Top 10 articles of the week – 27/07/2013

This week, we’ve seen the news agenda dominated by a tragic train crash in the Galicia region of Spain, killing (at time of writing) some 78 people, the significant (reported) drop in crime in the UK which appears to have got many scratching their heads, and the legacy of the 2012 London Olympics. In such a varied week, here are my top 10 articles. To make up for last week’s absence, i’ve included an extra bonus article! As per usual, please feel free to comment if you feel so inclined. Thanks for reading!

  1. Bryan Chapell on Christ-centred preaching by Bryan Chapell – Christianity Today (The Ed Stetzer Exchange blog)
  2. Spanish derailment: possible causes – BBC News Europe
  3. Why does it have to be so hard? By Jonty Allcock – FIEC blog
  4. The bank of Mum and Dad masks the crisis in the housing market by Campbell Robb – The Guardian
  5. Many direct impacts of the Olympics are already positive, not least that the follow-through is actually happening by Anne Power – LSE Policy and Politics blog
  6. Revenge of the nerds: Being popular is high school doesn’t make you rich, after all by Jordan Wiessmann – The Atlantic
  7. A reality check – most LibDem members prefer a post-2015 Coalition with Labour to one with the Conservatives by Paul Goodman – Conservative Home
  8. US Prison populations decline, reflecting new approach to crime by Erica Goode –The New York Times
  9. The Economist explains: Why is crime failing? – The Economist
  10. The era of cheap food is over. Are we ready for that? By Steve Hawkes – Telegraph Blogs
  11. The best way to cap the benefits bill? Tackle its underlying costs – by Chris Goulden – Huffington Post Politics

image courtesy of http://www.bbc.co.uk

Why a transferable allowance (TA) for Married Couples makes sense – Part 2

Wedding RingsFollowing on from last Monday’s post which gave a rebuttal to three points arguing that a transferable allowance for married couples wouldn’t make good sense, here’s a rebuttal to four more for your reading.

4. “The families it would help would not be poor, but would be well off.”[1]

As I demonstrated in my first point last week, under any TA policy, regardless of whether it was limited to basic or higher rate taxpayers, the majority of the benefit would go to those who are in the lower half of the income distribution.

What is more, research by CARE clearly demonstrates that many of those affected would NOT be well off at all, but in the lower half of the income distribution. A one-earner family on an annual income of £50,000 with three children for example is currently only just in the upper half of the income distribution, better off than just 51% of the population.[2] A one-earner family on an annual income of £60,000 with four children will be in the lower half of the income distribution, better off than just 49% of the population.[3]

Hence, whilst these families would only benefit from a TA if it were extended to higher rate taxpayers, or limited at the basic rate of tax, CARE’s figures show that even these families are not well off, as many would have us believe.

Moreover, if we take basic rate taxpayer family examples, then the families a TA would help would be even more badly off than the above households. If we were to take a one-earner family on an income of £26,648 (average male median income for 2012) for example, then this family is better off than just 29% of the population. A one-earner family with two children on half this income meanwhile would be better off than just 20%. [4]

Therefore, it is clear that regardless of the eligibility of a TA (i.e. limited to basic rate taxpayers, higher rate, or eligible for all but at the basic rate of tax etc.), very many of those affected would not be well off at all, but well within the lower half of the income distribution or only just above it. As demonstrated in the graph under point 1, a TA would progressively alleviate this situation.

5. “It’s only worth £2.88 a week and thus it won’t make a sizeable financial difference to hard pressed households.”[5]

This figure refers to the proposals drawn up by the Conservative Party in their 2010 manifesto,[6] which say that any TA for married couples would be limited to basic rate taxpayers and capped at £750 per year, at a cost of £550 million.  It should be noted that at the time of writing, there has been no official word from the Government on the cost, scope and eligibility of what they will end up introducing, we should be hearing more on this in George Osborne’s upcoming Autumn Statement.

Thus, whilst one would agree that the Conservative 2010 model would make a limited financial impact on hard pressed families this does not mean the policy itself is flawed. Indeed, analysis by the IFS suggests that under the plans announced by the Conservatives, the vast majority of the benefit would go to those in the lower half of the income distribution (see graph below[7]). In other words, those who would benefit would be poorer families rather than those who are richer.

TPA Distributional Impact

6. “It would undermine independent taxation and erode a partner’s financial independence.”[8]

It would be perfectly possible for a TA to be introduced without abandoning independent taxation. For example, if a TA were optional, it would be up to the couple to decide whether they wanted a TA to be applied to their earnings. What is more, research by CARE has shown that other countries manage to maintain both independent taxation and implement a TA at the same time. This is the case for many nations, including Denmark, Iceland, Japan and the Netherlands.[9]

7. What about widows, those who are divorced or those who are fleeing abusive relationships?[10]

Whilst it is true that a TA would not be given or would be ideal in all the above situations, it should be acknowledged that despite these instances, a TA would be ideal for millions of other one-earner households where the above situations don’t apply. In other words, the situations where a TA might not be particularly suitable do not negate the usefulness of a TA in other situations, and as a result a TA in my view is justified on this basis.


