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As we have heard, new clauses 1 to 4 would introduce a tax relief on medical insurance for over-65s. The hon. Members who tabled the new clauses stood on a manifesto that proclaimed we “believe in the NHS”. It turns out that they believe so much in the state that they think even private sector provision should receive state funding.
Mr Kevan Jones: Does my hon. Friend not think it strange that this proposal has not appeared in a Conservative party manifesto since 2001? The fact that it was dropped in 2005 and 2010 shows clearly that it is not a vote winner.
Kerry McCarthy: I thank my hon. Friend for that intervention. I believe that I will come to the point that he raises in a moment.
New clause 1 would reinstate a benefit that was withdrawn by the Labour Government in 1997 because, quite simply, it had failed. As my hon. Friend the Member for North Durham (Mr Jones) said, it was not picked up by the Conservative party during the recent general election. As noted by my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson), who was in government at the time—I congratulate him on his excellent speech—the measure had little impact. One of the problems with the previous Conservative Government's tax relief was that they did not do their homework on what impact it would have. I would be interested to hear what research the hon. Members who tabled the new clause have done. I note that the hon. Member for Mole Valley (Sir Paul Beresford) pleaded numerical dyslexia when asked about the statistics. I think he should have got someone to do his maths homework for him before proposing a spending commitment. The first thing hon. Members should have done was to see whether it would have the desired effect in spending that money.
The Justice Secretary, the then Chancellor, claimed when originally introducing the relief that it would provide an incentive to older people to buy private insurance and reduce the pressure on the NHS. That has been echoed by many Government Members today. However, the tax relief did not reduce the burden on the NHS or help those patients who relied on it. It simply subsidised health insurance for those who could already afford it and had chosen to buy it. When originally announced in 1989, it was estimated that the relief would cost £40 million. A telling warning for Government Members who want to reintroduce the expenditure at a time of such fiscal restraint is that by 1997 the cost had multiplied to £140 million, because there was no limit on the state’s generosity to private providers. It would be wholly irresponsible to reinstate a policy whose costs could spiral to such an extent.
As NHS patients knew to their cost in the 1980s and early 1990s, the then Government were far more comfortable limiting expenditure on the NHS and letting waiting lists rise for the majority of pensioners and others who could never contemplate private insurance, which, as my hon. Friend the Member for Brent North (Barry Gardiner) said, was primarily a way of financing queue jumping for those who could afford it. For just a 10% increase in the number of people covered by insurance qualifying for relief, there was a 100% increase in costs in just the first three years. Over the lifetime of that Government’s policy, the number of people covered
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rose from 500,000 to 600,000; so, for a 20% increase in the number of people covered, the costs shot up by 350%.
7 pm
There may be a weak correlation between the relief and private insurance, but there is no evidence of causation. The failure of successive Conservative Administrations to support the NHS is just as likely—if not more so—to have driven affluent older people towards the private sector. Either way, I would be interested to know whether Government Members, and in particular the Minister, think that the tax relief represents good value for money. The previous Labour Government did not, which is why the relief was withdrawn and used to fund a reduction in the rate of VAT on domestic energy supplies, which the Conservatives had increased. A preference for lining the pockets of private health providers? An increase in VAT? It is all too disconcertingly familiar.
The Labour Government knew that the way to reduce the pressure on the NHS was not to subsidise private medical insurance for a select few, but to invest in improved facilities, in more doctors and nurses, in better health outcomes, and in reduced waiting times for the benefit of everyone who needs treatment. Moreover, we are talking about tax relief on medical insurance, not treatment, so it does not necessarily follow that there was an increase in private cover corresponding to a commensurate fall in demand for NHS services. Of course, everyone in this country already has public health insurance, and it is not denied that people with private insurance will have paid their fair share of national insurance. It is their right to opt out of state provision, but I am intrigued to know whether those on the Government Front Bench share the view of their Back Benchers that those people should be rewarded for opting out, and should be allowed to opt out of the state insurance system. Income tax relief de facto does that, so do the Conservatives want to allow the rich to opt out of income tax more generally? Do they think it right that the general taxpayer pays for a choice freely made by the better-off?
According to research by the King’s Fund, the best estimates are that the withdrawal of the relief led to a 0.7% fall in the number of people covered by private insurance. As we are talking about health care insurance, not health care use, it is difficult to say exactly what the impact on demand for the NHS was, but few would dispute the King’s Fund’s conclusion that
“the cost of treating these individuals”
“is likely to have been substantially lower than the £135 million annual cost of the subsidy.”
The right hon. Member for Wokingham (Mr Redwood) and others speculated that the change would save the Government money by subsidising people taking out private medical insurance, thereby reducing the take-up of NHS services. However, when the policy was last in place, that was not the case, as the King’s Fund said. I have heard nothing today to convince me that reintroducing the policy would have a different effect.
Andrew Gwynne:
I am pleased that my hon. Friend has confirmed that those on the Labour Front Bench will oppose this measure. She is setting out the right arguments for why we should do so. Did more people
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not take up NHS care and treatment under the 13 years of Labour Government because of the improvements in NHS care and treatment that were achieved over the lifetime of the Labour Government?
Kerry McCarthy: My hon. Friend makes a good point as always. That is the crucial thing. Under the Conservative Government, the increased take-up in medical insurance from 500,000 to 600,000 did not necessarily have anything to do with the tax relief that was introduced; it happened because the NHS was in absolute crisis. Waiting lists were going through the roof under the last Conservative Government. People were terribly scared and did not feel confident that the NHS would look after them in their ill health. There were significant improvements under the Labour Government, which meant that fewer people felt the need to take out private health care.
Let me turn to the fairness argument. It remains to be seen how much the Health Secretary’s experiment through the measures in the Health and Social Care Bill—driven once again by a preoccupation with private sector involvement in health care—will eventually take from health care budgets. We know that £850 million will be spent on redundancies alone, and the estimates are that £2 billion of PCTs’ budgets are earmarked for what can only be described as—in those infamous words of the coalition agreement—a “top-down reorganisation”. Despite the Prime Minister’s promise of real-terms increases, NHS expenditure is falling in real terms. The King’s Fund has calculated that the NHS will have £910 million less to spend over the spending review period. Patients and staff know all too well that front-line services are being affected, but tax relief for private patients will not help them.
Alun Cairns (Vale of Glamorgan) (Con): Do I take it from the hon. Lady’s comments on health spending that she is condemning her colleagues in Wales, who are cutting health spending by £1 billion over the next three years?
Kerry McCarthy: I am sorry, I did not quite catch the end of that because a colleague was talking to me. I do not know whether the hon. Gentleman wants to make that intervention again.
Alun Cairns: I will happily repeat the point. Do I take it from the hon. Lady’s earlier comments about growth in health spending that she condemns her colleagues in Wales, which is the only place where Labour is in power? They are cutting health spending by £1 billion over the next three years.
Kerry McCarthy: The Government are here to answer for the activities for which they are responsible in the English health service—it is one of those things that goes with devolution. We have heard from Government Members in this debate that the Government are increasing spending on the NHS. They have trumpeted that over and over again—it was meant to be a platform on which the Conservatives sought election—but the truth is that there is not a real-terms increase in spending on the NHS. When inflation is taken into account, there is actually a cut in NHS spending, and it is time that the Government owned up to that.
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I am under pressure to finish my speech and allow those on the Government Front Bench to come in. [ Interruption. ] As hon. Members can see from the fact that not one but two Opposition Whips are sitting behind me, shouting at me to hurry up, I am indeed under pressure.
How can Conservative MPs tell the hundreds of thousands of people who have signed up to the “Save our NHS” campaign that a spending commitment priority for this Government should be subsidies for private medical insurance? The coalition has tried to deny that it is creating a market in the NHS, but now Conservative MPs do not even want it to be a fair one, by creating incentives for the private sector. If the Treasury thinks it wise to spend such considerable sums, I hope that it is clear by now that they could be much more wisely and fairly spent on the NHS for the benefit of everyone, not the few who need it least. Why not invest in the NHS as a universal service of which we should all be proud, rather than sending the clear message to patients and enormously dedicated NHS staff that private health care is better? Is the coalition planning to run down the NHS to such an extent that people will need to resort to private insurance?
As my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) knew when the relief was withdrawn in 1997, not only could those funds be of great value to the NHS, but ending the relief could fund a reduction in the VAT charged on domestic energy supplies to 5%—a rate that the Conservative Government had increased to 8%, and which they would have increased still further to 17.5%, had they not been defeated by Opposition MPs. The Labour Government at the time made clear their priorities. Rather than giving a tax break to older people who could already afford health insurance, they chose a tax cut that benefited everyone, but made the most significant difference to older people on low incomes who were struggling to heat their homes.
It is worth reminding the House that the Conservatives wanted to reverse that policy and reinstate the relief in 2001. Now, 10 years later, they still have the wrong priorities —priorities that will quite simply be incomprehensible to the average person feeling the effects of this Government’s reckless spending cuts. It is estimated that 4.5 million families in the UK are living in fuel poverty, while people are facing 10% increases in their electricity bills, which are likely to increase still further as a result of the coalition’s poorly thought out plans for a carbon floor price, which we will debate perhaps in the early hours of tomorrow morning or next week. Moreover, this Government have decided to cut the winter fuel payment for pensioners.
Faced with individuals and families who will struggle to heat their homes this winter, are the Government taking positive, responsible action to help them? No; instead, they have already hiked up the VAT bills of a couple with children by £450, and those of a pensioner couple by £275, and their Back Benchers think that it is more important to reverse a decision taken to help with fuel costs and instead give tax relief to the minority who can already afford the luxury of private health insurance.
The Labour Government lifted 1.1 million pensioners out of poverty, but there is a continuing need to support those on the lowest incomes. I fear that these proposals betray how some Conservative Members neglect the
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needs of the poorest pensioners. With the new clauses, they want to add insult to injury by giving tax breaks to the richest to buy private medical insurance, while poorer pensioners have no option but to rely on the NHS—a service that the coalition seems determined to decimate. New clause 1 explains that the relief would apply to people over 65 but, as we all know, the coalition is planning rapidly to increase the state pension age, which will affect the associated support for older people. Does the hon. Member for Mole Valley therefore envisage the age limit increasing with the state pension age, or does he disagree with the Government’s timetable?
In 2006, 10.6% of the population were covered by private medical insurance, and only 3% by personal private medical insurance. The latest figures that I have seen indicate that just 7% of people over 65 have private medical insurance, so the clear motivation behind new clause 1 is the choice to prioritise a very small percentage of the population at a time when the country and the NHS cannot afford it. Inflation is running at more than double the target rate thanks to the Chancellor’s decision to increase VAT, growth is flat-lining, the jobseeker’s allowance claimant count is increasing and more than 80 claimants are applying for each vacancy in some areas. That all means that the Government will have borrow £46 billion more than they planned last autumn, so how on earth can this measure be a priority?
I urge the Government to reject these new clauses, to consider how the money could be much better spent and to secure the future of the NHS as a high-quality service that everyone can access and trust. Instead of an unfair income tax cut for the few, we need a temporary emergency VAT cut that will benefit everyone, particularly those on low and middle incomes, and that will give a much-needed boost to the economy to reduce the deficit over the long term in a fair and balanced way. I conclude by asking the hon. Members who tabled the new clause what their priority is. Is it a tax cut for the minority who can afford private health insurance, which would undermine and undervalue the NHS, or a tax cut that would help everyone at a time when the economy needs it most?
