Matthew Hancock MP – ‘One of the best things Nigel Lawson did was to get rid of family based taxation’

Matthew Hancock, Conservative Party MP for West Suffolk and Parliamentary Under Secretary of State for Skills, speaking yesterday at the Resolution Foundation event ‘A Conservative agenda for tackling low pay’ said in answer to comments and questions from audience that ‘One of the best things Nigel Lawson did was to get rid of family based taxation.’

The former Chief of Staff for George Osborne is of course referring to then Chancellor Nigel Lawson’s decision in 1990 to introduce independent taxation, meaning that the tax man would no longer take account of the number of members in the family in deciding how much to tax an individual. The net result of this is that any family recognition would come through the benefits system, albeit with small concessions remaining through the Married Man’s Allowance and Additional Person’s Allowance (both of which have now disappeared.)

The East Anglian Parliamentarian’s strong opinion on this issue has raised a number of questions. Namely, does this opinion reflect a wider refusal by Tory modernisers such as Hancock to accept that income should than be considered on a wider, more reflective household basis rather than an individual standpoint? After all, as event panellist Nicola Smith (Director of Economic and Social Affairs at the TUC) correctly pointed out, a current Government tax policy – increasing the personal income tax threshold (which received the vociferous backing of Hancock yesterday) is both extremely expensive (the IFS estimate that it will cost the taxpayer £10.7 billion in 2016/17) and is relatively poorly targeted, with most of the income benefit going to those in the upper half of the income distribution (see the graph below, produced by the IFS .)

income tax thres graph1

Moreover, do Hancock’s views reflect those of other members in the Conservative Party, most notably George Osborne, who once again failed to introduce in his budget this month a transferable allowance for married couples? This failed recognition is important in that this policy would begin to reintroduce some semblance of family recognition into our tax system, has been noted on page 30 in the Coalition Agreement, and rather unlike raising the personal income tax threshold, would predominantly benefit those in the lower half of the income distribution due to households with one-earner being more likely to be in the lower half of the income distribution than those with two (see graph below, again with thanks to the IFS.)

Trans allowance graph1

In case you hadn’t guessed by now, it is my view that in order to tackle low pay, we must start to think of incomes not as just those of the individual concerned, but in the context of the overall household. Only when this is taken into account will we begin to see much some wages have to stretch in order to meet routine household cots. Thus, if future policy can consider households more readily, then it will have done low to middle income UK households (whose living standards have stagnated in recent years) a great a service. With this in mind, it is both surprising and worrying to hear Matthew Hancock’s apparent reluctance to consider the whole household in this debate on low pay.

What’s wrong with being a stay at home mum?

With ideas regarding the role of women, mothers and families being as hotly contested and debated as ever, I thought it worthwhile to share some thoughts on the ways in which the role of the mother is portrayed and constructed in 21st century society and culture.

One particular portrayal which is gaining increasing visibility and media coverage is that of the ‘stay at home mother’, and in particular, this role being something of a ‘waste’ of the mother and her talents. This seems to be particularly the case when the mother in question has ‘achieved’ educationally or otherwise. Indeed, Cherie Blair in a speech to Business Leaders urged all women to be ‘self sufficient’[1] arguing that ‘yummy mummies’ who take a break from their career to raise children are making a ‘dangerous mistake’.

Indeed, this sort of thinking has been espoused by numerous academics as well as Blair[2] yet to my mind there are a number of problems with this view.

Firstly, many individuals in the last few decades have vociferously fought for the right of women to make independent choices, yet here it seems when women make the independent choice to stay at home (if only for a relatively short period before returning to work, as many do) they are derided by some for doing so! It appears then that some believe that women can only be seen to be ‘getting on’ if they are in paid employment, or in a role deemed ‘worthy’ by the rest of society.

Who then are we to overrule a person’s own choice in this area? If a woman, couple or family has made a particular decision to stay at home to raise the children then surely (on the premise of individual choice) society, culture and the state should respect that?

Moreover, despite not gaining individual financial reward, one cannot deny the immense value of the unpaid work both stay at home parents do raising young children. Indeed, as British Household survey figures clearly show[3] many one earner households (i.e. those where one parent) aren’t, despite perceptions by some[4], dominated by rich families where the women play Bridge all day but those who have significant caring responsibilities either for young children or a partner who has a significant disability.

What is more, numerous surveys have shown that most women when asked whether they’d like to stay at home to look after their children at least for some of their children’s early years, overwhelmingly answer to the affirmative. One recent survey for instance demonstrated that 75% of women would be stay at home mothers if money was no object[5], food for thought when you consider that the UK tax and benefits is the most unfriendly to one earner families in the OECD.[6]

However, it is also true that many families are not able to make this choice of whether one member of the couple stays at home to look after the children. Indeed, what are we to make of lone parents, many of whom who are women[7] and whose families face a greater likelihood of poverty than almost any other family type[8]?

In this instance, where the fathers are often absent it may well be essential both for the mother and children concerned that the parent enters the world of work. Yet for these mother’s many barriers remain, whether they be the prohibitively expensive childcare provision in the UK[9], or perhaps more worryingly the high levels of fatherly absence (both personally and financially) in lone parent households.

Therefore, whilst there is a strong case to be made for lone mothers to enter the workforce via flexible, childcare friendly employment and in a way where parents can still play a fundamental role in the upbringing of their children, questions still remains as to why we seem so insistent that all women, regardless of situation and circumstance should enter the world of work wherever and whenever possible?

Thus, whilst work is undeniably a good thing, and (along with a compliant tax and benefits system) a viable route out of poverty for many, mothers who choose to stay at home for any amount of time should not in my view be frowned upon as those ‘wasting their talent and potential’ or those being a burden or society. For as many home-based mothers will tell you, being a stay at home mum is no easy feat and contributes (in terms of caring costs for example) a great to deal to both our economy and society. Furthermore, if this is what couples feel is best for their household, who are we as a society, culture and government to tell them otherwise?[10]

[3] Households Below Average Income data sourced from 2010/11 Family Resources Survey

[6] See Draper et al, The Taxation of Families 2010/11, CARE, 2012

[8] Department for Work and Pensions, 2012, Households Below Average Income 2010/2011

[10] I should like to add at this point that many of the arguments here could also apply to stay at home fathers.