.
As with other Government Members, the hon. Gentleman is making a passionate case, but we are considering the detail of the policy. Is he not concerned that the policy will effectively introduce a new 20% tax rate below the personal allowance as the married couple’s tax allowance is progressively withdrawn on the second earner between £9,500 and £10,500?
The hon. Gentleman is being most generous. He mentioned that his long-term aspiration is for the transferable allowance to be extended to the full £10,000 of the personal allowance. Does he know what the distributional implications of that would be?
“The risk of poverty is much higher for children in couple families where only one parent works; sole earner families account for a significant minority of poor families with children. Many fathers”— this applies to mothers, too—
“have to work long hours, making it harder for them to get involved in family life and more difficult for mothers to work. To enable more low-income families to have both partners in work”.
The Joseph Rowntree Foundation makes a case for why such recognition helps lower paid families, too. My long-term aspiration is that we should fully extend the allowance, but at this stage, as I stated in my proposed amendment to last year’s Finance Bill, I would like us to concentrate on families with children under the age of five. If it meant that we could extend a more generous allowance to families with children under that age, I would be happy for the allowance not to extend to married couples generally. Such an amendment has been costed at between £700 million and £750 million, which is affordable in the context of what else is happening.
What is the hon. Gentleman’s definition of a family? He keeps talking about families, rather than married couples with children. Does he consider a family—I hope this is not what he intends—only to be one in which a couple is married?
I am talking about married couples, which now take different forms. As we have already discussed, the definition includes same-sex marriages, civil partnerships and conventionally married couples. That is to whom the allowance should apply, which has never been in doubt. The allowance is about making it easier for parents to choose the best way to bring up their children. Frankly, it is insulting to describe the measure as discriminating against single parents.
I am about to address the hon. Lady’s point. She may then want to intervene.
Most single parents are not single parents by design or intention. Many are single parents because they have been deserted, subjected to violence or for other reasons, and they are doing an incredible job of bringing up children in very difficult circumstances. We are doing things for them and we probably need to do more for many of them. However, that should not preclude our wanting to do more for people who get no recognition whatever in the tax system, who are also often bringing up children in difficult circumstances. Just because one is in favour of introducing a transferable married couple’s tax allowance, the implication is not that one is in some way against people who happen to be single parents or to be bringing up children on their own. It is a typical Labour argument that if someone is for something, they must be against something else. This is about achieving a much more level playing field for people who choose to engage in a relationship of marriage.
I thank the hon. Gentleman for giving way. If he will allow me, I will read a text that I have received from one of my constituents. She says:
“As one of YOUR 38%…nonsense I and kids should be disadvantaged because I chose to leave abusive relationship and bring them up alone in happy home!”
I am really sorry, but that is the view of the public on this measure.
That is the view of one constituent who has not yet listened to the whole debate. Introducing a married couple’s transferable tax allowance in no way disadvantages that constituent. [Interruption.] In what way is she financially disadvantaged? It is a typical Labour response to say that if someone is in favour of something, they must be anti something else. I am in favour of doing a lot more for constituents who find themselves in that position through no fault of their own and who need help, support and recognition. However, there are also many married couples who need support in bringing up their children, often in difficult circumstances. Just because we want to help them, it does not mean that we are disadvantaging somebody else.
Of course, everyone in every part of this House is against abuse in any type of relationship. If we want to reduce abuse, does my hon. Friend agree that we should recognise that women and children are significantly more vulnerable to violence and neglect in cohabiting families than in married families? What we are doing today is part of addressing that issue.
My hon. Friend has done a great amount of work on this issue and there is a much bigger picture.
This policy is popular among the public. It is popular with a majority of Labour voters. It is even popular with an awful lot of Liberal Democrat voters, despite that party’s policy being against it. Last May, the Liberal Democrat Secretary of State for Business, Innovation and Skills attacked the “prejudice” directed at stay-at-home mothers. I am sure that he would have included stay-at-home fathers to be inclusive. It is deeply insulting to the many millions of married couples who have decided to make a lifelong commitment to each other that is recognised in law in front of their family and friends to suggest that we are discriminating in some way against other people.
Some 90% of young people aspire to get married. Some 75% of cohabiting couples under the age of 35 also aspire to get married. There are many forms of family in the 21st century and many people do a fantastic job of keeping their families together and bringing up children, often in difficult circumstances. However, as many of my hon. Friends have said, almost uniquely among the large OECD economies, the UK does not recognise the commitment and stability of marriage in the tax system until one partner dies. Worse still, one-earner married couples on an average wage with two children face a tax burden that is 45% greater than the OECD average, and that gap continues to widen.
To introduce such a recognition of marriage, particularly in the modest form suggested in the Bill, is not to disparage parents who find themselves single through no fault of their own, nor to undermine couples with two hard-working parents, all of whom rightly get help and support from the state in other forms and for whom we might need to do more. Uniquely, married couples, civil partners and same-sex marriage partners are discriminated against in our tax system.
My hon. Friend is making a powerful and fluent case. He spoke about the popularity of the policy with Labour voters. Is it not also the case that significant polling evidence shows that young people across all classes, ethnicities and races support the institution of marriage and hope one day to be part of it?
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 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.
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 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 Sir Gerald Howarth is a keen advocate of civil partnerships, I guess that they have missed his speeches and blogs in recent years.
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.
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.