The Financial Secretary to the Treasury (Mr Mark Hoban): New clauses 1 to 4 seek to provide for tax relief on medical insurance premiums for individuals above the age of 65. I understand that the argument for introducing such relief is that it would encourage individuals above that age to take up private medical insurance and therefore reduce pressure on NHS resources, and that this would result in a net saving for the Exchequer in the medium to long term.
The Government introduce new tax reliefs only when there is a compelling case that to do so would represent a good use of public money. Turning first to cost, we estimate that this relief would have a direct and immediate cost to the Exchequer of at least £135 million pounds a year—a significant amount, especially given the fiscal climate in which we are now operating. That would reflect the cost of restricting relief to the basic rate of tax.
Mr Kevan Jones: I am interested to find out where the Minister got his figure from, because the figure in 1997 was £135 million. Has it not changed since then?
Mr Hoban: That is the Treasury’s latest estimate, and it is a number that we are going to stand by.
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In his opening speech, my hon. Friend the Member for Mole Valley (Sir Paul Beresford) said that he wanted to restrict the tax relief to the basic rate, but subsection (3) of new clause 1 would not have that effect. It suggests that the relief could be obtained at the highest marginal rate that a person paid. He has used the 1990 legislation, whereas in the 1994 legislation the relief was restricted to the basic rate.
Mr Leigh: Why does my hon. Friend think that the social insurance systems on the continent, where there is much more blurring between the public and private sectors, produce much better health outcomes? Also, why does he think that the Major Government followed this policy, which we all supported at the time? Why is this proposal different from the policy of the Major Government, which we all—or some of us—supported?
Mr Hoban: I am pleased that my hon. Friend added that qualification. I entered the House only in 2001, so I was not in a position to support the Major Government or to disagree with them. We need to look at this measure on its own merits.
I would say to my hon. Friend the Member for Mole Valley that the way in which his new clause has been drafted means that tax relief could be gained at someone’s highest marginal rate, which could mean relief of up to 50%.
Sir Paul Beresford: Of course, if that were the result, I would be prepared to make some little adjustments to the new clause as the Bill progressed through the House.
Mr Hoban: My hon. Friend is an experienced Member of the House, and he will know that this is the final stage of the Bill, so it would not be possible to amend his proposal in that way. I note, however, that he has introduced a ten-minute rule Bill on a related subject, so we shall see what progress that makes through the House.
7.15 pm
Frank Dobson: Will the Minister give way?
Mr Hoban: I want to make some progress. I appreciate that my hon. Friend the Member for Wellingborough (Mr Bone) has said that the debate may go on until any hour, but I do not want to be the cause of delaying the House’s tackling subsequent new clauses.
The vast majority of the cost of providing the proposed tax relief would go to those who already have private medical insurance, and there is therefore no obvious need for a new incentive. The case for introducing tax relief rests on the proposition that it would encourage significant new take-up of private medical insurance and ultimately be self-financing. However, at this stage we do not have any strong evidence to show how much additional take-up of private medical insurance a tax relief would generate, or how much pressure on NHS resources would be relieved as a result.
Indeed, when a similar relief existed between 1990 and 1997, it had little apparent effect. It is estimated that take-up of medical insurance increased only from 500,000 to 550,000 individuals over that period. The hon. Member for Bristol East (Kerry McCarthy) said that that increase was a demonstration of people’s lack
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of confidence in the NHS under the previous Conservative Government, but she ought to be aware that the take-up of private medical insurance under the Labour Government of whom she was a member went up from 550,000 to 1.7 million, so I do not think that her argument is particularly strong.
Frank Dobson: I congratulate the Minister on at least producing an estimate of the cost of the proposed measure. When the original scheme was first introduced, neither the Treasury nor the Department of Health made any estimate whatever; they were flying blind.
Mr Hoban: I thank the right hon. Gentleman; there are times when I am happy to accept congratulations from the other side of the House. We want to ensure, especially given the constraints that we are working under in these times of fiscal austerity, that measures can be well justified.
An Institute for Fiscal Studies report published in 2001 questioned how far the take-up of private medical insurance would ever respond to tax relief. It also suggested that the dead-weight cost would make it unlikely that tax relief could be self-financing.
Mr Chope: My hon. Friend was not in the House in 1989, but is he saying that my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), who was Secretary of State for Health at the time, was wrong to say that introducing this self-same measure would
“reduce the pressure on the NHS from the very age group most likely to require elective surgery, freeing resources for those who need it most”?—[Official Report, 31 January 1989; Vol. 146, c. 169.]
Mr Hoban: Loth as I am to suggest that my right hon. and learned Friend could ever be wrong on any measure, I want to make a point about the chances of a reduction of pressure on the NHS exceeding the cost of the tax relief. There is no evidence that there would be a net positive outcome for the Exchequer. When a similar relief existed in the 1990s, it had little apparent effect, and the IFS report from 2001 concluded that it was unlikely that such a subsidy for private medical insurance would ever be self-financing.
I appreciate the passion with which my hon. Friend the Member for Mole Valley has put forward his argument for the new clause, but I do not think that there is sufficient evidence at this point to justify the relief. There is no evidence that it would represent good value for money for the taxpayer, particularly at a time when our efforts should be focused on reducing the deficit and tackling the problems left by the previous Government.
Oliver Heald: Assuming that the new clause does not result in making a change in the law tonight, would my hon. Friend be prepared to look into the effects of longevity and the effect of having a more substantial private sector available to undertake operations and procedures on behalf of the national health service, as this is partly about capacity and what the future holds, not just about the numbers today?
Mr Hoban:
My hon. Friend makes an important point about the impact of longevity on the public finances; the Office for Budget Responsibility is working
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on that at the moment, and we await its report. At the moment, however, given the fiscal situation and the need to tackle the deficit we inherited from the Labour party, I do not believe that the costs entailed by the new clause would represent good value for money, so I ask my hon. Friend the Member for Mole Valley to withdraw the motion.
Sir Paul Beresford: It is traditional to say that we have had a good debate, but we really have had a good one today; it has been stunning in a way. Most importantly, I do not think there is any Member who does not support the national health service. We are very much behind the national health service, and it is true of me even more than most Members of all parties, because I have worked in it, as well as working in the private sector and in a combination of the two. I am emphatically behind it, and I back the hospitals in my constituency.
The approach has, of course, been different. If the right hon. Member for Holborn and St Pancras (Frank Dobson) had not joined the debate, I would have felt that I had failed because we would otherwise not have heard a good red-blooded, left-wing socialist viewpoint. The difference, of course, is that Conservative Members support the national health service, but we also support the possibility of looking for alternatives or different ways of helping the NHS. That was my aim tonight.
I question the figures that the Minister provided, as we need to recognise that over a seven-year period from 1990, with the over-60s—not just the over-65s—having a full swathe of tax deducted, not just the basic rate, the relief was costing about £80 million. If the proposal in the new clause went through, there would be a progressive growth in the number of people claiming as time went on. I do not think it would be logarithmic, but it would certainly make a difference to hospitals in my constituency and others, particularly those down south. There would be a relief of the strain on those hospitals and an opportunity to redistribute the money.
I was putting my toe in the water this evening, trying to get some thinking going on the proposal, and that has happened. I will discuss the issues further with the Minister before the Budget and next year’s Bill, but in the meantime, I wish to withdraw the clause.
Mr Deputy Speaker (Mr Nigel Evans): We now come to new clause 5. Fiona Bruce. Not moved?
‘After section 37 of the Income Tax Act 2007, insert—
“37A Transfer of personal allowances between spouses
(1) This section applies to an individual who is entitled to a personal allowance under sections 35 to 37 for a tax year if—
(a) the individual is a person whose spouse who is living with the individual for the whole or any part of the tax year, and
(b) the spouse meets the requirements of section 56 (residence, etc).
(a) the allowance exceeds the individual’s remaining relievable income;
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(b) the individual makes an election, and
(c) the individual’s spouse makes a claim,
the individual’s spouse is entitled to an allowance for the tax year equal to the amount of the excess.
(3) The individual’s remaining relievable income is found by—
(a) taking the amount of the individual’s net income, and
(b) subtracting any personal allowance to which the individual is entitled for the tax year.”’.—(Mr Leigh.)
Brought up, and read the First time .
Mr Leigh: I beg to move, That the clause be read a Second time.
In the last Parliament the Prime Minister and other senior Conservatives repeatedly expressed their commitment to recognise marriage in the tax system. There were some very strong statements, particularly by the Prime Minister. For instance, in Glasgow, in July 2008, he said:
“And when it comes perhaps to the most important area of all, families, we will take action not just to support marriage and family stability”,
“to parents, your responsibility and your commitment matters, so we will give a tax break for marriage and end the couple penalty.”
That was the leader of our party speaking during the last Parliament. This was the key policy response to the challenge of social breakdown, or the “broken Britain” phenomenon, and it became an important manifesto pledge at the 2010 election—a manifesto pledge on which every Conservative MP was elected. It was a sacred bond, as it were, with the electorate to support marriage, which was considered to be an absolutely key part of dealing with broken Britain. We put that in our manifesto.
I know that our party did not win an outright majority, but the commitment, most importantly, got into the coalition agreement with a provision for our Lib-Dem friends to abstain. I am not asking them to do anything, but I am asking our Front-Bench team to fulfil the pledge that they solemnly made in the manifesto and put in the coalition agreement. We are still waiting for it, which is why new clause 5 is so important and why I believe that, whatever else has been going on in the background this afternoon—I need not go into that—it was my duty to move it. If it had not been moved, many people involved in the Christian community or in the Christian Institute or in churches would have wondered why this new clause—clearly on the agenda this afternoon, and a vital part of what we are trying to achieve for Britain—had suddenly been withdrawn. I was not prepared to let that happen. I have therefore moved it to allow a debate, to which the Government should be made to respond.
Since the election the Prime Minister has reiterated his commitment to recognise marriage in the tax system on a number of occasions, including at his second Prime Minister’s Question Time—but no action has yet been taken. Given that the manifesto pledge is backed by the coalition agreement and pertains to the period between 2010 and 2015, the fact that the Government have not yet acted to recognise marriage in the tax system is, I hope, no cause for alarm. This debate is important: the Minister will have to respond to it later, when he can assure us that although it has not been possible to do this yet, it is definitely going to happen in
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this Parliament because it was in our manifesto and in the coalition agreement. At the very least, I want the Minister to say that.
Since the commitment to recognise marriage in the tax system was made last year, there have been some significant changes, which in my personal view greatly increase the need for swift action. In this context, the tabling of new clause 5 on Report to recognise marriage in the tax system is an important step. It provides an opportunity to put on the record the standard arguments for recognising marriage in the tax system and, more importantly, to set out the changes over the last 12 months that have greatly increased the urgency of taking action in this area. As I have said, the Government are obliged to respond and engage with the implications of the changes as they relate to the importance of recognising marriage in the tax system.
Let us go into a bit more detail. Apart from married couples with at least one spouse born before 1935—a number that will clearly reduce over the years—and couples in which at least one partner is blind, everyone in the United Kingdom is taxed on an individual basis. Unused tax allowances cannot be transferred from a non-earning spouse to an earning spouse.
Under the system of transferable allowances, which we have constantly promoted as a party for several years and as is envisaged in our coalition agreement, a non-earning spouse would be able to transfer the whole or part of the basic income tax personal allowance to their earning spouse. Depending on how it was introduced, the whole allowance or part of it could be transferable, and it could be limited to couples with children under a specified age, or limited to tax at the basic rate. The Government can decide what they can afford and they can bring it in gradually; there need not be dead-weight costs or the other problems that were aired in the previous debate. Moreover, I am not at all sure that it is appropriate to talk about dead-weight costs in this context at all. For 2011-12 the personal allowance is £7,475; if the whole allowance were transferable it would be worth up to £1,495, so we are not talking about huge sums of money.