[1] Argument made by Kate Green MP, New Clause 5, Transferable Allowances for Married Couples, 28th June 2011, accessible here.

[2] Derived by CARE from the DWP TBMT and IFS ‘Where do you fit in’ calculator.

[3] Ibid.

[4] Ibid.

[5] Argument made by Catherine McKinnell MP, Westminster Hall debate on Transferable Allowances, 28th November 2012, Column 89WH, accessible here.

[6] Adam et al, Taxes and Benefits: The Parties plans, IFS, 2010, p.24.

[7] Figure 4.4, Adam et al, Taxes and Benefits: The Parties plans, 2010 election briefing note no.13, IFS, 2010.

[8] Argument made by Chris Leslie MP, New Clause 5, Transferable Allowances for Married Couples, 28th June 2011, accessible here.

[9] Pearson and Binder, Taxation of Families – International Comparisons, London, CARE, Appendix A, 2012

[10] Argument made by Chris Leslie MP and Fiona O’Donnell MP, New Clause 5, Transferable Allowances for Married Couples, 28th June 2011, accessible here.

– This article is also published at: http://www.care.org.uk/comment/why-a-transferable-allowance-ta-for-married-couples-makes-sense-part-2#sthash.PM54j0rb.dpuf

Why a Transferable Allowance (TA) for Married Couples makes sense – Part 1

WhiteFollowing the furore in media circles over Tim Loughton’s amendment to the Finance Bill to include a transferable allowance, and George Osborne’s announcement last week that the Government will be announcing plans for this policy in his upcoming Autumn Statement, I thought it wise to offer a rebuttal to some of the more commonly used arguments used in the past couple of weeks against the transferable allowance.

1. “It sends out the message that one type of family is worth more than another.”[1]

Whilst most families of all types do a great job raising children, it is true that one-earner families, whom the TA will particularly help, are especially penalised in the current UK Tax and Benefits system and are as a result worthy of help through the introduction of a TA.

Recent research by CARE, for example, demonstrates that a one-earner couple with two children on the average wage faces a tax burden (that is, Income Tax plus National Insurance contributions) that is 42% higher than the OECD average. In addition, a one-earner couple with two children in 2011 had a tax burden that was 73% of a single person’s, whilst an equivalent household in the OECD had a burden that was only 52% of the OECD average[2]. The point here is not that the UK should have lower tax rates in general, but that the overall tax burden across different household types should be redressed, so that one-earner households pay a fairer tax burden. Introducing a TA for one-earner couples would help address this imbalance that is currently present in the UK Tax and Benefits system.

Furthermore, one-earner households with children also currently face Marginal Effective Tax Rates (METRs) that are much higher than those in the OECD and EU face. This problem is particularly acute for those one-earner families on 36%, (the 2011 minimum wage) 50% and 75% OECD average income. One-earner families at this level face METRs of 73%; meaning that for every extra £1 earned while in work (overtime for example) a hard-working household would only see 27p of that £1 come into the household.[3] So for these families, who are most certainly not well off, a TA would help alleviate this situation, reducing METRs by up to 20%[4]

Overall then, a TA is not about privileging one family type over another, but would help redress the current unfairness currently faced by one-earner families.

2. “It’s targeted at an extremely narrow group, the only people who will be able to claim this tax benefit will be married couples, where one partner earns above the income tax threshold and the other does not; whether the couple has children will be entirely irrelevant.”[5]

Figures from the DWP indicate that there are 2.2 million families where there is one-earner in work and where the other is not[6]. The majority (61%) of these families have significant caring responsibilities, a child under the age of 5, or a disabled person within the household[7]. Thus rather than this proposal affecting an extremely narrow group, millions of hard pressed one-earner families would be positively affected by this policy proposal.

What is more, just because one-earner families might in themselves not represent all the household types in the UK, it does not mean that they should not be helped, especially given their disadvantaged position in the UK tax and benefits system (explored in more detail in point 5). In other words, in campaigning for a transferable allowance for married couples, we are not saying that other policies that help other family types are ‘bad’ and should be stopped, but that this policy, which progressively helps one-earner families, should be enacted in conjunction with other family-friendly tax and benefit policies.