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 Dr Coffey has something stuck in her throat. If she wants to intervene, I—
Order. We are not having two Members on their feet. Let us see if I can help—Mr McCabe, are you giving way?
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.
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. 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?
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?
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.
I agree entirely with many of the Tory MPs who wrote to The Daily Telegraph about the policy in one respect: the benefits of marriage to society do not depend on one’s tax code. It is a failing to make that judgment—it is failing that means that we exclude widows, single parents, deserted mothers and cohabiting couples. They have the same right to benefit from the Government and the tax system but are excluded. That is why the policy is wrong. A Government can do many good things to encourage stable relationships and family life. Unfortunately, this policy is a phoney, misguided and poorly targeted measure. It simply is not one of the good things that we could do.
I support clause 11, and acknowledge and support the excellent speeches made by my hon. Friends the Members for Peterborough (Mr Jackson) and for East Worthing and Shoreham (Tim Loughton). I support marriage, not for moral, religious or ethical reasons, but because, as they said, and as all the evidence shows—I shall provide evidence shortly and will not be deterred by the fact that others have quoted it—marriage promotes stability, security and better life outcomes for children; improves health and well-being for the parties to the marriages, notably as they age; and strengthens the wider community, as those in married families are more likely to be actively involved in it.
The Opposition, as the debate has shown, do not get it that the proposal benefits not only those couples who will receive the allowance, but the much wider society. Supporting the proposal, and supporting marriage through the tax system, is a matter of social justice. Underlying so many social problems that the country faces is the problem of family breakdown and, in particular, family breakdown outside marriage. Many hon. Members are reluctant to talk about that for fear of being branded judgmental, but the fact is that helping to strengthen health and well-being through supporting marriage is to help to tackle a key, root cause—relationship breakdown—of so many contemporary problems, such as addiction, abuse and mental health issues, and the increasing problem of acute loneliness, especially in old age.
The proposal is even more a matter of social justice because, as the Centre for Social Justice reports, indications show that, whatever the liberal press might say, the better off in our society get the fact that the benefits of marriage are worth buying into and are marrying while the less well off are increasingly not getting married. According to the CSJ, that is causing a widening gulf between better-off married people and less well-off unmarried people. The latter do not access the health and well-being benefits that I and other hon. Members have mentioned and that marriage can bring. Rather, they are falling into an increasing cycle of negative outcomes and social instability, which is inter-generational. If we really care about building a society that promotes social equality rather than inequality, and one that offers a key route out of poverty for those who may otherwise be trapped within it, and if we are really serious about social justice, one key policy is backing marriage.
As my hon. Friends the Members for Peterborough and for East Worthing and Shoreham have stated, the statistics are stark. Children aged five are five times more likely not to be living with both parents if their parents are not married. The position is far worse for children aged 15. Women and children are significantly more vulnerable to violence in unmarried families. Teenagers living outside married family relationships have much higher delinquency rates than others. Seventy per cent. of young offenders come from unmarried families. The prevalence of mental health issues among children living outside married family relationships is 75% higher than among children of married parents.
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, publically committed, married families being the most beneficial structure.
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?
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 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.
Is there any provision that would mean that people who have been together as a family—a man and a woman, with children—for a certain period of time, say five years, would be able to count in the same way as being married to get the tax break? The benefits would then be almost the same, would they not?
The benefits that are proposed in this clause are for married couples. That is the way in which our society recognises a permanent and lifelong commitment that is intended by the parties.
Of course I would like to see more, but I welcome this positive start. I would like to see a department for families, a dedicated family policy across government and greater investment in relationship education for young people, both in school and later for those embarking on relationships or contemplating having a family. In the meantime, I fully support this proposal. It will encourage marriage and sends out an important signal that, for the first time in a long time from the Government, marriage is valued in our society—something the last Government never did. It places Britain in the position of recognising marriage in the tax system, whereas we were the only country in Europe not to do so. Is it any coincidence that the UK has one of the highest levels of family breakdown in Europe? We have to do what we can to change that, and this is one way. As the Prime Minister said, this change will provide support. Our support for families and marriage puts us on the side of a progressive politics and on the side of change that says, “We can stop social decline, we can fix our broken society and we can make this country a better place to live for everyone.”
I am pleased to follow Fiona Bruce and I certainly will not yield one inch to her in the value I place on the importance of marriage. Like her, I am a member of the Mothers’ Union, the Church of England organisation that promotes and supports stable family life in this country. However, she is making a mistake. The undoubted benefits of stable relationships could be far better encouraged by the Government in several ways: if, for example, resources for tackling domestic violence were not being reduced; if, for example, we had compulsory sex and relationship education in schools that prepared people for healthy adult relationships; and if, for example, we had a decent child support system that did not incentivise the non-resident parent to ignore their responsibilities to their children, because that is what is happening. Instead of tackling those real problems, or looking at the factors that put families under stress—debt, long hours and zero-hours contracts—the hon. Lady ignores them. She does not understand that those factors are the cause of rows, tension and stress in families. If Government Members turned their attention to policies that would make a real difference, instead of faffing around with this fatuous married couple’s allowance, families would be a lot better off.
If this policy is so fatuous, why is it that more than 80% of the population covered by the OECD live in countries that recognise marriage in the tax system? Are they all completely wrong? Are they are all wedded to fatuous systems?