Let us look at what other countries are doing, because it is important to nail the untruth that this idea comes just from the right wing of the British Tory party, or from the Christian community, when it is very common throughout the world. In fact, Britain is unusual among developed countries in failing to recognise marriage in the tax system. This is something that we did as a country, with cross-party agreement, as it was considered absolutely the right thing to do, right up to 1999-2000. Only 24% of citizens of OECD states live in countries that do not recognise marriage in the tax system in one way or another, and most of those live in just three countries—Mexico, Turkey and the UK. We are very much in the minority in not recognising marriage through our tax system. Why should we not recognise marriage when most countries and tax administrations in the world think that marriage is a force for stability? It is not unusual to want to recognise that. Other developed countries such as France, Germany, Italy and America all recognise marriage. In that context it was hardly surprising to learn that, according to the latest figures—published in May 2010—the resulting tax burden on single-earner married families in the United Kingdom was one third greater than the OECD average.
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7.30 pm
My point is that the present system is unfair—unfair on single-earner families. Nothing in the new clause requires families to have a single earner; we are simply saying that if a family chooses to have one, particularly if there are young children and particularly if the mother wants to stay at home, that choice should be recognised. As I have said, such arrangements are common throughout the world, and I believe that the new clause is very moderate.
Helen Goodman (Bishop Auckland) (Lab): I agree with the hon. Gentleman about the importance of marriage, but I am not convinced that it is appropriate to encourage and recognise it through the tax system. The hon. Gentleman mentioned unfairness, and I think the question of fairness is the nub of the issue, for if the money were spent on benefits or tax credits for children rather than on a married tax allowance, far more children could be lifted out of poverty.
Mr Leigh: As so often in Finance Bill debates, the devil is in the detail. The hon. Lady has made a perfectly reasonable point. However, I hope to establish in my speech that the present system is unfair and, specifically, militates against single-earner families. That applies especially to those who are struggling out of poverty, but it is not necessarily the very poorest about whom we should be concerned. We should also be concerned about families on fairly modest earnings who are desperately trying to look after their children, and who decide that someone, usually the mother, should stay at home and care for them. But, as I have said, the devil is in the detail, and I will try to deal with the hon. Lady’s point later. It is important, and we need to tease the answer out of Ministers. We want to know why action has not been taken.
Mr Kevan Jones: Will the hon. Gentleman give way?
Mr Leigh: I want to make progress, but I will give way.
Mr Jones: I agree with the hon. Gentleman that the devil is in the detail, but surely the new clause would unfairly disadvantage those who lost partners through no fault of their own as a result of broken relationships or death.
Mr Leigh: That argument has been used against transferable tax allowances. It is true that it is impossible to create a transferable tax allowance that helps everyone, but I do not consider the fact that in certain circumstances, through no fault of their own, people will not be allowed to enjoy the benefits of such allowances to be a good argument against trying to help others—and that is all we are trying to do.
Let us examine the extent of support for marriage in Britain. It is no surprise that marriage rates are at an all-time low and family breakdown is a massive problem, affecting many different areas and, it is estimated, costing us directly between £24 billion and £41 billion per annum. The “Breakdown Britain” report motivated the then Leader of the Opposition, now the Prime Minister, to come up with this policy—our policy—and launched the debate. It was promoted by my right hon. Friend the
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Secretary of State for Work and Pensions; although he is not present today, I pay tribute to him for his fantastic work.
Chris Williamson (Derby North) (Lab): Will the hon. Gentleman give way?
Mr Leigh: I will in a moment, but I want to make a little more progress. Others will want to contribute to this important debate.
There is no doubt that the lack of support for marriage gives rise to some family breakdown, not primarily through the breakdown of existing marriages but by making marriage a less attractive and more costly option for some people than it would otherwise be. I do not pretend that that applies to everyone, but undoubtedly our present system, which is very unfair on single earners receiving relatively low wages, is a disincentive for some. As the “Breakdown Britain” report demonstrates, a child born to unmarried parents has a nearly one in two chance, before reaching the age of five, of seeing its parents split up, whereas for children whose parents were married, the figure is just one in 12. That is unmistakably a huge difference. It is, I believe, a commonly held view that marriage is a good thing.
A more recent piece of research, “Family breakdown in the UK”, set out the problem of the lack of support for marriage in the following terms:
“the problem is not divorce. While marriage accounts for 54% of births, the failure of marriages—i.e. divorce—accounts for only 20% of break-ups and 14% of the costs of family breakdown, amongst all families with children under five. Unmarried families account for 80% of the break-ups and 86% of the costs.”
“These new statistics demonstrate dramatically that family breakdown is a huge and growing problem and that the main driver of family breakdown is the collapse of unmarried families. A failure to acknowledge these key points will lead to the inevitable failure of any government policy aimed at strengthening families.”
That is why many Government Members believe that this policy is so important.
Chris Williamson: Given the hon. Gentleman’s proposition that the tax system discriminates against single-income households and could cause couples to break up, what does he think of the Government’s decision to force through a change in the child benefit rules for single-income higher earners with, say, three children, whose families will lose up to £3,000 per annum? If he believes that family breakdowns result from financial circumstances, he must surely believe that that will lead to even more of them.
Mr Leigh: I agree with the hon. Gentleman. I have made clear my belief that our policy of fiddling around with child benefit is entirely wrong. Child benefit works because there is no fraud and no error, and because it is a flat tax. I strongly oppose the Government’s policy, because it will attack families who are on the margin just as they get into work and emerge from poverty. I predict that we will see a U-turn on that policy, and if it is the 23rd U-turn, it will be one of the best of them.
Why does the lack of stability in marriage matter? We all recognise that most single parents do a fantastic job in very difficult circumstances—I noted earlier interventions on my speech to that effect—and they must enjoy our
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full support. Nothing that I am saying constitutes an attack on them. However, policy must be based on evidence, and the evidence is very clear. It shows that, on average, children who are brought up in single-parent families do less well than children brought up in two-parent families according to every significant measure: educational attainment, health, the likelihood of getting into trouble with the law, and alcohol and drug abuse. I do not think it wrong for the Government to try to recognise what works when it comes to bringing up children.
Some may be tempted to respond to what I am saying by suggesting that the principal cause of the different outcomes is not marriage but wealth, and that it just so happens that wealthier people are more likely to get married. However, the facts do not support that. No one is trying to argue that marriage is the only important consideration, or that wealth is not relevant—of course it is—but data show substantial differences in family stability between married and unmarried couples in the early years of parenthood, even after the discounting of socio-economic factors such as age, income, education and race.
Most notably, the difference in family breakdown risk between married and cohabiting couples is sufficient that even—this is an important point—the poorest 20% of married couples are more stable than all but the richest 20% of cohabiting couples. It is foolish to make ourselves the odd one out in comparison with other developed countries such as France, Germany and America. Why do we not recognise marriage in our tax system, and why has the Minister not fulfilled the pledge that we made in our manifesto?
As we all know, recognition of marriage in the tax system specifically through a transferable allowance brings heightened child development benefits. In a culture that encourages parents to go back to work as quickly as possible, even though research demonstrates that this is a key time for developing attachment which has huge implications for the later development of a child, the provision of a transferable allowance makes it easier for one parent to stay at home to be with their children. I am not saying that everyone will want to do it, I am just giving an opportunity. I am not requiring anybody to do anything.
Helen Goodman: Will the hon. Gentleman give way?
Mr Leigh: I have given way to the hon. Lady once. I will make a bit of progress and if she is really desperate, of course I will let her in because I am very fond of her, as she knows, and we have served together in a Select Committee.
Polling demonstrates that staying at home is a choice that parents want to exercise. That is all that we are talking about here; we are talking about choice—no requirement. For instance, a 2008 YouGov poll for the Centre for Social Justice, run by the Secretary of State for Work and Pensions, found that 88% of parents thought that more should be done to help parents who wish to stay at home and bring up their children in the early years and 97% agreed that the Government should do more in that area. What other policy has 97% support?
A 2009 YouGov poll for the Centre for Policy Studies found that only 12% of mothers wanted to work full time, 31% did not want to work at all. Only 1% of
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mothers with children under five thought that the mother in a family where the father worked and there were two children under five should work full time, 49% thought that she should not work at all and fathers, when asked the same question, offered an almost identical response. So the facts are there in the opinion poll data. Only 2% thought that mum should work when her husband worked and the children were under five, and 48% thought that she should not work at all.
Many people are forced into work. Many mothers want desperately to be at home looking after their children when their children are very young, but they simply cannot afford to do so. No one suggests that a transferable allowance will solve the problem of family breakdown or make it incredibly easier for families to cope, but it will be a step in the right direction and a small gesture that we in Parliament could make to mothers who desperately want to stay at home and look after their young children.
Many women, rightly, want to work; they have good jobs. Why should we be forcing young women with very young children into low-paid jobs when they want to be at home looking after their children? Why should we create a tax system that militates against women making that choice?
Helen Goodman: I am grateful to the hon. Gentleman for indulging me. He makes a powerful point. Many mothers of small children want to work part time. I worked part time as I am sure did many other hon. Members. I want to bring the hon. Gentleman back to the facts. When the tax system changed from one that included a transferable allowance to one that did not, was there evidence of any impact on family breakdown?
Mr Leigh: I confess that I cannot go back to 1999 and I do not know what data were then available to the Chancellor, but the hon. Lady cannot deny that our tax system is unfair because it militates against the choice to stay at home. Surely I can take the hon. Lady just this far, if no further—that it should be a free choice for women with young children whether they work or not, and the tax system should be neutral. That is all that we are asking for. The hon. Lady can make a speech later if she disagrees with me. I do not doubt her sincerity. I am just saying that the system is simply unfair.
Britain’s failure to recognise marriage in the tax system meant, as of May 2010, that it was out of line with other developed countries, with the effect that, far from supporting the best child development environment and being family friendly, it was placing a significantly greater proportion of its total tax burden on this family type than was the case in comparable countries. In that context, it is not surprising that family breakdown, the key driver of the broken Britain phenomenon is particularly pronounced and the case for recognising marriage in the tax system is clear and compelling. So all the arguments for recognising marriage in the tax system stand in one key area. The tax burden on one-earner married couples with children in the UK has now risen such that it is over 40% greater than the OECD average.
7.45 pm
Should we be proud of that as a Conservative Government when we went to the country on the basis of supporting marriage? Why are we doing that? Why
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are we not taking action when it was a key part of our manifesto pledge to deal with broken Britain? What is even more important is that, if all the tax and benefit changes proposed for 2012 are introduced, the burden is projected to increase to over 50% more than the OECD average. So it is getting worse, not better, for every month that the Minister delays carrying out the pledge in our manifesto.
I want to go into a tiny bit more detail before I finish because the hon. Member for Bishop Auckland (Helen Goodman) made a point and I have to reply to it. If 2012-13 rates had applied in 2009-10, the tax burden on a one-earner married couple with two children would have been 20% rather than 18%—in other words, 80% rather than 73% of that on a single person. OECD figures show that in 2009 a UK one-earner couple with two children on an average wage paid 39% more than the OECD average. They would have paid over 50% more if 2012-13 rates had applied. The figures are there. They are Treasury-approved figures and there is no doubt about it. One can disagree with the policy, and no doubt the Minister will say that there are a 101 reasons why we cannot introduce a transferable allowance yet, but the figures are there. We are out of touch with other civilised countries, and we should be, above all, a civilised country that helps young mothers look after their children.