3. “IFS analysis suggests it would be available to only 32% of married couples, what about the other 68% of couples, are they not worthy of support?”[8]

This analysis is based on the assertion that a TA would only be eligible to basic rate taxpayers and capped at £750 per year[9]. Whilst under this model, it is the case that only certain married couples would be affected, these couples would be those who are basic rate tax-paying, hard-working households, thus those affected would be those married couples who are in the lower half of the income distribution (if indeed they have children). Hence, limiting it to these couples could be justified in that it helps those who are less well-off compared to those who are richer. In other words, it would be perfectly possible for a TA to be extended to couples including basic and higher rate taxpayers. However, if the aim was to introduce a policy that was particularly progressive, one might want to limit it to poorer married couples.


[1] Argument made by Catherine McKinnell MP, Westminster Hall debate on Transferable Allowances, 28th November 2012, Column 89WH, accessible here.

[2] Pearson and Binder, Taxation of Families – International Comparisons, London, CARE, p9, 2012

[3] Ibid, Appendix E

[4] Binder, Building an Aspiration Nation: How transferable allowances will help work pay, forthcoming 2013, CARE, London, p.16

[5] As footnote 1

[6] Figures derived from Department of Work and Pensions’ Family Resources Survey 2010/11

[7] Ibid

[8] As footnote 1

[9] Adam et al, Taxes and Benefits: The Parties plans, IFS, 2010, p.24.& Recognising Marriage in the tax system, 10/04/2010, Conservative Party website: http://www.conservatives.com/News/News_stories/2010/04/Recognising_marriage_in_the_tax_system.aspx

– See more at: http://www.care.org.uk/familyfiscalpolicy/why-a-transferable-allowance-ta-for-married-couples-makes-sense-part-1#sthash.cSioG8ul.dpuf

Top 10 articles of the week – 12/07/2013

This week we’ve seen some interesting new research released on public perceptions of (amongst other areas) benefit take up, crime and immigration, an announcement by the Chancellor, George Osborne that plans for a transferable tax allowance for married couples will be announced in the upcoming Autumn Statement, and a plethora of other interesting bits of news, analysis and opinion. With this as a backdrop, here are my top 10 articles for the last seven days (bar one or two which despite falling outside this window I felt were worthy of inclusion.) Thanks for reading, please feel free to leave a comment if you wish!

  1. Listening to Young Athiests: Lessons for a stronger Christianity by Larry Alex Taunton – The Atlantic
  2. Perceptions are not reality: the top 10 we get wrong by Bobby Duffy – Ipsos Mori
  3. They got high on Jesus instead by John G Turner – Christianity Today
  4. Universal Credit Could See Parents Paying to Work, Not Making Work Pay by Katie Schmuecker – Huffington Post Blog
  5. George Osborne: Marriage tax break will appear in the Autumn Statement – Metro
  6. Scheme to let victims request meetings with offenders trialled – BBC News England
  7. Income gap between poorest and richest at 26 year low by Hilary Osborne – The Guardian
  8. Foolish, but no fool: Boris Johnson and the art of politics by Matthew Flinders – LSE Politics and Policy Blog
  9. Intergenerational poverty – myth or reality? By Julie Nelson – The NFER Blog
  10. Evidence based policy is the most meaningless phrase in Politics today by Ryan Bourne – City AM

Image courtesy of http://www.telegraph.co.uk

Top 10 articles of the week – 05/07/2013

In a week where we’ve seen the overthrowing of Egyptian President Mohamed Morsi, the debate surrounding transferable allowances for married couples hot up (Tim Loughton MP tabled an amendment to the Finance Bill this week) and Tom Watson (who played a leading role in the phone hacking enquiry) resign his role as Labour’s 2015 election chief, here are my top 10 articles this week. Oh, and there’s also been some tennis tournament thing in South London somewhere? As always, many thanks for reading and do feel free to comment if you so wish!

  1. Judging the line in Wimbledon by Tim Thornborough – The Good Book blog
  2. Is Dave just too modern for marriage? By Kathy Gyngell – Centre for Policy Studies
  3. ‘Preachers of LA’ brings the prosperity gospel to realty TV by Joe Carter – The Gospel Coalition
  4. Married couples to get tax break ‘very shortly’, promises PM by Steven Swinford – The Daily Telegraph
  5. Assessing Labour’s record: Many of the socio-economic outcomes Labour targeted improved, but it did not achieve all of its ambitious vision by Ruth Lupton – LSE Politics and Policy blog
  6. Education and employment destination data published by Department of Education – Department of Economic and Social Inclusion
  7. The malign media representation of Glastonbury and other events by Cyrus Bozorgmehr – DJ Broadcast
  8. Ed Miliband is running scared of Owen Jones by Dan Hodges – The Daily Telegraph
  9. Tom Watson’s resignation says more than the Labour leadership ever does by John Harris – The Guardian
  10. India’s Food Security Bill, by the mind blowing numbers by Nandagopal J. Nair – Quartz

Image courtesy of http://www.politicshome.co.uk