That is exactly the point that I was about to come on to. Tim Loughton said that we should place the well-being of children at the centre of this policy. That is a perfectly reasonable starting point for this debate, but which country is near the bottom of the UNICEF child well-being table and which is at the top? The country near the bottom is the UK: the country at the top is Denmark, which has the highest rate of single parenthood in Europe. It is at the top because it has a proper welfare state, decent child care and properly functioning systems so that people can look after their children properly. If we want to do something for children, we should have policies that promote the well-being of all children, not just a small minority of children who happen to live in a particular family structure.
The hon. Member for East Worthing and Shoreham asked, “Why do Opposition Members suggest that just because you are in favour of marriage, you are against other patterns of family life?” That is not my view. I am in favour of traditional families, as I have said, but I also think that we need to support all families. The reason we are concerned about this policy is—as the hon. Gentleman should understand—that we can only spend the money once. We cannot spend it twice or thrice over—
Government Members talk a good talk, but they do not seem to understand the practical implications.
People in this country are facing a severe cost of living crisis. We are seeing an increase in the number of children living in absolute poverty. More than 600,000 families are going to food banks. If hon. Members had any real concern for child well-being, they would address those issues, not come here proposing £700 million of expenditure on a tiny group.
Those of us on the Government Benches care deeply about child poverty, and we believe that family breakdown is a cause of child poverty. By trying to deal with breakdown, we are dealing with a severe cause of child poverty.
If the hon. Gentleman would pause for a second, he must surely understand that giving people an extra £200 a year is not likely to enable them to continue their marriages when they are under stress. It does not make sense. For £4 a week, the couple could not even have a pint of beer together. The whole thing is absurd—
The hon. Gentleman says that, but the policy is not well targeted. The transferable marriage tax allowance will help just one third of married couples. If we scrapped this allowance and had a mansion tax on homes worth more than £2 million, we could have a tax cut of £100 for 24 million people.
This allowance will go to a third of married couples, and 85% of the benefit will go to men, not to women. Only one in six families with children will get it, and families will only get it if they have only one earner in the family. My test for whether or not this is a good policy is a conversation I had with a constituent of mine recently. She is a shop worker in a supermarket and works 16 hours a week. She has two school-age children. Her husband is not working, because he had an industrial injury. He is on employment and support allowance which, under this Government, will come to an end after 365 days. I simply do not know how a family of four can be expected to live on 16 hours at minimum wage and two lots of child benefit. She cannot. She will lose her tax credits, because she cannot get a shift to increase her hours to 24 a week. Instead of dealing with people like that, who are doing the most responsible things and struggling against all the odds, we have this totally mis-targeted transferable allowance proposal. The Chancellor does not agree with it and the Prime Minister does not agree with it, so why are they doing it? They have made it absolutely clear, in all discussions, that this is about seeing off the Tory right.
I am sorry that Mr Davis is not in the Chamber. He had three articles on this subject in the newspapers this morning. The one in The Times is headlined, “Davis the kingmaker plots the next leadership challenge”. He wrote an article for the Daily Mail online promoting large-scale new breaks for married couples and making many of the points we have heard repeated by less elevated hon. Members this afternoon. Let us look at the response the article received from the public; they are not Guardianistas, but people reading the
“No…I do not want my taxes going to ‘stay at home’ (eg gym/lunch/shopping) women. I want them to go to help vulnerable, disadvantaged people, not the ‘I’ll park my 4x4 on the pavement even if it inconveniences other people’ bunch. Bad idea.”
Another comment reads:
“This is ridiculous. Surely tax should be calculated on household income rather than basing this on a wife staying at home…some people are carers for the elderly, some are in full time education - just focusing on stay-at-home mums is very unfair.”
Then there is this:
“Thanks to this government telling us what we must believe and what we must not believe…This whole article is politically and socially incorrect and out of date.”
I do not think that this proposal will deliver the political benefits that Government Members are hoping for. It certainly will not deliver the social and economic benefit.
When I was first elected to this House, I sat on the Finance Bill Public Bill Committee with the Exchequer Secretary, Mr Gauke. Throughout the Committee’s proceedings he told us, on many issues, what Mrs Gauke thought. I hope we will hear what Mrs Gauke thinks this afternoon.
I speak as the chair of the all-party group on strengthening couple relationships. Family stability lies at the heart of this debate, and I was pleased to hear Catherine McKinnell say that she is a supporter of marriage.
This proposal is one of a range Government policies. The Government have put £30 million into strengthening relationship support. For the first time ever, the Department for Work and Pensions is conducting a family stability review. The good news is that family stability is increasing and strengthening, by a bit in the most recent figures. The scariest statistic in this whole area is that by the time children born today are 15, roughly half will see their parents separate. That saddens me hugely. My own parents divorced and I am very much less than a perfect husband myself—none of us is perfect. We all bring our baggage and personal experiences to these issues, so I understand the emotion on both sides of the House. We need to speak with care and moderation. When I look at the pain experienced by the children of friends of mine who are going through divorce, there is something that makes me want to try to do everything possible to increase family stability and reduce family breakdown.
I will not regale hon. Members with many figures, but I will mention the UK’s biggest household study, “Understanding Society, the UK household longitudinal study” by the university of Essex. Most academics and researchers in this area respect it as one of the most authoritative studies. It shows us that 93% of 13 to 15-year-olds whose parents are still together are living with parents who are married. I am not making that up or making a judgment on anyone; I am merely presenting the House with the facts. There may be many reasons for that, and I accept that there are cause and effect arguments both ways. I accept absolutely that poverty is a cause of breakdown, but I also accept that strong families are a bulwark against poverty.