Under Labour, the tax burden on one-earner married couples with two children on the average wage oscillated between 33% and 44% greater than the OECD average. That means that the phenomenon is getting worse under a Conservative Government. I do not think that, for all those people who supported us at the election, that is tolerable.
When the burden reached the 44% level in 2007-08, the then Conservative Opposition spoke out against the extraordinary unfairness and committed ourselves to addressing it when in office through the introduction of the transferable personal allowance. It was 44% under Labour; it is now going to increase to 50%, and we are still not taking action. It is worth quoting the then shadow Chief Secretary to the Treasury, now the Secretary of State for Transport. He said that the report “Taxation of Families 2008-9”, which demonstrated that the tax burden on one-earner married couples on average wage with two children in the UK was 44% greater than the OECD average
“highlights the continuing bias in the tax system against two parent families where only one adult works. No other European country penalises families in this way. If we want to end child poverty we must end this discrimination.”—
what a ringing statement from a member of the current Cabinet—
“That is why Conservatives have pledged to reintroduce a recognition of marriage into the tax system”.
For the figure to deteriorate even further under a Conservative Administration such that the burden was over 50% greater than the average—breaking new ground never reached even by new Labour—would be a wrong thing for the Government to do, and that is why we should take action. I hope that the Minister will accept the new clause or at least give a commitment that he will address the issue in the next few months.
It would make the manifesto commitment to make Britain the most “family-friendly country in Europe” utterly ridiculous. Why is Parliament held in contempt? Why do people not follow these debates? It is because
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they vote for parties who make solemn pledges and five minutes later, when it becomes inconvenient, break them. This was a solemn commitment.
So when this new clause was promoted this afternoon there were all sorts of shufflings offstage to try to prevent its debate. I am not going to stand here and allow a solemn pledge not to be debated on the Floor of the House of Commons. It is about restoring faith in British politics. We made this pledge and many in this party will hold the Government to account on it.
Of course, some will respond by blaming the previous Administration’s economic mismanagement and the debt crisis—we do have a debt crisis—saying that the Government intend to make these changes but first have to deal with the debt crisis left by the previous Administration. I am sure that we will be told that this afternoon, but I do not accept it. Even if challenging times require a country to cut spending and increase tax, that does not mean that the way it shares out its bigger tax burden has to increase the already disproportionately negative effect on one same family type. We are all in this together, are we not? We are all in it together when dealing with this debt crisis, so why should we tax disproportionately heavily a particular type of one-earner family?
The need to increase the total tax take should be used as an opportunity for redistribution in the tax system—this may appeal to Labour Members—so that it is shared out more fairly between families and single people, even as it increases overall. I might even take Labour Members that far, for do they not agree with fairness among all family types? Interestingly, the tax burden in the UK on one-earner married families with children is on average 73% of that on single people on the same wage with no dependants. I have nothing against single people with no dependants, but what we are doing at the moment is manifestly unfair. Our system is disproportionate compared with the arrangements in other countries—our figure is 73% whereas the OECD average is 52%, so other countries are at least trying to address this state of affairs. Moreover, the tax burden on single people in the UK has fallen steadily since 2007, such that it is now lower than the OECD average. That is great—I have nothing against that—but we should not unfairly discriminate against other people. How can we allow the tax burden on one-earner married couples who have two children and are on an average wage to rise from 73% of that on a single person on the same wage to more than 80%? That is why I said to the Minister that this situation is getting worse and worse with every month and year that we delay taking action on a solemn manifesto pledge.
The ongoing arguments for recognising marriage in the tax system have been greatly enhanced by the fact that, other things being equal, the tax burden placed in this country on one-earner married couples on an average wage with two children will rise to more than 50% of the OECD average. We need a swift recognition of marriage in the tax system—the case is overwhelming. It will also probably take Her Majesty’s Revenue and Customs two or three years to make the necessary changes. Depressingly, even if the Minister were suddenly to announce today that he was going to do this, it might take two or three years for it to happen, so it is even more important to act. This is even more important than raising the personal allowance to £10,000. That Lib Dem policy concentrates on individuals, rather
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than families and, thus, favours two-income couples, rather than single-earner couples. The Government’s policy is actually making the situation even worse. With that, I rest my case and just plead with the Minister to try to recognise a solemn manifesto pledge.
Mr Kevan Jones: New clause 5 would allow married couples to transfer their personal income tax allowances between each other, along the lines of what was said by the Prime Minister and the Secretary of State for Work and Pensions during the election campaign about recognising marriage in the tax system. The new clause is not exactly what the Conservatives were proposing at the general election, and I shall deal with the differences in a while. The important point, which has not been clearly articulated by the hon. Member for Gainsborough (Mr Leigh), is that this policy arose from a 2005 report by a Conservative think-tank, the Centre for Social Justice, on the breakdown of the family. Its main argument was that marriage is the important point in keeping families together, tackling poverty and dealing with all the other arguments that he has covered. It also supported the introduction of an incentive in the tax system to encourage people to marry, and I shall return to that in a moment. I am not sure that most people who get married are thinking about the tax system before they decide to do so.
Andrew Gwynne: My hon. Friend makes a reasonable point and one that we were discussing on the Back Benches earlier. I am married and all three of my children attended my and Allison’s wedding in 2003. We did not need a tax allowance in order to get married—that is the important factor here that is being missed.
Mr Jones: I am sure that the hon. Member for Gainsborough will be shocked at the fact that my hon. Friend’s children actually attended his wedding. I did not realise that my hon. Friend was such a progressive individual, but he makes a perfectly good point.
Mr Leigh: The hon. Gentleman knows perfectly well that I am not suggesting for a moment that people get married in order to get tax allowances—I have never said that. All I am saying is that the current system is unfair, because it militates against a family on modest earnings where one person wants to stay at home to look after children. Of course nobody gets married in order to get a little tax allowance, but why should we have an unfair tax system?
Mr Jones: I actually do not understand why all this is unfair, because the new clause would give an advantage to people who are married but do not have children. I do not know how the new clause does what the hon. Gentleman is proposing in terms of keeping family units together and alleviating child poverty.
The important point relates to what was in the Conservative manifesto. What came out of that Conservative think-tank was the idea that marriage was an important point in keeping the family unit together and ensuring that children and wider society were not disadvantaged by a breakdown in the family unit. The manifesto made a commitment to “recognise marriage” in the tax system. It proposed that couples and civil partners who were basic rate taxpayers should be entitled to transfer just part of their allowance—this was worth,
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in effect, up to £150 a year. That is very different from what is contained in the new clause, because it makes no mention of civil partnerships. Given the names of the people who are supporting this proposals, I suspect that this has come from the wing that has not quite gone all the way in being the new cuddly Conservative party in terms of even envisaging the idea that civil partnerships, with or without children, could constitute a family unit.
As the hon. Gentleman mentioned briefly, the policy came unstuck in the coalition agreement because this proposal is clearly not supported by the Liberal Democrats. I believe that during a general election television interview, the Deputy Prime Minister called it “Edwardian”.
Mr Jones: Well, yes. I can think of several people in the Chamber who are—
Mark Tami (Alyn and Deeside) (Lab): Mediaeval.
Mr Jones: They are mediaeval in some cases, as my hon. Friend mentions.
Andrew Gwynne: The Deputy Prime Minister did not just say that this proposal was Edwardian. I believe that he went on to say that it was also patronising drivel.
Mr Jones: That is a bit rich coming from the Liberal Democrats, because most of the things that they come out with are patronising drivel. However, they were clearly not happy about this policy, so in the scramble to get the red boxes and cars they had to reach some type of compromise. Thus, the coalition agreement simply states that there will be a provision whereby the Liberal Democrats can abstain at some point in the future when this policy is introduced.
Helen Goodman: Are they going to abstain tonight?
Mr Jones: Possibly. The 22 June Budget made no announcement on where this policy stood and on what was happening to it. I can understand the annoyance felt by the hon. Member for Gainsborough and others, who clearly think that this is a vital piece of legislation that was promised to the electorate. It was obviously a key point: I am sure that a lot of people went to the ballot box thinking that if they would get an extra £150, they would vote Conservative. That pales into insignificance when set against what has been taken away from them since this Government came into power.
8 pm
Mr Stewart Jackson: I expect better of the hon. Gentleman than the trivialisation of this important issue. He is better than that. I know he is probably working up to the filibuster that is usual from him when we do not have a guillotine on our business, but does he concede that low-income families in North Durham who are eligible for working tax credit and in which one parent wishes to stay at home to look after the children will miss out on the child care element of that credit? That is the reality, and he should address those issues rather than trivialising the subject through knockabout.
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Mr Jones: I am not trivialising the subject, but I will say to the hon. Gentleman that the real difference in North Durham was made by provisions opposed by him and his party, such as tax credits, which raised hundreds of families out of poverty, and the Sure Start initiatives, which were important in poor communities such as Stanley in my constituency and gave real life chances to youngsters from poor backgrounds. I will not take any lectures from a Conservative on alleviating child poverty. I hasten to add that since this coalition Government came to power, many families, including many individuals whom I met the other day at a school in my constituency, will lose the education maintenance allowance. That was not a luxury but a vital part of supporting those children in education and giving them the access to higher education that generations before them had never had.
Mark Tami: Would my hon. Friend like to add the minimum wage to that list? That was also opposed by the Conservative party and helped to lift many children out of poverty.
Mr Jones: I totally agree with my hon. Friend. I remember the debates on the minimum wage as a trade union official, as he will too, and we were told that it would wreck the economy, but in the north-east alone 110,000 people got a pay rise thanks to that change. It is interesting that we are now hearing proposals from Conservative Back-Benchers to change the system and that people who are disabled and others should perhaps be offered a lower rate of minimum wage.
Dan Rogerson (North Cornwall) (LD): While the hon. Gentleman is patting himself on the back about the great successes of the previous Government, can he tell us which he thinks would have the best effect for working families with low incomes: scrapping the 10p rate or raising the income tax threshold, as this Government are doing?
Mr Jones: The hon. Gentleman must be honest with my electorate in North Durham about the fact that although the Government have increased personal allowances they have taken away money in others ways, such as the increase in VAT and the £140 million of cuts that Durham county council will have to impose over the next three years. Those cuts will have a direct effect on many of those poor families. The Liberal Democrats can claim that they have had great success, but if that is their only claim they should be honest with people and tell them what they have lost, as well, through such vicious policies. The hon. Gentleman should remember that this Conservative Government would be doing nothing without the support of him and his Liberal Democrat colleagues.
Helen Goodman: Another problem with raising the tax thresholds—a provision constantly promoted by the Liberal Democrats—is that, as I am sure my hon. Friend has not forgotten, the biggest beneficiaries are those who are highest up the income scale. The biggest value of the change is not to the people at the margins—those who are just caught or just not caught by the tax boundaries—but to the people higher up the income scale.
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Mr Jones: My hon. Friend makes a good point, but she knows as well as I do that many people in County Durham are facing unemployment as a direct result of the spending cuts. Many of those people will be taken out of paying income tax altogether because they will not have a job. For Members to try to trumpet that policy, not realising the damage they are doing to regions such as the north-east of England, is disingenuous.
I understand the argument made by the hon. Member for Gainsborough, which is that marriage is key in ensuring that we have the units that will lead to less crime, less social breakdown and so on, but—I am sorry—I do not accept that. The root cause of many of those issues is poverty. If we consider the examples given by the hon. Gentleman, as well as those given by the Secretary of State for Work and Pensions when he toured his Glasgow housing estate, we can see that £150 will not make a great difference to lifting anyone living on such a council estate out of poverty or giving life chances to the young children who live there. We should address poverty, and, in my opinion, provisions to do with the tax system and marriage are not the way to do that.
