Laura Perrins is a former barrister turned stay at home mother. She campaigns for Mothers at Home Matter.
“We’re building a land of opportunity”: if David Cameron really means what he said at the recent Conservative Conference, he must put his money where his mouth is and commit to a constructive, not piece-meal, family policy. Without this his aspiration will fail, because the necessary foundation stones of his land of opportunity and social mobility are strong, stable and independent families based on marriage. This means putting putting clear blue water between the Conservatives and Labour on family policy.
The battle lines have been drawn and we now know the next election is going to be bruising. Labour have embraced their base; as a matter of principle and politics, Conservatives should do the same. Now is not the time to wander around the vacuous middle ground, particularly on family policy. The Conservatives need to set out their vision for the family and that vision must, and can only be, one of valuing marriage, defending liberty and responsibility, and empowering families to decide how best to care and provide financially for themselves.
Cameron has finally, in the last breath of his term, set a start date for the transferrable tax allowance for married couples. It is true that critics on both sides point out that the amount (£200 per year for a family earning up to £40,000) is unlikely to make any difference to whether anyone gets married, or indeed to the decision as to how to care for their children. The amount stands in stark contrast to the £1,200 per year per child in childcare allowance paid to a family earning up to £300,000. A review of family policy reveals just how disjointed and visionless it is. The Coalition has removed child-benefit and then introduced the childcare allowance, the transferrable tax allowance, and free school meals. However, this piece-meal approach to family policy has only decreased choice for families.
George Osborne’s cap on child benefit at £60,000 for families with one earner was misguided. It is shocking that a Conservative Government expected such families to continue to pay a disproportionate amount of tax yet not benefit from the one non-conditional child allowance. A single-earner family on £60,000 pays £18,200 in tax, whereas a dual-earning family with a joint income of £60,000 pays £13,500. The difference is £389 per month. In addition to this, the double income family will receive child benefit and the childcare allowance.
Furthermore, the single-earner families who have lost their child benefit because they earn £60,000 and continue to pay a disproportionate amount of tax will not benefit from the new transferable tax allowance. These families are the Conservative base, or at least should be. Issuing threats such as ‘if you vote UKIP you will get Labour’ will not wash. With the effectively increased tax burden, they have had Labour for the last five years anyway.
They believe they have been punished for deciding to care for their children at home, even though they are saving the State that burden. They are net contributors to the Exchequer, and do not want to receive any benefit or payment to care for their children at home. However, they do not want to pay a disproportionate amount of tax, or contribute to the external childcare costs of families pulling in close to £300,000. They have had enough of being taken for granted by the their own party. The transferable tax allowance must be extended to this group, and must at least match the value of the childcare allowance.
This would empower families (married or in civil partnerships) to make their own choice as to how to provide and care for their children. A frequent reply to single earner families by others who may wish for one parent to stay at home but cannot is that ‘they cannot afford to.’ This is a reality for many, many families.
But we must ask: who created this reality? One contributing factor was the removal of child benefit. Removing it from a family living in the South East with a higher rate taxpayer and three children put a huge dent in family finances. This was created by the Coalition; it did not appear out of thin air. Another contributing factor is that the working parent cannot access the tax-free allowance of the caring parent. Again, this is a reality created by the State. It does not have to be this way – current tax rules were not handed down on the Mount. So the State is making it unaffordable for families to have a stay-at-home parent.
To help cash-poor and time-poor families at the crucial stress points when children are born and are young, parents should be able to access each other’s allowance, or part thereof. This can be a winner for the Conservatives on the following grounds: all the surveys suggest mums, at least in their children’s early years, want to spend more and not less time caring for children if they can afford to. The latest USwitch found that three quarters of new mothers would be stay at home mums if money was no object. This could become a realistic option if dad had access to mum’s tax free allowance during these early years.
For those who mourn all that ‘wasted’ GDP – worry not. Our worthy men are up to the task, and ‘man up’ when baby comes along. Evidence suggests dads work longer hours when children come along. The Fathers and Work research, based on the long-term EU Labour Force Survey, found this year that men with a partner and children at home work longer hours than other working men with no dependent children. Three in ten work 40 hours a week and one in ten work 60 hours.
When this happens, families should not be punished in the tax system for this ambition if it results in them moving up a tax band. It is desperately shortsighted of the Conservatives to limit aspiration. If Dad can increase his hours and pay, he should not be penalised, if Mum stays at home, by being taxed at 40 per cent if he moves into the higher tax threshold, or by the removal of child benefit if he earns up to £60,000.
If Dad can use Mum’s unused tax allowance to bring him back down under these two crucial lines, this could make a significant difference to family finances, and the ‘decision to stay at home’ would be more realistic – one taken by the family, and not dictated to them by the State. We also know from many studies, but also by virtue of common sense, that Mums staying at home to care for their children, at least the majority of the time, is better for the children and therefore makes for stronger families.
Furthermore, sharing tax allowances is flexible and fluid for the family. If mum wants to go back to work either part time or full time, that is the family’s decision: she can use her allowance again. If she only works part-time and uses only part of her allowance, she should still be able to transfer some or the rest of it to her husband. So by sharing allowances families are responsible for their own children, and the State is not dictating terms to them. This is what the Conservatives should stand for.
Sharing allowances is also totally gender-neutral. So Mum can work full time and Dad stay at home if this is what the family wants. It is also gender equal as it recognises that caring and providing for children financially are of equal worth. And, finally, if both parents want to work full time and get in external childcare they can; they can use up both their tax allowances – it is entirely a decision for them. Oh, and they get the £1,200 childcare allowance to boot.
Family policy matters, to millions. The reason parents get up and go to work in the morning is for their children; improving their lot is their very mission in life – their very reason for being. Conservative family policy must be fair, it must be equitable, and it must build on the transferable tax allowance.