We should use every tool in the box to try to strengthen family life for everyone, whatever relationship they are in at the moment. We need to care deeply about the 38% of constituents of Alison Seabeck. I want to strengthen family life for everyone. Some of the relationship support money that the Government have put forward will be for her constituents. The work we are doing on the family stability review will be for her constituents. I wish these debates did not become quite so heated, because I can assure her that Government Members who support this measure are for everyone—we are for all her constituents as well. We will defend the measures for everyone in the tax and benefit system—child benefit and child tax credits—because we recognise the important part that marriage plays in family stability. I do not want Opposition Members to think that this is a divisive policy. We are bringing this forward as part of a suite of measures to try to do deal with an epidemic of family breakdown in this country and because we want to do something to promote family stability.
As we look at other countries, we see that this is not an outlandish or an unusual thing to do. In fact, the UK is the odd country out in the OECD. Across OECD countries, Mexico is the only other large economy not to have any recognition of marriage in the tax and benefit system. We have tax benefits for all sorts of policies. We have tax benefits for Christmas parties. Just because we favour a firm providing for Christmas parties does not mean that we are against Muslims, Sikhs or Hindus who might not choose to celebrate. It is just something we recognise. We have tax policies that support people parking their bicycles at work. Just because we favour people bicycling to work does not mean that we are against people who come to work in cars or scooters, or who walk, or take the train or the bus. We need to get out of the mentality that, because we are introducing a tax break for an institution we know is good for family stability, we are being in any way divisive.
The hon. Gentleman talks about family breakdown. Has he made an estimate of how many families will break down because of the bedroom tax, which is an awful policy? Could this money be used to scrap it?
There is relatively good news on the under-occupancy penalty. More families have been able to move, with nearly 200,000 one and two-bedroom properties available for families to move into. I have seen families who are better off because they are paying lower rent and lower heating bills, or are nearer a bus stop or a sick or disabled relative. We must remember the 1.7 million people on social housing waiting lists and the 300,000 people who are very overcrowded.
The general point the hon. Gentleman makes is of course important. There are many stresses on families today. The Government are cognisant of that fact and are introducing a whole suite of policies—freezing council tax and fuel duty, increasing the personal allowance and increasing in the minimum wage—to try to make life easier for people. The good news on jobs and growth will also make things easier. We should not seek to divide people. As has alrea been said today, we know that over half of lone parents believe strongly that there should be both a mother and a father involved in bringing up children. That is something we need to remember as well.
I strongly support what the Government are doing. The sum can always be increased when the public finances allow it—at present, the Chancellor is playing with a limited amount of money—and we are returning to a policy that was well supported until 2000 and is common among OECD countries. I ask Members to focus on the widespread extent of family breakdown in our country, and to see this as one important policy for increasing the family stability which we know is so important to children.
In the past, both here and in Westminster Hall, I have spoken frequently about issues such as child poverty, food poverty, benefits for single parents, social exclusion and other social problems. On this occasion, I want to express my support, and that of my party, for the married couple’s transferable tax allowance. We gave a manifesto commitment to support it in our Parliament, and we are pleased to be able to support it today as well.
I respect the opinions of Labour Members, and I do not wish to be divisive. I want always to be respectful to Members whose opinions may differ from mine. However, I have a hard-held opinion about this particular issue. I want to help everyone, but I think it is time that married couples had an opportunity to see some benefit from legislative change. Those who support the recognition of marriage in the tax system have waited a long time for the Government to introduce this policy. I expected it to be introduced a long time ago, in view of the Prime Minister’s enthusiasm for what was a headline manifesto commitment, but I am very pleased that, at long last, it is being introduced now.
We have heard some excellent speeches from Members on both sides of the House. I particularly commend the way in which the hon. Members for East Worthing and Shoreham (Tim Loughton) and for Peterborough (Mr Jackson) set the scene. I recall a debate in the House about two years ago to which Fiona Bruce and I contributed. That was one of my early introductions to the cut and thrust of politics here. Most of the Members surrounding me opposed what I was saying, but I held fast to my opinion, and I am very pleased to be able to express it again today.
Let me begin by highlighting some of the powerful public policy benefits of marriage. I shall then explain why I consider clause 11 to be an appropriate public policy response, albeit rather modest—I should have liked to see more.
As always, the hon. Gentleman is talking a great deal of common sense. Marriage is indeed something to which most people aspire. Let us be honest: it is a great institution. However—I think he was starting to make this point just now—the Bill is neither one thing nor another. It does not really achieve what most Government Members want, and it certainly does not deal with the concerns of Opposition Members. I should welcome his views on that.
As ever, the hon. Lady has made a very sensible intervention.
It is not the financial aspect of the clause that will be the convincing factor for those who wish to proceed with it. Personally, I see it as a recognition of those who are in a marital relationship, which is why I support it. Marriage is unquestionably a source of great benefit to adults, to children and to our communities in general: as others have said, there are extensive research findings to demonstrate that. Given the shortage of time, I shall highlight just some of the benefits of marriage to adult health, on the basis of evidence and statistics.