Mr Stewart Jackson: The hon. Gentleman is being very generous in giving way. Would he care to comment on the UNICEF study, produced in 2007, which showed a league table ranking the well-being of children in 21 developed countries, including their material, educational and subjective well-being, their health and safety, their behaviour and the strength of their family and peer relationships? Under the hon. Gentleman’s Government, Britain came bottom of the league.
Mr Jones: I think that report has been discredited, but I can look at the north-east of England and my constituency and consider the changes in employment that happened under the previous Labour Government as well as the life chances we gave to individuals, the new hospitals we provided and the investment we made in things such as Sure Start centres. Although I accept that such changes will not have benefits straight away, they will have real benefits over the lifetimes of those individuals. The Government that the hon. Gentleman supports is taking away such provision and says that the state is not important in one respect while, in this case, they want the state to engineer people’s private lives socially. I find that a completely contradictory stance, but, again, the hon. Gentleman is a Conservative and is therefore allowed to be contradictory.
Andrew Gwynne: My hon. Friend is being generous in giving way and he is making the point that the state can be family friendly through its policies without having to give away a tax break to people based on their marital status. The previous Labour Government made great changes by giving life chances to young families, in particular, without having to manufacture the tax system in such a way.
Mr Jones:
My hon. Friend makes a good point. A little later, I shall discuss what our Government did to recognise the fact that if we are to address the issues raised by the hon. Member for Gainsborough about child poverty, the tax system and marriage are not necessarily the way to do it. The way to do it is to ensure that the money goes to the families and children who
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are affected. That is why the child tax credits and other such provisions were vital in raising people out of poverty. Earlier, my hon. Friend the Member for Alyn and Deeside (Mark Tami) mentioned the minimum wage, which lifted a lot of very poor individuals out of poverty who were getting a pittance. I remember seeing as a trade union official an advertisement in the jobcentre in Newcastle that read, “Night guard, bring your own dog, £1.35 an hour.” That is a thing of the past. I hope that it will remain so, but I do not know, as we hear from Conservative Back Benchers that they might want to change the minimum wage in some way.
Helen Goodman: It was interesting that the hon. Member for Peterborough (Mr Jackson) mentioned the UNICEF report, because Denmark came at the top and Britain came very low down. I want to remind hon. Members that Denmark has the highest rate of lone parenthood and the Danish can combine that with good child well-being because they have a strong welfare state. Does not my hon. Friend think that that is far more important in addressing child poverty and well-being?
Mr Jones: It is. To be fair to the hon. Member for Gainsborough, he did say that being a lone parent does not make someone a bad or unfit parent. My hon. Friend the Member for Denton and Reddish (Andrew Gwynne) had three children before he got married, but that does not make him a bad parent. [ Interruption. ] He says, “I don’t know,” but I do not think it makes him a bad parent: it is something that he and his partner chose to do. As he said earlier, the offer of a tax break of £150 a year would not make any difference to whether people decide to have children before or after they marry. Indeed, I have many friends who have children and who have never married and have no intention of doing so.
Barry Gardiner: Has my hon. Friend considered the situation of people like my mother whose husband, my father, died when I was a child? Under the proposed system, she would have found that the support was taken away at the very time when financially she needed it most. That would be the effect of the measure, which pays no real attention to the needs of the family or the needs of the child.
Mr Jones: My hon. Friend makes a very good point. The proposal is not subtle at all and his personal example is a good one. Why should someone who loses a spouse in an accident or through natural causes be penalised because, through no fault of their own, they have lost their spouse? That is the problem with trying to use tax in relation to marriage. As I have said, the measure is very different from what was put forward in the Conservative manifesto because it does not include civil partnerships. It clearly is not what Conservative Back Benchers have read in their own manifesto.
Mr Chope: The answer to the hon. Gentleman’s point was put succinctly in a Daily Telegraph editorial of 11 July 2007, which asked
“why should favouring married couples be an unacceptable interference when favouring single ones, as this Government does, is not?”
Mr Jones:
The hon. Gentleman knows that there are always winners and losers in any tax system. I am very surprised at him because I know that he has very
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libertarian views on a whole host of subjects, which we have heard on many occasions in the Chamber. Is he really suggesting that we should use the tax system socially to engineer society by saying that people should marry rather than cohabiting or, as has been mentioned, becoming single through separation or bereavement? I am surprised at him because I thought he was very much against the state doing anything, but the measure has the state wanting to determine or influence exactly what an ideal society should be. I am sorry, but the statistics just do not bear out what the hon. Gentleman proposes. If such tax measures worked as a way of bolstering marriage and keeping families together, we would have expected marriages to rise with the married man’s tax allowance through the 1960s and 1970s, but they did exactly the opposite—we had record levels of divorce and separation. Hon. Members should look at the facts. Tax measures have not succeeded in doing that in the past, and I doubt whether they will in future. They certainly will not encourage anyone to get married for a small financial benefit.
It is important to dispel one myth, which has been put forward again by the Conservative party—the fact that a wicked Labour Government somehow did away with the married couple’s tax allowance and that Labour is responsible for the degeneration of society that the Secretary of State for Work and Pensions describes in his report. It is important to recognise what the previous Conservative Government did on this. It was Chancellor Norman Lamont in the 1993 Budget who proposed that the married couple’s tax allowance should be restricted to 20% from April 1994. That was the first time that happened for the basic MCA, which for a couple under 65 was then £1,720, so it was worth something like £608 for those who were on marginal rates of 40%, but only £344 for those on marginal rates of 20%. We then had the argument that it was unfair to have different amounts for people on higher tax rates than for those on lower tax rates. The then Chancellor said:
“There is no good reason why an allowance intended to recognise the responsibilities of marriage should give least to those on low incomes and most to those right at the top of the income scale.”—[Official Report, 16 March 1993; Vol. 221, c. 182.]
In the November 1993 Budget, the current Justice Secretary confirmed that change and went on to announce that the MCA would be further restricted to 15% from April 1995, so there was a slow change in the system. The provision restricting the MCA was made in section 77 of the Finance Act 1994. When this was debated in Committee, there was general support for the idea that the MCA should be the same across the board.
8.15 pm
Helen Goodman: My hon. Friend’s description of what happened in the 1990s reminds me of an issue that I do not think the hon. Member for Gainsborough (Mr Leigh) addressed. One of the big debates on this subject was about the fact that transferable allowances reduce any scope for financial privacy within a marriage. A number of people felt very uncomfortable about that. Does my hon. Friend have any comments on that?
Mr Jones:
My hon. Friend makes a key point and I understand why she makes it. This goes right back to when income tax was introduced in the 1790s, when a spouse’s income was the property of the husband. That
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was the basis on which income tax was brought in and it continued for centuries. There was no recognition that even within marriages people might have separate tax affairs or sources of income that needed to be recognised.
It is interesting to look back at the debate that took place about the MCA. Baroness Maddock, who was then a Member of this House, argued that the MCA was
“a relic of the days when a husband was taxed on his wife’s income as well as on his own. It contravenes the principle that marriage should be tax neutral.”—[Official Report, Standing Committee A, 22 February 1994; c. 344.]
Mr Chope: The hon. Gentleman quotes my predecessor, the then hon. Member for Christchurch, but in order to emphasise how out of touch her opinions are, may I tell the hon. Gentleman that there is no longer a single Liberal Democrat councillor in the whole of my constituency?
Mr Jones: I am very pleased to hear that but I am not sure that that is very good news for the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) to whom I understand the Baroness is now married. However, I take the hon. Gentleman’s point.
Interestingly, the then Chief Secretary to the Treasury, Michael Portillo, concurred with Mrs Maddock’s view. The then Chancellor, who is now the Justice Secretary, recognised that and announced in his Budget speech that there would be a two-stage restriction of the MCA, stating:
“Now that husbands and wives are taxed independently—one of the best taxation reforms in recent years—the married couple's allowance is a bit of an anomaly.”—[Official Report, 30 November 1993; Vol. 233, c. 935.]
The important thing that this demonstrates is that change was taking place under a Conservative Government, and that it was not the wicked previous Labour Government who came up with this idea. However, the change did set off the forces who were arguing that the changes were wrecking marriages. In 1995, a major paper called “Farewell to the Family” appeared. It made much of the fact that the measure would change families and discourage people from marrying.
Stephen Pound (Ealing North) (Lab): Does my hon. Friend agree that it is a pretty poor show if a couple united in love and affection for each other decide to get married simply for the sake of some miserable, mean, pusillanimous fiscal mechanism? Would it not be a more healthy world if we could get the accountant out of the couple’s marriage bed, and concentrate on the important thing: two people who love each other, not two people who are trying to save a few bob from the Treasury?
Mr Jones: As usual, my hon. Friend makes a very good point. He raises the idea of the accountant in the bed. I do not know of many couples who, when they are ready to get married, sit down with their accountant to work out the financial benefit to them. I am sure that for many, something other than money comes into the decision to marry or start a family—a point that I demonstrated earlier.
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Mr Stewart Jackson: As I said earlier, the hon. Gentleman aspires to be the County Durham filibustering champion; no doubt he will be on his feet for many more minutes. Is he seriously denying the findings of the British household panel survey, which found that the average length of cohabitation is just over three years, and led it to conclude in its paper that, compared to marriage, cohabitation was a significantly more fragile and temporary form of family? Just one in 11 married couples split up before their child’s fifth birthday, compared to one in three unmarried couples. Those are the facts; is he disagreeing with them?
Mr Jones: As for filibustering, this is nothing; I think that my record is two and a half hours. If the hon. Gentleman would like to keep intervening, I am sure that I can try to beat that. I do not deny what he says, and it is all right to cite the facts, but should one necessarily go on to say that those facts are a bad thing for society? Is he genuinely saying that the relationships of people who cohabit are any poorer than those of people who are married? Likewise, is he suggesting that if people decide, after marriage or cohabiting, to split up, that makes them bad individuals in some way—or, if they have children, bad parents? I know many cohabiting and divorced couples and single parents who are perfectly good parents and role models and work very hard to ensure that their families contribute to society financially and to local community life. The statistics that he cites are fine, but what is not fine is the next bit—the suggestion that the situation will somehow lead to the breakdown of society, or the idea that the family as a unit is the only answer to people’s lives these days. It is not.
That goes back to a Victorian notion. Before the Victorian period, it was not uncommon for people not to get married for many years. Marriage was a Victorian fashion, but in Georgian times many people did not get married at all, and raised perfectly good families. I am not sure that society came to a grinding halt because people were not married, or because there was not a tax system that encouraged people to marry.
Mr Jackson: Perhaps I might invite the hon. Gentleman to make a causal link, because he is not challenging the substantive point that I made with the figures that I gave. He will know that the Centre for Social Justice report of May 2011 found that children who do not grow up in a two-parent family are 75% more likely to fail at school, 70% more likely to be a drug addict, 50% more likely to have an alcohol problem, and 35% more likely to experience unemployment. That is not about traducing single-parent families, or besmirching their commitment to their children, but there is a causal link to family breakdown, which the hon. Gentleman denies.
Mr Jones:
That is complete nonsense. When the Secretary of State for Work and Pensions was in opposition, we saw him walking around the Easterhouse estate, saying how dreadful things were. That is not down to whether people are married; it is down to poverty. That is the key driver of the pressures that people face. It is all very fine talking about drug use, but I have worked with an organisation for parents of drug addicts in Durham, and most of those parents are middle class. They have stable homes, but they have drug-addict sons and daughters. They are not bad parents, and it is not down to whether they are married. The hon. Member
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for Peterborough (Mr Jackson) and the Centre for Social Justice report make the mistake of saying that the family units that he describes are the reason for poverty. They are not. Addressing poverty, which we were doing through measures such as tax credits, is the way forward, rather than social engineering, and £150 a year will not go very far in encouraging people to stay married—or, for that matter, alleviate child poverty at all.
