The latest on marriage tax breaks – a shabby little compromise?

For those unaware of this long running saga, I shall do my best to summarise where we have got to so far.

This tale begins way back in 2010 when the Conservative Party officially promised to introduce tax breaks for married couples, if they made it into Government.  Their commitment was arguably made yet more official when this policy promise made it into the Coalition Agreement, page 30 to be precise:

We will also ensure that provision is made for Liberal Democrat MPs to abstain on budget resolutions to introduce transferable tax allowances for married couples without prejudice to the coalition agreement.’

With this commitment seemingly set in stone, fans of marriage, family stability and fairer taxation surely had every reason to expect the imminent introduction of this policy.  And why not? With family breakdown costing the taxpayer some £46 billion per year (more than the defence budget), and with cries of the emotional, financial and social costs etc., of ’man deserts’ and family breakdown coming from acclaimed think tanks, any policy that recognised the existence of a non-earning (or significantly lower earning) spouse and unpaid caring should surely be applauded and introduced at the earliest possible opportunity, right?

Fast forward to early summer 2013 however, and despite repeated declarations from the Treasury that this measure will be introduced ‘in due course’billions (literally) are being spent on raising the personal income tax threshold to, and beyond £10,000 (a policy which by the way benefits those who are richest more than the most poor), not to mention the Prime Minister’s memorable pledge to make Britain ‘the most family friendly country in Europe’, what do proponents of this policy have to show for their efforts? Nothing.

Unsurprisingly therefore, there is growing anger on this issue. Having campaigned long and hard for this measure, all advocates have for their labours is a ‘we’ll do it soon’ from the Treasury. But the pressing question still remains: when? Time is marching on and given the time it takes to introduce a measure of this nature, get it through Parliament and become fully operational, the Government surely needs to take more concrete action. In other words, we need a date, now! With all this in mind, it’s no wonder Conservative MP and former front bencher Tim Loughton is to table an amendment to the current Finance Bill, and Tory rebels Hollobone, Chope, Bone and co have included this in their ‘Alternative Queens Speech.’

But wait! Stop the press! Just when all hope seemed to be lost, the Daily Telegraph broke the story that after all this time the Government IS planning to introduce transferable allowances for married couples (TPA’s). David Gauke has given a ‘firm commitment’ that the policy will be introduced by April 2015, during the next General Election, and that any tax breaks will be worth up to £150 to each couple per year.

If we take the date first, this is potentially problematic for a number of reasons, Firstly, there is some trademark ambiguity over the word ‘introduced.’ If the Government means by this that the policy will be announced by this date, but not actually operating until some point later in time, then what might happen if we see a Labour Government after the next election, or a new Conservative leadership that doesn’t share the current Government’s ‘enthusiasm’ for TPA’s?

And then there’s the more concerning issue of the amount apparently in question: £150. Yes folks, that comes to the earth shattering amount of £2.88 per week. What better way to demonstrate your Government’s commitment to marriage than to give married couples slightly less than the amount required to partake in a Tesco lunchtime meal deal (that’s one per week by the way)?  And to those who say that it’s the message that’s more important than the amount, I believe that in a time where living standards have fallen for many families across the UK, the amounts involved concerning prospective family tax policy definitely do matter.

In reality, the only way the Government can demonstrate that their commitment to marriage and the family is a serious one is to introduce a policy that not only recognises marriage and unpaid caring responsibilities, but does so in a way that makes a noticeable difference to the incomes of hard-pressed one-earner families. Indeed, a TPA by its very design is a progressive policy that benefits the poorest families more than those who are richer.

Looking forward, I believe that despite this challenging backdrop there are still a number of good opportunities for this policy to see the light of day: Tim Loughton’s amendment to the Finance Bill being a particularly good example. In addition, there’s the upcoming 2014 Finance Bill which I think realistically speaking is the last point at which a TPA could be announced if it were to be fully operational before the General Election in 2015.

Whatever the future for this policy, the latest supposed Government reassurances, culminating in a letter from Gauke attempting to reassure MPs, acquired and leaked by The Spectator, will do little to calm the obvious tensions present in the Coalition regarding this policy. And the Government would do well to act quickly and decisively, not only to allay the fears of their MPs, but also to show hard-pressed one-earner families that the Government is on their side.

This article has also been published at: http://www.care.org.uk/familyfiscalpolicy/the-latest-on-marriage-tax-breaks-a-shabby-little-compromise

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