As has already been said today, the health gain from marriage may be equal to the benefit of giving up smoking. Of special interest to me, given the challenges presented by our ageing population, is the fact that marriage significantly limits hospital use. Those living with a spouse are less likely than others to enter an institution after the age of 60, because that person will be able to look after them and help them. In children, growing up with married parents is associated with better physical health in adulthood and increased longevity. There is a direct link between family breakdown—particularly separation from a biological parent—and future offending. I have not made those things up: they are facts, based on information that we have received.
Some Members have argued that marriage in itself is irrelevant, and that all the positive associations with it are driven by other factors, principally income. I must say that I find that argument particularly unconvincing. When one set of couples have thoughtfully embraced the cost of making an exclusive, lifelong commitment before the world, “forsaking all others, so help me God”—a commitment that is sealed in law—and another have just decided to move in together and see how it goes, is it any wonder that the first set of couples are likely to be, on average, more stable? That is not a reflection on those who cohabit, but it is a reflection of the statistics showing the commitment that we all make in a marital relationship.
Moreover, as others have noted, the Millennium Cohort Study has blown out of the water the idea that it all boils down to money. According to the study, the poorest 20% of married couples are more stable than all but the 20% richest cohabiting couples. Finance is clearly not the motivator. However, recognition of the marital relationship by the Government through the transferrable tax allowance strikes me as a constructive way forward.
My concern is not with trying to persuade people to marry, but the evidence suggests that people who want to marry are not doing so because it is not an accessible option. As the Secretary of State for Work and Pensions said in his marriage week speech in 2011,
“When asked about their aspirations, young people are very clear: three quarters of those under 35 who are currently in cohabiting relationships want to get married, and some 90% of young people aspire to marriage”.
Those are very clear statistics. The Secretary of State continued:
“So perhaps the question we should be asking ourselves is this: if people from the youngest age aspire to make such a commitment in their lives, what stops them doing so?
Government cannot and should not try to lecture people or push them on this matter, but it is quite legitimate to ensure people have the opportunity to achieve their aspirations.”
The hon. Gentleman is making a powerful speech, and I think that we have a unanimous view about the importance of marriage. Does he feel that the Government are communicating the details of the policy clearly enough for the young people about whom he is talking to understand whether it affects them or not? Many of them—for example, couples earning the minimum wage—will not be affected by it.
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 Mr Jackson 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.
“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 of 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.
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.
Those children will think it extraordinary that we have not previously corrected the situation and gone back to how things were. Historically—up until 2000—marriage was recognised and all we are doing is correcting an anomaly created by the Labour Government. Those children will think our position extraordinary, given that only 20% of people in OECD countries live in a nation that does not recognise marriage or the couple relationship in any way in the tax system, and they will say, “Why aren’t we going along”—as we thankfully will be—“with Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Iceland, Italy, Japan, Korea, the Netherlands, Slovakia, Spain, Turkey, Estonia, France, Germany, Ireland, Luxembourg, Norway, Poland,
Portugal, Switzerland and the United States? Why have we for so long—since 2000—not been recognising marriage in the tax system?” The people living in those countries, seeing that marriage is recognised in the tax system, are not saying to themselves, “How dare you Governments recognise marriage! You’re discriminating against me because I am not in a married relationship.” They are just saying it is common sense, because they look at the evidence of international research and recognise the basic well-being for children that comes from being in families supported by marriage.
Not everyone is going to be married but everyone—whether married or not—can recognise, as I think we do across this House, that marriage is an important institution. Why do we not simply recognise it in the tax code?
As Helen Goodman mentioned, certainly, we can support marriage in lots of other ways. If we are on the side of marriage, we are going to have to do more than simply recognise it in the tax system. That is not a magic wand that will simply transform the issue of family breakdown, which we are all concerned about and have seen in our constituencies. We need to do much more, such as by investing in marriage support before, when and after people get married. Sadly, sometimes people who have been married for 20 or 30 years or more consider ending their marriage. We need to do more to support people throughout marriage. We are not under any illusions here, but we must not try to put in place any false dividing lines.
If we look at the OECD averages, we have to recognise that we are out of kilter. In this country we are generous to single parents but not to married couples. This is not about creating a level playing field; it is simply about starting a process that other countries started many years ago and ensuring we get back into the mainstream.
Clause 11 is not about judging different relationships. The Opposition seek to pit married couples against single parents, and suggest that if we are for something, we must be against something else. That is not the case. We are simply saying, in a very moderate and measured way, what we are for. We are not saying we are against something, because we are not against other couples who conduct their relationships differently. They have freedom to choose, but this is clearly showing who is on the side of marriage.
The Opposition may say, “No, no—we support marriage and we recognise the institution of marriage,” as the Opposition spokesperson said, but at the end of the day we have to put our money where our mouth is. We know we have a division in respect of clause 11 and amendment 3 and the question is, “What are you putting your money on?” The Opposition are not putting their money on the side of marriage.
The reality is it does not matter what I think. It matters what our constituents think. We have heard a few anecdotal comments such as, “My constituent thinks this” or “My constituent thinks that”, but survey after survey shows that young people in particular, in their droves, aspire to marriage. If they have a look at these proceedings and see who has voted for and against, they will see where people have put their money and who is on the side of marriage, and they will know for sure the position of the Conservatives, the Democratic Unionists and others. Indeed, when a married tax allowance measure was moved by, I think, my hon. Friend Sir Edward Leigh during the passage of a previous Finance Bill, some souls—perhaps errant souls—on the Labour Benches supported it.