Stephen Pound: Does my hon. Friend agree that there is not a person in this marvellous, glorious, gorgeous building who fails to accept that couples together often nurture and raise children in a happier and better way, although they are not the only ones? However, we are not arguing about the sanctity of marriage; we are arguing about a backhander from the state—a few bob. The hon. Member for Peterborough (Mr Jackson), who was a bank manager and may well have interposed himself in a few intimate relationships in his time, is speaking very much from the perspective of the Conservative who sees everything in terms of money and fiscal benefit. Is there not a better way?
Mr Jones: There is, but the new clause that we are debating—I do not know whether the hon. Member for Peterborough would agree with this—refers only to married couples; it does not refer to civil partnerships, for example. I know that the new Conservative party is supposed to be modern and reflective, but what about people in a civil partnership who have children, whether from previous marriages or afterwards? Are we saying that that is a worse family unit than marriage? This debate is not about the tax system for those who are married and those who are not; it is about what is in the best interests of the child. Single parents—they may be separated, or their partner or spouse may have died, as my hon. Friend the Member for Brent North (Barry Gardiner) said—work very hard. This is about the child. The problem with the proposal is that it would reward people with no children.
Barry Gardiner: Does my hon. Friend accept that he has perhaps calumniated Georgian England—inadvertently, I am sure? Does he accept the wisdom of Jane Austen, who of course said:
“It is a truth universally acknowledged, that a single man in possession of a good fortune”
“must be in want of a wife”?
My hon. Friend’s suggestion that marriage was not as common in Georgian England as in Victorian England is somewhat belied by Austen and other authors of the age.
Mr Jones: Let us consider Georgian and Victorian England. It might have been fashionable for someone with £5,000 a year in Georgian England to be married, but in many post-industrial cities of northern—
Mr Deputy Speaker (Mr Nigel Evans): Order. I fear that we are straying a little far from the point. Any chance of getting back to the 21st century?
Mr Jones:
I think this is an important point, Mr Deputy Speaker. The main thrust of the argument that has been made is that marriage, and taxation in marriage, has been consistent throughout history, but it has not. Like
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a lot of things in this country, it has been looked at through a Victorian prism that seems to bend the reality of what took place way back then. However, I will move on to my next point.
Helen Goodman: I should like to back up what my hon. Friend says. In the major study of marriage in England from 1550 to 1750, Lawrence Stone demonstrated that in a commercial society with a commercial attitude—
Mr Deputy Speaker: Order. We seem to be going even further back. Keep to the 21st century, please.
8.30 pm
Mr Jones: It is important to note that income tax was introduced in the 1790s. We need not go back to the 15th century, but my hon. Friend the Member for Bishop Auckland (Helen Goodman) makes a good point, which was made earlier—the tax system treated women and their income as the property of their husbands. The supporters of the new clause argue that it would strengthen society, but there is no evidence for that. The new clause will help many people who have no children. It would apply to married couples and even retired people.
Mr Stewart Jackson: To what does the hon. Gentleman attribute the fact that many more people in County Durham, Northumberland and the north-east of England generally are keen on getting married than in, say, the south of England and London? Are his constituents wrong in supporting the institution of marriage?
Mr Jones: No, not at all. Many things in the north-east are obviously better than anywhere else in the country, but the statistics show that the number of people getting married is going down. The Secretary of State for Work and Pensions seems to think that a tax break of £150 a year will encourage people to get married, but that is not the case at all. He misses the main point.
The MCA was abolished in the Budget speech by the then Chancellor in 1999, and withdrawn in April 2000. Only married couples who reached the age of 65 by that date would be able to continue to claim the MCA. The additional personal allowance was also withdrawn at that time. The allowance equalised the MCA so it was given to lone parents, whether single, divorced or widowed, caring for one or more children under the age of 16.
Importantly, the then Labour Government introduced the child tax credit, which was vital to ensure that support went to the children. The Centre for Social Justice report suggested that marriage was important for keeping families together, but that is not the case. The important thing is how we support children. By introducing the tax credit system, we lifted thousands of children out of poverty by helping the families, whether they were married or not.
The credit took the form of an allowance which was then set at £5,200, on which relief was given at 10%. Families eligible to claim the child tax credit were able to cut their annual income tax not by £150, as is proposed, but by £520 a year. In April 2002 the credit was increased in line with inflation, making it worth £10 a week more. That was the fairest way of supporting
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families. I do not question the Secretary of State’s intention to help families, but the child tax credit was a far better way of doing it than through the married tax allowance.
The debate tonight has glossed over the cost of the proposal. We are told by the Government that we face hard times and that we must make every penny count. One reason given to explain why the proposal was not brought forward was the coalition Government; another was cost. The IFS estimated the cost of various options for introducing a transferable allowance based on different criteria. On the assumption that the allowance applied only at the basic rate of tax, which was due to be 20% in April 2008, the figures are eye-watering.
If the allowance applied to all married couples, the IFS estimates the cost at £3.2 billion. I am not sure where the Government would get such a sum from. If the allowance applied to all married couples but only half the personal allowance was transferred, that would cost £1.6 billion, so we are not talking about small amounts of money. If the object is to get that money to children, is this the best way? There is no realistic hope of the present Government doing this. I understand the annoyance of the hon. Member for Gainsborough, who thinks that he stood on a manifesto which will now not be implemented.
Stephen Pound: No one in this place would begrudge that sum if there was the slightest empirical evidence that it would be of any long-term benefit to society. There is no such evidence. Does my hon. Friend agree that that money could be far better spent on a raft of supportive mechanisms for families, particularly families with young children? That would ensure the longevity of the family unit.
Mr Jones: I agree. The money should be directed into Sure Start centres and the child tax credit, for example, but the Government are penalising single parents in some of their benefit proposals.
Another option that the IFS considered was targeting the allowance at married couples with dependant children or those receiving carer's allowance. The estimated cost of that was £1.5 billion. The final and cheapest option was that it would be given only to married couples with children under the age of six, which would cost £900 million. The various options illustrate the complexity of the policy and the questions that arise from it—whether it should apply to everyone or only to the groups that I outlined.
As the hon. Member for Gainsborough pointed out, whatever system is chosen, there are winners and losers. If we believe, as the hon. Member for Peterborough clearly does, that keeping people married is so important that everyone should get the allowance, the price tag is totally unaffordable, but doing anything less would undermine the main argument put forward.
It is worth recognising what that would translate into in cash terms. If it applied to the full personal allowance, the amount provided as an incentive to remain married would be quite meagre, at about £20 a week, which I am not sure is a great incentive. The rationale is that it needs to be fair and large enough to make a difference,
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but I do not think that a couple whose marriage is breaking down would stay together for an additional £20 a week. Whatever figure we come up with, I doubt whether it would actually make a real difference in determining not only whether a couple gets married in the first place, but whether they will separate after a period of marriage. When it comes to enabling families to stay together as a unit, clearly the important point is poverty. That pledge was made before the general election by the previous Prime Minister. I think that everyone, even those influenced by the darker forces on the traditional wing of the Conservative party, agrees that the modern family takes many forms.
Stephen Pound: My hon. Friend is young and has not been around for a enormously long time. When Mrs P and I were married in June 1976, virtually everyone got married just after the beginning of the financial year, which was a nonsensical system, with churches doubling the cost of altar servers. I assure him that one of the disadvantages of the married couple’s allowance was the great logjam of spring weddings. Despite that, Mrs P and I are still together.
Mr Jones: I have not had the pleasure of meeting Mrs P, but she certainly deserves a medal for the longevity of her marriage to my hon. Friend.
Mr Leigh: I am not sure that that intervention was entirely helpful, because the hon. Member for Ealing North (Stephen Pound) has just proved that tax policy at that time did influence behaviour.
Mr Jones: It might have done, but clearly if it raised the cost of a wedding, any financial benefit that people got from their £150 would soon be used up as a result of the extra costs involved. It did nothing to ensure that people stayed together longer.
Stephen Pound: I appreciate that we are treading on you patience, Mr Deputy Speaker, but I should note that it was probably a fear of Father Padraig that kept Mrs P and I together for the first three decades, rather than any small financial advantage.
Mr Jones: I understand why my hon. Friend and Mrs P have stayed together. Although the allowance might be an incentive to get married, the important point is that it does nothing to ensure that people will stay together for longer than the tax year. As has been mentioned, what is proposed would be very unfair. What happens if someone loses a spouse though no fault of their own, for example as a result of a tragic accident? Why should someone who finds themselves suddenly bereaved through no fault of their own after an accidental death, possibly with young children, be penalised by the tax system? It would be very difficult to introduce flexibility into this system to take account of that, and if we compare that with the tax credit system we will see that the important point is to support families and their children.
I will turn to some of the statistics on marriage that the Conservative party is putting forward. The hon. Members for Gainsborough and for Mole Valley (Sir Paul Beresford) are not known as great state interventionists, but by arguing that the tax system should be used to encourage people to marry, they are suggesting that the
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state should determine a certain model of behaviour. I find that very strange coming from Conservatives who deplore the nanny state and argue that the state should not interfere in people’s lives. There is an inconsistency there that needs to be answered.
Mr Stewart Jackson: The charming Maggie Pound deserves a long-service medal at the very least for putting up with the hon. Member for Ealing North (Stephen Pound).
On the merits and logic of the argument that the hon. Member for North Durham (Mr Jones) is making, is he suggesting that there is no place for fiscal incentives in directing personal and public policy? If so, does he think that we should not fine motorists for breaking the speed limit, for instance, because that is the logical corollary of his last remark?
8.45 pm
Mr Jones: I am not saying that at all. I am saying that the hon. Gentleman, his party and, certainly, the more blue-blooded elements of it very strongly argue that the state should not intervene in people’s lives, including, in some cases, motorists’ lives, but what we have in new clause 5 is the right of the Tory party arguing for direct state intervention in something very personal: somebody’s personal relationship.
Earlier, it was said that a tax system would encourage people to get married, but there is no evidence of that at all. In the late 1960s and ’70s, when the old married man’s tax allowance was in place, there was a record rise in divorces, but that was less to do with the tax system and more to do with the change in society and the law that clearly made it easier to get divorced or to choose not to marry at all. Again, the idea that £20 a week will encourage somebody not to divorce is quite ludicrous. All the studies find that we would need to offer a considerable amount of money to prevent people from divorcing.
My hon. Friend the Member for Bishop Auckland (Helen Goodman) raised the issue of international comparisons, somebody else mentioned Denmark and other countries and the hon. Member for Gainsborough mentioned the fact that we are one of the few countries not to recognise marriage in the tax system, but there is no evidence to suggest that taxation as an encouragement to get married does anything to hold the family unit together.
Clive Efford (Eltham) (Lab): I have listened to my hon. Friend’s speech with a great deal of interest. On fiscal incentives for people to stay together, does he agree that the cost of running two separate households is a major financial consideration for people living apart? It far outweighs any fiscal benefit that the taxation system could deliver.
Mr Jones:
I agree. The changes being made to housing benefit will not do anything to help families stay together. My hon. Friend is a London Member, so he will know that families will be forced to move out of central London because of the Government’s changes to housing benefit rules. That is one of the inconsistencies of this Government. On the one hand they say that a tax break of £150, or £20 a week, will help to keep the social unit together, and on the other they—the same Minister,
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I hasten to add—pursue policies on housing benefit and other benefit changes that will not help at all to keep families together but will lead to the root cause of most of these issues: the poverty that affects such individuals.