I make a call across the Benches: this issue should not divide us along party lines. I say, “Come on; show us where your money is. Do you support marriage?” Then, we will know by the end of today who is on the side of marriage.
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.
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.
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?
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.
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.
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.
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?
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 transferrable 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.
Let us consider the following words:
“I believe in marriage, I believe marriage should be recognised in the tax system. I see this as yes, a start of something I would like to extend further”.
They are not mine; I plagiarised them from my right hon. Friend the Prime Minister. I am surprised that Helen Goodman, who is no longer in her place, was trying to suggest that the Prime Minister did not support this policy, because it was certainly in our manifesto and he is the person who said that from the Front Bench.
I am not married. Do I feel disadvantaged, as a consequence, that I will not benefit from this transferable tax allowance? No, I certainly do not. I will have a warm heart voting for clause 11 to stand part of the Bill, because I believe that marriage is an important institution at the heart of a strong society, as the Government are indicating, and it has been clear for some time that we wanted to bring forward proposals to recognise marriage in the tax system. We have been hearing about how, “You can only spend the money once”, but the Opposition have managed to spend their version of the bankers’ bonus tax about 11 times. So it is a bit extraordinary to hear some of these comments. As has been said, this is about choices. The choices this Government made in this Budget were to reduce income inequality to its lowest level in 28 years, whether through council tax cuts, or through freezing or cutting fuel duty, as we have done in previous Budgets. This Government are certainly helping families of all models in this Budget.
We debated child care yesterday, and it is right that we start supporting marriage. Some are saying, “Oh, 4 million married couples. You are not helping people.” But of course we are helping 8 million people as a result of this measure, and that is to be welcomed. My hon. Friends will note that the Labour party is committed to reversing this tax transfer. It will come in before the election, so Labour is automatically saying to 8 million people, “We will be putting up your taxes because of our dogma.”
I appreciate that the Front Benchers still need to speak in this debate, Mr Caton. What I want to put across strongly is that there is no arbitrary disadvantage, marriage is a good thing and we should support it. We do the same for people who save, by increasing the individual savings account limit. We do it for people who put into pensions, whom we support with tax relief. We do it for businesses that invest in their businesses, helping to create jobs. That is what we are doing and although only a token amount of money is involved here, it will be very welcome.
The hon. Lady is making a powerful speech in favour of marriage, but does she not accept that the Government proposal does not recognise two thirds of marriages? Where both partners in the marriage are working to provide for their family, that marriage is not recognised as valid in terms of this policy.
They certainly do. This measure is a start. We do not have tons of money, and the fact that resources are scarce has been well pointed out. Nevertheless, we are doing things that reduce the income inequality for families across the country, using the long-term economic plan. It has meant that gilt rates have been able to stay relatively low, which means that mortgage rates have stayed low and that is probably doing more for people than anything else, along with our fuel duty freezes and indeed cuts in previous Budgets. Those kinds of things are helping families, be they married or not.
I appreciate that time is short and others are waiting to speak, Mr Caton. I just wish firmly to say that although I am a singleton—I thought I had met Mr Right 20 years ago, but it did not work out—I hope that every married couple benefiting from this will recognise that at least they can go and have a nice wedding anniversary with a little bit more cash from the Government.
We hear so much in this House about how little money there is and how hard it is, yet certain members of the Government support this measure. It appears that not all do—the Lib Dem part of the coalition may or may not support it; it said it did not previously. We are talking about only a small amount of money, but let us see what it is equivalent to. Many people in this country have been outraged by the Government’s bedroom tax. Even if that makes the savings the Government claim it will, which I doubt, it will save less than the amount this measure will pay out. That is the problem: the Government say that the issue that has to be addressed all the time is saving money, but clearly when it comes to some things saving money is not quite so important. There are priorities, and the Government have chosen to make this policy one of them.
I believe we should be giving particular help to families with children, and not just to couples because they happen to be married. Apart from in respect of the very poorest, I have not noticed any great appetite to do away with the couple penalty that probably does apply in terms of people in the benefits system. But if two people choose to marry, we have an independent taxation system here and they can choose to work or not work, so I do not see where any great penalty is being applied to marriage. For those who have children the situation may be different.
If the Government wanted specifically to help parents who are staying at home with children, perhaps that it is what they should have done. This measure does not do that; it helps couples where one person is not working, but it has no relationship with the needs of any children they may be raising. If our main aim is to help people with children and make sure that children are brought up in stable relationships, I cannot see what this measure has to do with that. The reason many relationships break down, whether or not they are marriages, has to do with financial insecurity and the difficulties that causes. Those struggling through a cost of living crisis and those who have lost out because of many of this Government’s policies particularly include the low paid. We can all pick and mix our experts—some hon. Members have cited views of the Institute for Fiscal Studies—but if we really want to help low-paid people, we must examine things such as the proposed tapering for universal credit. We need to examine the structure in place for working people who will be in receipt of universal credit—the replacement for tax credits. Under the current structure there is a serious lack of support for second earners in the family who want to start building up their earnings. We could be looking at such things, including child care help for low-paid families.
Very briefly, let me tackle something that was mentioned by Mr Jackson. He did not take my intervention, so I will deal with it now, and, as he raised the matter, it must be relevant to this debate. One statement that Government Members are always keen to make is that every Labour Government leave office with unemployment higher than when they arrived, but it is not true. In 1946 unemployment was 2%, and in 1951 it was 1.3%. In 1951, at the beginning of the Tory Government, unemployment was 1.3%, and in 1964 it was 1.7%, so it went up under a Tory Government. Between 1979 and 1997, which was again a Conservative Government, unemployment went up from 5.2% at the beginning to 7.4% at the end, but for 13 of those 18 years, unemployment was above 10%. Therefore, the statement is not true, and it also completely distorts the appalling unemployment record of the Government between 1979 and 1997. I will now sit down and allow others to speak.
I am grateful, Mr Caton. I apologise for not being here at the beginning of the debate, but I was at the Council of Europe. I wanted to come back here to speak on this measure especially, because I have campaigned for it for many years. This is a very proud moment for our party. We are fulfilling an election manifesto, and I am delighted that at last it will happen. I have no doubt that the party will unite today at 4 o’clock to vote through the measure.
There is no doubt that marriage is the fundamental institution of society. It is the one that contributes the most to the cohesiveness and sustainability of society, and I do not think that anyone disagrees with that. But for too many families, the tax system simply punishes marriage. Why do we have a tax system that does that? It should facilitate marriage. The system has led to numerous social problems that, aside from the obvious human cost, create an undue financial burden on the state. Ultimately, if we promote marriage and support it in the financial system, the state saves money, and we create a happier society. Creating a transferable allowance will strengthen the institution of marriage—that may be only a message, but it is a strong one. It will provide benefits for adults, children and society as a whole.
I am afraid that marriage rates are at an all-time low. The scale of family breakdown as a social problem is increasing all the time. It is estimated that it has cost us between £24 billion and £41 billion to deal with it every single year.
The absence of a transferable allowance obviously makes marriage less attractive to prospective husbands and wives and more costly than it should be for some people. However, that is not the main point. The main point is that we are creating a powerful message that marriage works and it is good for children. As I said in an earlier intervention, a married couple where one partner stays at home is uniquely disadvantaged by the tax system. That cannot be fair.
I agree that policy must be based on evidence, and the evidence is absolutely clear. Regardless of socio-economic status and education, co-habiting couples are between two and two and half times more likely to break up than equivalent married couples. The poorest 20% of married couples are more stable than all but the richest 20% of cohabiting couples. The 2004 Blanchflower and Oswald study in the US and UK shows that the effect of marriage on mental well-being is estimated to be equal to that of an extra $100,000.
A 10-year study of British households found that the health gain from marriage may be as much as the benefit from giving up smoking. The Centre for Social Justice found that those not growing up in a two-parent family were 75% more likely to fail at school, 70% more likely to become addicted to drugs and 50% more likely to have an alcohol problem. We should pay tribute to the Prime Minister, the leader of the Conservative party, for constantly expressing his support for the institution of marriage.
Marriage is even a predictor of survival rates in patients with lung cancer, according to TheIndependent newspaper. The transferable tax allowance will be in line with international best practice. This is not some way-out wacky idea from the Christian right, but what most countries do. Of the biggest countries in the OECD, it is only the UK, Mexico and Turkey that do not have a transferable allowance. It is only 24% of the population of all the OECD countries that are not benefiting from this transferable allowance for married couples. It is a common idea that is widely accepted all over the world. It works; it is normal; it is good.
The UK is one of the only countries in the OECD not to recognise marriage in the tax system. The comparison between the United Kingdom and the OECD average is telling. The tax burden on the single earner married couple with two children on the average wage in the United Kingdom has increased from being 33% greater than the OECD average to now being 42% greater. Clearly, the problem is growing. Introducing a transferable allowance for married couples will disproportionately benefit poorer families and those in the lower half of income distribution. I am proud of what we are doing and I am proud that at last, this afternoon, we are recognising marriage in the tax system.
It is a great pleasure to respond to the debate. I shall make some remarks on clause 11 and on amendment 3 and address some of the arguments that we have heard in this interesting and passionate debate on a subject in which many right hon. and hon. Members have taken a long-standing interest.
Clause 11 introduces a transferable tax allowance for married couples and civil partners. We have targeted the benefit of the measure on married couples and civil partners with the lowest incomes, when one member of the couple has an income below their personal allowance of £10,500. The clause allows individuals to transfer 10% of their income tax personal allowance to their spouse or civil partner, providing that neither partner is liable for income tax above the basic rate. For the year 2015-16, when the measure comes into effect, the amount of personal allowance that can be transferred will be £1,050, significantly higher than the £750 included in the Conservative party manifesto at the last general election. It is also higher than the £1,000 allowance announced at the autumn statement as a result of the Budget announcement that the personal allowance would be increased even further in 2015-16. That means that more people will now be able to gain from the measure and by a higher amount.
Let me remind the Committee of the purpose of the policy. Marriage is an important institution in this country and I have been struck by the contributions from both sides recognising that point. Catherine McKinnell described marriage as a force for good. We have also recently had a debate about marriage in the context of single-sex relationships and, indeed, the first gay and lesbian marriages took place just over a week ago. In that debate, a variety of views were expressed but it was striking how those on both sides of the argument recognised the importance of marriage. Indeed, the hon. Lady made a powerful and persuasive speech on that very issue in the course of those debates. Whether or not one agrees with the decision that the House reached, the strength of views expressed in those debates makes it clear that people believe in the importance of marriage as a building block of our society. The policy we are debating today is about recognising it in the tax system.