I turn to some of the problems with the Bill as framed, and to what we have before us. New clause 5 is not the measure in the Conservative party’s most recent election manifesto. This proposed change includes married couples but excludes civil partners, who would not be covered by the new clause. When there was an outcry and complaints about what had been proposed at the election, the Prime Minister included civil partners at the last minute.
People would have to opt in to this system and elect to transfer their part of an allowance. That would be very unfair to many people who do not understand tax codes. I have just got my annual tax return and I keep putting it to one side, as most people do, until the deadline arrives. Introducing a system whereby people have to elect to transfer a certain allowance may well help the more articulate middle-class people who can do that when they fill in the form, but I am not sure that some of the people on poor council housing estates in Glasgow whom the Secretary of State for Work and Pensions is trying to address will have the wherewithal or knowledge to do it even if they knew that the option was available.
The Government have told us that they wish to simplify the tax system, but the new clause would make it a lot more complicated. In trying to bolster marriage, it would help certain groups of people but not others. Whenever we do anything with the taxation system, we should try to make it as user-friendly as possible. If someone opted to move their allowance around, that would be quite complicated because people’s incomes change throughout the year, so they might have a certain allowance available in one year but not another. The system would incur not only the £3 billion-plus cost of having it open to everyone but the cost of trying to work out how the tax office would administer it. In that respect, the new clause is not well thought out.
The Government have got themselves into a bit of a logjam on this. The Prime Minister is clearly committed to this policy. His Back Benchers are now worried that it cannot be implemented because of the coalition agreement. Huge amounts of public money would be used, but would it have any effect on child poverty? No, it would not, and neither would it affect most families. Moreover, it would help people without any children, including pensioners.
Kate Green (Stretford and Urmston) (Lab): Leaving aside couples where there are no children in the household, does my hon. Friend agree that married couples typically tend to come from the better-off social classes and that, while I am sure that this is not what the hon. Member for Congleton (Fiona Bruce) intends, a tax break for marriage would therefore benefit the better-off?
Mr Jones: My hon. Friend has great experience in this area, and she makes a clear point. People on lower incomes and possibly of lower educational standing than others will not look at the tax system and say, “I’m going to stay married because somehow I will be financially better off.” That is why it is important to simplify the tax system.
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If we are looking to help children, this proposal would not do that. Indeed, some aspects would be detrimental to families, especially put alongside the Conservatives’ existing proposals on changes to the tax and benefits system. We need an honest debate on the family, child poverty and how we can build communities. By investing in Sure Start and child tax credit, the last Labour Government raised a whole group of individuals out of poverty. That was the way to do it. If money is tight, it needs to be targeted very carefully.
The approach that has been put forward, which recognises marriage, is not targeted and will not have the effect that the Secretary of State for Work and Pensions wants. That is unfortunate, because I think that he is well intentioned and has just come to the wrong conclusions. It will be interesting to see whether the Government accept the new clause. I do not think that they will, because it is not what the Prime Minister and the Secretary of State for Work and Pensions outlined in the manifesto or in the lead-up to the general election. It will be interesting to see how much pressure the Liberal Democrats can bring to bear to ensure that this proposal never sees the light of day. The coalition agreement says that they can sit on their hands if it is brought forward.
In conclusion, the individuals who are trying to address this issue, including the hon. Member for Gainsborough who is well intentioned and thoughtful in trying to do the best for families, have got it wrong in thinking that the answer is marriage. The root cause of social breakdown is not that people are not married, but poverty. We need to ensure that not only the tax system, but the benefits system and everything else, supports families, whether the parents are married, single, in a civil partnership or whatever. As has been said, and as the modern part of the Conservative party recognises, the modern family comes in all shapes and sizes. One size does not fit all and one solution does not fit all. Giving a pathetic sum of money to support marriage will not relieve child poverty; nor will it ensure that people stay together longer if the taxman will raid their savings or income if they do not. I do not think that this is the answer, and if it goes to a vote I will oppose it.
Fiona Bruce (Congleton) (Con): Only a few days ago, on father’s day, the Prime Minister stated:
“I want us to recognise marriage in the tax system so as a country we show we value commitment”.
I believe that the Government’s commitment to introduce such a provision is genuine. It was in the Conservative manifesto, it is in the coalition agreement, and I trust that the Government will introduce it in this Parliament, just as they are addressing the couple penalty. I warmly congratulate the Government, and in particular my right hon. Friend the Secretary of State for Work and Pensions, on the work being done to address this subject.
Kate Green: I know that the hon. Lady and her colleagues feel strongly about the couple penalty. Does she not accept that the design of the benefits cap that her Government are proposing will bring in a couple penalty—something that I thought they were trying to remove?
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Fiona Bruce: The Government are seeking to support families and stable communities. In supporting marriage, that is what we are seeking to do.
Mr Iain Wright: Will the hon. Lady define what she thinks a family is?
Fiona Bruce: Committed relationships.
Under the previous Conservative Government, Britain recognised marriage in the tax system. The Labour Government did away with that in their first term. Britain’s fiscal arrangements effectively made it more challenging for people to marry than was the case in most other developed countries. Today we still live with that legacy. Apart from those in the UK, only 18% of citizens of OECD states live in countries that do not recognise marriage in the tax system. Most of them live in Turkey and Mexico. Our failure to recognise marriage puts us out of line with fellow developed countries, and that arrangement continues to be a cause for concern, for a number of reasons relating to both fairness and social well-being.
9 pm
Barry Gardiner: I notice from the amendment paper that new clause 5 is in the hon. Lady’s name. Could she explain to the House why she did not move it?
Fiona Bruce: My hon. Friend the Member for Gainsborough (Mr Leigh) kindly moved it in my stead.
Chris Leslie (Nottingham East) (Lab/Co-op): On a point of order, Mr Deputy Speaker. I do not wish in any way to dispute the hon. Lady’s version of events, but I am quite sure that I distinctly heard her—maybe the official record will show this—say “not moved” when she was asked about new clause 5. Am I wrong in my recollection of that?
Mr Deputy Speaker (Mr Nigel Evans): That is not a matter for the Chair, but I am sure that the hon. Gentleman will be able to read Hansard and work it out for himself tomorrow. As a matter of record, as he knows, it is open to any Member to move a new clause, despite the fact that the Member who tabled it has decided not to move it.
Fiona Bruce: Is it fair that when incomes are equivalised, one-earner married couples with children—
Mr Kevan Jones: On a point of order, Mr Deputy Speaker. I am sorry, but like my hon. Friend the Member for Nottingham East (Chris Leslie), I heard the hon. Member for Congleton (Fiona Bruce) say “not moved”. I think that I saw one of the Tory Whips at her beforehand, so I do not know whether they tried to persuade her not to have this debate, but I think we need to clarify this point before we move on.
Mr Deputy Speaker: The position has been made absolutely clear. Now can we please continue with the speech that is being made?
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Fiona Bruce: Is it fair that when incomes are equivalised, one-earner married couples with children, on the average male wage, find themselves thrust into the poorer half of the population in income?
Chris Leslie: I apologise for interrupting the hon. Lady’s flow, but this is really quite important. Did she or did she not say “not moved” at the beginning of the debate on new clause 5?
Fiona Bruce: I have already indicated that my hon. Friend the Member for Gainsborough kindly moved the new clause in my stead. I am very pleased that he did so.
Mr Kevan Jones: Why, because you’re not up to it?
Fiona Bruce: If I may, I will move on.
On the subject of young people’s aspirations, it is striking that surveys demonstrate that approximately 90% of young people aspire to marry, yet that is not reflected in the marriage figures. I am not suggesting for a minute that fiscal considerations are the only factor, but the Government should at least ensure that it is not more financially detrimental to marry in this country than in other developed OECD countries, if we are to be true to our determination to become the most family-friendly country in Europe.
As a Government, we should send out a clear and credible signal to young people that we value marriage and encourage their aspirations in that respect, particularly as marriage acts as a stabiliser not just for the individuals within it but for the wider community. The prevalence, for example, of the isolation and exclusion of the elderly is influenced by the wider breakdown of family and community networks, as the Centre for Social Justice stated in its “Fractured Families” report.
On social well-being, the current problems in our local communities resulting from our failure to recognise marriage are pressing. As we have already heard, in December 2006 the CSJ’s report “Breakdown Britain” clearly resonated with the public. One of the key drivers of social challenges is family breakdown.
Kate Green: Will the hon. Lady give way?
Roberta Blackman-Woods (City of Durham) (Lab): Will the hon. Lady give way?
Fiona Bruce: No, I am going to continue now, because I have given way so many times that, as has been pointed out, it has interrupted the flow of my speech.
Family breakdown is an incredibly important challenge for the Government. The cost in human terms, especially in terms of children failing to fulfil their potential, is far too high. Although most single parents do a fantastic job in very difficult circumstances, and deserve support as they do so, the evidence is that on average, the children of married parents do better on significant measures such as educational attainment, health, likelihood of getting into trouble with the law, and alcohol and drug abuse.
The crucial thing to understand about British family breakdown is that the key is not only divorce, but the break-up of cohabiting relationships, which are far less stable than marriage. The CSJ report states:
“While marriage accounts for 54 per cent of births, the failure of marriages—ie divorce—accounts for only 20 per cent of break-ups
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and 14 per cent of the costs of family breakdown, among all families with children under five. Unmarried families account for 80 per cent of the break-ups and 86 per cent of the costs.”
Mel Stride (Central Devon) (Con): My hon. Friend makes an extremely powerful case. Does she agree that Conservative Members are not denigrating forms of family other than those that involve marriage, but saying that we believe that marriage makes for a powerful start in life for children, and leads to better social outcomes on average?
Fiona Bruce: I agree with my hon. Friend in that respect—nor are Conservatives seeking to take away the support that we give to other family groups such as single parents. We are saying that there should be a tangible affirmation of the very important relationship of marriage.
A child born to cohabiting parents has nearly a one in two chance of living in a single-parent family by the time they reach the age of five, but a child born to married parents has only a one in 12 chance of finding themselves in that situation at that age.
Roberta Blackman-Woods: Will the hon. Lady give way?
Fiona Bruce: No, because I took interventions from Opposition Members earlier.
The direct costs of family breakdown are variously calculated at between £24 billion and £41.6 billion per annum—a huge amount of money that cannot be ignored, especially in times such as these. When faced with such enormous figures, a provision such as the transferable tax allowance to support marriage, and in turn to support stable families, who in turn form an important element of promoting the stable communities that we all want and that are so very much needed today, is surely worth considering.
I am aware of the argument that the principal cause for those different life outcomes is not marriage but family income, but that analysis is too simplistic. No one is trying to argue that family income is not relevant—it is—but in my view, insufficient recognition has been given in recent years to the importance of family stability in promoting the health and well-being of children.
Mr David Burrowes (Enfield, Southgate) (Con): In my hon. Friend’s careful preparation for her speech, did she analyse whether other countries have given similar recognition to marriage?
Fiona Bruce: I did indeed, and I shall refer to that before I close my speech.
The CSJ report “Fractured Families” demonstrates significant differences in family stability between married and unmarried couples in the early years of parenthood, after discounting other factors such as age, income, education and race. Even the least well-off 20% of married couples are more stable than all but the richest 20% of cohabiting couples.
It is appreciated that we do not need to preach or moralise, but if we are to be truly family-friendly we must ensure that choosing to marry is no more difficult in this country than it is in any other developed country.
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Yasmin Qureshi (Bolton South East) (Lab): Will the hon. Lady give way?