That recognition in itself is not a new idea. People born before
Let me remind the Committee that that is not the only reason for the policy. It also provides a way of allowing lower income married couples and civil partners to feel more of the benefit from our increases to the personal allowance. As discussed in Committee yesterday, by 2015-16 our successive increases to the personal allowance will mean that a typical basic rate taxpayer will be more than £570 better off than under the previous Government’s plans. That could mean a tax cut of more than £1,000 for a couple, but that is the case only if both partners use all of their personal allowance. If one spouse is a low or non-earner, the couple will be able to benefit only from one personal allowance increase. Let me give an example. By April 2015, one couple with each spouse earning £15,000 will see more than £800 more benefit from the personal allowance increases this Parliament than a couple with one spouse earning £30,000 and the second earning nothing. The policy allows us to change that. It gives married couples and civil partners the opportunity to benefit from the £1,050 of the second unused personal allowance, and thus benefit from the increases to the personal allowance, providing further support to some households with a low or non-earner. That will help just over 4 million married couples and civil partnerships, with each couple gaining up to £210 a year.
Amendment 3, which was tabled by the Opposition, commits the Government to publishing a report on the impacts of the policy within six months of the Finance Bill receiving Royal Assent. I do not believe that such a report is necessary, as there are comprehensive arrangements to report on the impacts of Government policy. First, we have reported the impacts of the clause in the tax information and impact note, which was published on the Government website on
Let me deal in a little more detail with what the amendment would do. It requires a calculation of the proportion of married couples and civil partners eligible under the policy. We have said that we expect just over 4 million couples to benefit, which means that about 300,000 more couples are in a position to benefit than if we had just increased the personal allowance in line with the retail prices index, which was the approach taken by the previous Government. The 4 million couples who will benefit represent just over a third of married couples. The heart of the Opposition’s case seemed to be that two thirds of married couples will not gain from the policy, so what was the point of it? It is worth explaining how the policy is targeted. First, in 3 million couples, one or both partners are higher or additional-rate taxpayers. Some of them can benefit from the changes to the personal allowance, but if we had a policy that extended the transferable tax allowance to higher and additional rate taxpayers, the Opposition would complain that it was not well targeted and that it should be directed at low-earning households. I think that my hon. Friend Tim Loughton made the point that the logic of the Opposition’s argument was that we should extend the policy. I know that he takes that view, but it would be rather strange for the Opposition to make that argument.
The second group that does not benefit is the 1.8 couples in which both partners are non-taxpayers. It is worth pointing out that since 2010 about 350,000 couples have become non-taxpayers because we have taken them out of income tax. It is impossible to provide an income tax cut for people who do not pay income tax. The Opposition argue that what we should do instead is have a 10p rate of income tax, but a 10p rate would not help those married couples either.
There is no reason to believe that the measure is discriminatory. I will address that point in slightly more detail in a moment.
The third category of people who will not benefit is couples where both members are basic rate taxpayers, but those are the households that have benefited most from the very significant increases in the personal allowance that this Government have been able to deliver. One has to look at the overall package and what this Government have done in terms of cutting taxes. I come back to the point that couples with two earners have benefited significantly, more so than couples with one earner, as a consequence of the personal allowance increase.
I mentioned that the Opposition want to use the money to fund a 10p rate of income tax. They have complained in the course of the debate that the benefit is worth only £3.85 a week. This is about sending a signal. The benefit from the new 10p rate, assuming that it were funded from this, would be in the region of 50p a week, and I am not sure that that would change things significantly.
I am short of time so, if the hon. Lady will forgive me, I will not give way.
Let me deal with a couple more points. On support for women, it is worth bearing in mind that of the 3.2 million people who have been taken out of income tax, 56% of the beneficiaries are women, and we have done a lot to help with child care. On the practical points raised by the hon. Member for Newcastle upon Tyne North, only the transferor will need to make an election, which will make it administratively easier for couples. We also want to implement the measure through a digital process, but we recognise the need for support for those unable or unwilling to use that method. HMRC will be properly funded to deliver this policy.
Let me conclude by reiterating the purpose of the clause. It is to reinforce the important institution which is marriage—whether gay, straight or civil partnerships—while also providing support for many households that have not been able to benefit fully from our changes to the personal allowance. I therefore request that amendment 3 be withdrawn, and move that clause 11 stand part of the Bill.
We have had some sincere but variously aspirational speeches from Government Members today, dreaming of a world where marriages are stable and children thrive. Nobody can take issue with the aspiration, but we need to deal with the real world and what the Government’s policy will deliver. It purports to support marriage, but only certain marriages will qualify. Two out of three marriages will get no recognition at all. The policy purports to support children, but five out of six families with children will get no help whatever. It is a dud. It adds complexity to the tax system. Its implementation will add cost both for HMRC and for the employers who will have to deal with the complexity for highly questionable gain.
We will therefore oppose the clause, and we urge hon. Members on both sides of the House, particularly Liberal Democrat Members, who we know are on our side of the argument on this issue, to vote against the Government’s proposals and for our sensible amendment.
Question accordingly negatived.
Proceedings interrupted (Programme Order,
The Chair put forthwith the Question necessary for the disposal of the business to be concluded at that time (
Question put, That the clause stand part of the Bill.
The Committee divided:
Ayes 279, Noes 214.