Fiona Bruce: I will give way—[Hon. Members: “No!”]
Moreover, if we rise to that challenge through the provision of a transferable allowance, as suggested by the new clause, we would do so in a way that makes it easier for one parent to stay at home for the children, which parents value and from which children benefit. That is also a matter of women’s rights, for it is often women who will exercise greater choice and flexibility. Women want that choice.
A 2008 YouGov poll found that 88% of parents think that more should be done to help parents who wish to stay at home and bring up their children in the early years, and 97% of them agree that the Government should do more in this area. Furthermore—this is of huge importance—the relative costs of introducing a transferable allowance are small when compared with the huge costs of family breakdown. I quoted those figures earlier.
Roberta Blackman-Woods: Will the hon. Lady give way?
Fiona Bruce: The transferable allowance would help to reduce those costs, and would therefore be an investment very well made. The £550 million cost of the partially transferable allowance proposed by the Conservatives prior to the general election represents just 1.3% of the direct costs of family breakdown, as calculated by the Relationships Foundation—[Interruption.]And just 2.16% of the direct costs of family breakdown, as calculated by the same organisation—
Michael Connarty: Will the hon. Lady give way, in this so-called debate?
Fiona Bruce: No. [Hon. Members: “Go on!”] I will not. [Interruption.]
Mr Deputy Speaker (Mr Nigel Evans): The hon. Lady should carry on.
Fiona Bruce: I am going to conclude.
Mr Deputy Speaker: Order. I ask the hon. Gentleman to resume his seat. Fiona Bruce has made it absolutely clear that she has no intention of giving way at this stage. I am sure that she will make it clear if she changes her mind.
Fiona Bruce:
I fully accept that the Government’s priority has been to clean up the terrible financial mess left by the previous Administration, which has necessarily involved difficult decisions, and I want to put on record today my support for the Government, who have not been afraid to grasp the nettle and make the difficult decisions that the previous Administration were incapable of making. Britain is on a much sounder footing today than was ever the case under the previous Administration, and I pay tribute to the Government’s hard work in this
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respect. However, even in the current economic environment, I believe that new clause 5 would, as I have outlined, be an investment well worth making both fiscally and socially. The Government have said that they will recognise marriage in the tax system at the appropriate time. I suggest that that time is now, particularly given that it would still take Her Majesty’s Revenue and Customs some considerable time to implement a transferable tax allowance, because of the IT and other implications.
Does the Minister agree that the increased tax burden on one-earner married couples on an average wage—it will soon be more than 50% greater than the OECD average burden on such families—commends the early introduction of the transferable allowance if we are to be, as we aspire to be, the most family-friendly country in Europe? What assessment has he made of the time it will take to make the necessary IT and other changes to give effect to the Government’s commitment to introduce the transferable allowance? If he has not made such an assessment, will he do so? I ask the Government to bring forward this legislation not when they are ready, but sufficiently in advance of that, so that all IT and planning changes can be made first, and when the money is available, transferable allowances can become operational quickly, not one or more years later.
The transferable personal allowance was a key election commitment from many of us in the House and an important reason why people voted for the Conservative party. They are now looking for action. I very much look forward to what the Minister has to say, and I will conclude with a quotation from a speech given by the Chief Rabbi in another place earlier this year:
“If the Jewish experience has anything to say to Britain today it is: recognise marriage, not just cohabitation, as in the best interests of the child. Do so in the tax system. Do so in the educational system. Do so in relationship support. Otherwise, our children will pay the price—financial, educational, medical and psychological—for generations to come. Without stable marriages we will not have strong families, and without strong families we will not have a big society.”—[Official Report, House of Lords, 10 February 2011; Vol. 725, c. 366-7.]
Jim Shannon (Strangford) (DUP): Thank you for giving me the opportunity to speak this evening, Mr Deputy Speaker. For the first time in what I suppose is a long time, I will be at odds with some of my colleagues sitting on the Opposition Benches. They are surrounding me at the moment, and I suspect that I will say something that they might not be entirely happy with. None the less, that will not stop me making my point of view heard.
9.15 pm
I believe that marriage is good for society. That is my belief, and I am unapologetic about it. Like my hon. Friends the Members for North Antrim (Ian Paisley) and for South Antrim (Dr McCrea), I believe that a Christian marriage is good for society. Does that mean that other relationships are not right? No, it does not; but it does mean that marriage has an important part to play in society. Some of the research and the evidence that other Members have mentioned is clear on that too. The evidence indicates that marriage is associated with far better child development and adult well-being—ask those in a married relationship and the children they raise—although that does not mean that other children, from other relationships are not as good.
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Kate Green: Does the hon. Gentleman not accept that the reason why children from married relationships so often do better is that their parents come from higher socio-economic backgrounds, not the fact of marriage itself?
Jim Shannon: The evidence from the constituency that I represent would indicate that that is not necessarily the case. Those who are perhaps worse off financially are in stable relationships as well. The reason I am speaking on this issue tonight is that I am reflecting not only my personal views, but—I believe—those of a large majority of the people whom I represent. I am here as the MP for Strangford to put that on the record and ensure that that opinion is well heard this evening. Many people might not like what I have to say, but hon. Members will have to accept that it is my opinion.
Barry Gardiner: I, too, believe that marriage is good for society, but surely what we have to consider this evening is whether the proposals before us would do anything to incentivise marriage and increase the number of people going into wedlock, and I do not believe for a moment that they will.
Jim Shannon: I do not believe that that is the intention of those who have put these proposals forward. I believe that they are about the unfairness in the taxation system that impacts directly on those in marital relationships. That is the reason. This is not about creating a financial incentive—other Members have suggested that it is about encouraging people to get married for an extra £150—and I do not believe for a second that it is.
Ian Paisley (North Antrim) (DUP): Does my hon. Friend agree that these proposals are not about incentivising or encouraging people to get married, but about saying to people who are married, “You will not be penalised financially”? Marriage is good for society, good for relationships and good for children, and it should be encouraged. We should not as a House try to pour scorn on the many married couples out there, whether they are unemployed married couples or wealthy married couples.
Jim Shannon: I thank my hon. Friend for his intervention and for the passion in his voice.
Mindful of those points, it is a minimal responsibility of policy makers to remove all obstacles to marriage resulting from fiscal policy. Indeed, there is a good case for considering what steps could be taken to support marriage. I believe that the proposal before us is one suggestion that we should be considering. In the light of that, I am delighted by what the Prime Minister has said. Some people in this Chamber would say, “If the Prime Minister supports it, we don’t,” but if the Prime Minister says something good, let us support it, whether he is the Prime Minister or not—and if one of my colleagues says that something is good, then that is good as well.
Mr Burrowes: The hon. Gentleman is making the case on behalf of his constituents and presenting his own personal view, but does he also recognise that a strong case has been made in those countries that recognise marriage in a way that this country does not?
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Jim Shannon: I thank the hon. Gentleman for his intervention. Clearly that is the issue, because there are many countries right across the world that have tax breaks. Indeed, the Prime Minister has said:
“Britain is almost the only country in Europe that doesn’t recognise marriage in the tax system.”
That was his comment back in 2007, but he reiterated the point in 2008 and 2010. There is clearly an issue to be addressed if we are to make comparisons with tax systems in other countries across Europe.
Barry Gardiner: I am grateful to the hon. Gentleman for giving way again; he is being extremely generous. I am delighted that he believes that this should not be about incentivising—[ Interruption. ]
Mr Deputy Speaker (Mr Nigel Evans): Order. Please could the hon. Gentleman direct his comments through the Chair? That will also mean that I can hear what he is saying.
Barry Gardiner: My apologies, Mr Deputy Speaker.
I am delighted that the hon. Gentleman has said that this measure is not about incentivising marriage, or about penalising people. Can he therefore explain why, under the proposals, a woman with children who has recently been widowed would suffer a financial loss at precisely the time when the family needed the money the most? That seems to me to be a fundamental flaw in the proposals.
Jim Shannon: The hon. Gentleman made that comment earlier to other speakers, and they responded to it. I accept that there are anomalies in all systems. In the short time that I have been in the House, I have spoken on many issues, and each one was something that my constituents told me that they wanted me to deal with. I am on record as having opposed changes to the education maintenance allowance, the employment and support allowance and incapacity benefit. I am also on record as opposing changes to the disability living allowance, among other changes in the benefit system. I have done that in this Chamber; if I see something wrong, I will take a stand on it. If I see an anomaly, I will do my best to address it. I cannot necessarily tell the House every detail of the matter, because I might not be aware of them, but if there is a wrong, it must be righted.
Ian Paisley: Does my hon. Friend also accept that it is all very well to say that there are anomalies, but that sometimes straw men are put up in these arguments? The fact is that if a pensioner, for example, loses a loved one, their tax credits and allowances go up, not down. We should not allow these straw men to be introduced into the debate.
Jim Shannon: I thank my hon. Friend for that contribution.
Yasmin Qureshi:
No one is saying that there is anything wrong with marriage. Of course, one should encourage it. My parents were married, and I am married. No one is objecting to people getting married or saying that we should be telling people to get married. However, a fundamental problem with the new clause is that it effectively discriminates against one set of people. Why
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should a man and a woman who live together and have children be less well off or be discriminated against, compared with a married couple? Why would we wish to create discrimination between those groups of people?
Jim Shannon: People’s interpretations of these issues are different; we see things in different ways and have different opinions. I do not necessarily agree with what the hon. Lady has said, but there are issues to be addressed.
Roberta Blackman-Woods: Does the hon. Gentleman accept that there is inconsistency among Conservative Members, in that they want to support marriage while taking away huge amounts of financial support from ordinary families?
Jim Shannon: I do not believe that there is an inconsistency in relation to this matter, although, with respect, I would disagree with certain other proposals relating to the benefit system.
Michael Connarty: I am grateful to my hon. Friend—I regard him as such—for giving way. I share his warmth about marriage, having spent the past 41 years married, although I am not sure that my wife would be quite so enthusiastic. He has, however, strayed beyond his own guidelines. He said that the provision was not about people marrying for a payment, yet he is now arguing that that is what he supports. Surely this should be about the responsibilities that people take on as a couple, especially when they have children, because that is the most burdensome time when they need the most help from the tax system. This is not about whether they decide to have one kind of a relationship or another. Whether they are married or unmarried, if they decide to be together and have children, they will be burdened with other costs.
Jim Shannon: I can tell the House that when I married, I married for love. I am one of those old-fashioned boys; that is just the way I am.
Mr Leigh: In the light of the intervention from the hon. Member for Linlithgow and East Falkirk (Michael Connarty), it is important to point out that we are not trying to penalise single-parent families or families in which there are two earners. All we are trying to do is remove the severe penalty on families in which there is only one earner, because our system is totally out of step with most of the rest of the world in that regard.
Jim Shannon: I thank the hon. Member for his contribution and for providing a bit of focus to this debate.
Given that the agreement pertains to a full Parliament, one ordinarily would not be concerned at the failure to action a commitment in just over a year. What we need is for legislative change to be approved by the coalition Government, to move forward and perhaps see this legislation coming through in two years. The latest publication of the international tax comparison, CARE’s “The Taxation of Families 2009-10” puts things in a very different light. It demonstrates that we are now headed to a place where the tax burden on a married family with children with one earner on an average
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wage is growing so much that it will soon be more than 50% greater than the OECD average. That breaks new ground, taking us into territory that not even new Labour dreamt of occupying.
Some will no doubt respond by saying that this is a result of the tax burden having to increase on everyone in the context of the debt crisis. I understand that, but it is not exactly the case. Let me quote a director of an influential think-tank, who said: