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Marriage tax breaks would alleviate child poverty, Mr Duncan Smith

16 November 2012

2:51 PM

16 November 2012

2:51 PM

The problem about relative poverty is precisely its relativity. The child poverty index, which measures whether a family’s income is below 60 per cent of the average, is a case in point; when incomes go down, bingo, so does child poverty. Which means that one sure fire if controversial way to improve the Government’s child poverty record would be to drive down everyone’s earnings. Iain Duncan Smith, Work and Pensions Secretary, made just this point yesterday when he made a speech about whether the definition should be rather wider than it is.

‘As we saw last year,’ he observed, ‘when the child poverty level dropped by two per cent – a fall in the median income may lift a family out of poverty on paper. Yet at a closer look, real incomes did not rise and absolute poverty was unchanged. For the 300,000 children no longer in poverty according to the official statistics, life was no different.’

Well, quite so. This brings us to Mr Duncan Smith’s wider point, viz, that child poverty should be measured in all manner of ways which may not be entirely income-related. Family breakdown plainly has a proven impact on a child’s wellbeing – ditto whether he has two parents around in the first place, and whether those parents work and whether they are riddled with debt. Education and decent schooling matter; so does criminality in the area where he grows up. You could of course argue that some of these quality of life elements are related to income – if you weren’t poor, you wouldn’t be living in a poor area, for instance, and you’d be less likely to fall prey to loan sharks. But in general his point holds good. The official child poverty measure is a bit of a blunt instrument, which sets an arbitrary target that can distort overall social and fiscal policy. So, Mr Duncan Smith is launching a consultation to decide whether the measure should include other factors than income.

Of course, he’s right; there should be a wider, more discriminating measure that sets store on some of these other things that affect a child’s wellbeing. It doesn’t stop the Government using the existing way of doing things as well; I think we can cope with two measures of child poverty, don’t you? – one relative to income, the other giving a broader idea of wellbeing, of the ways children aren’t flourishing.


But these indices aren’t neutral, are they? They drive government spending one way or the other. Famously, the last Government set, and missed, its target of halving child poverty by 2010/11 but the effort of trying to achieve it had a profound effect – it resulted, according to Mr Duncan Smith, in an extra £170billion in spending on benefit payments. In other words, targets skew spending choices. As the Institute of Fiscal Studies observed in a study of child poverty:

‘But fiscal redistribution is not costless. There is an inescapable trade-off between increasing redistribution and strengthening financial work incentives. And a pound spent on benefits is a pound not spent on other things which might improve children’s lives more cost-effectively in the long run, such as education, health or social services (or indeed a pound spent on completely different objectives).’

So what would be the spending implications of IDS’s move to include, say family breakdown, in his child poverty index? One could be to give added impetus to the drive within the Tories to meet their manifesto commitment to give tax breaks to those couples who are married or in civil partnerships. So, there could be a transferable tax allowance between couples which would benefit families with one earner. I ought to confess an interest in all this: I’m my family’s earner; my husband doesn’t work outside the home at present (though he will); we don’t, therefore, subcontract the care of our children to au pairs and child-minders. In normal families, I may say, the gender roles would be different but either way, children benefit from the arrangement. A transferable tax allowance would make my life, and that of lots of married couples, easier. It wouldn’t be expensive to administer.

Fiscal favouritism for married couples and civil partners was a distinctive Tory proposal, and you can’t say that about much government policy these days outside welfare and education. So Iain Duncan Smith is onto a good thing here. If his consultation results in a new measure of child poverty, one that measures whether a poor child’s parents are married, it will give added impetus to the campaign to treat marriage favourably, not neutrally. It would, as it happens, benefit the middle classes, not just the poor, but that’s not an argument against, is it?

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Show comments
  • Jim Moore

    Marriages go out the window when the cupboards become bare !

  • dafta duck

    You put kids into poverty then claim to help them out of it?… [prs]

  • HJ777

    I don’t think that transferable tax allowances are ‘fiscal favouritism’.

    For example, if you have no, or lose, your job, then your spouse’s income is taken into account when assessing whether you are entitled to most benefits, i.e. your spouse is assumed to be responsible for keeping you, (assuming they have an income). In that case, it is only equitable that you can also transfer your personal allowance to them.

    Marriage is a pooling of interests arrangement. Personal allowance rules should recognise this.

  • Tim Nichols

    Actually a tax dowry would give very little bang for your buck for reducing child poverty. Analysis by the Institue for Fiscal Studies showed that putting the same investment in through child tax credit would make a child poverty reduction thirteen times as large ( So child tax credit investment would clearly be a much better way to help the stay at home mums who need it most, because it is properly targeted to those who need it most. A tax dowry on the other hand is a give-away mainly to people without children living with them.

    It is wrong to claim that you could improve the government’s child poverty record by driving down everyone’s earnings. The government would fail to meet 3 out of 4 of its Child Poverty Act targets if you did this. This is because it is utterly wrong to say the government only has a relative poverty target: it also has statutory targets for absolute poverty, persistent poverty and material deprivation. On top of this, it is already legally required to take action in its child poverty strategy on parenting skills, parental employment, childcare, education, housing health and more (CPA section 9(5)).

    You can read it all in the Act here:

    I wish these commetnators would actually read the Child Povety Act, and help stop spreading lies and spin about it from people like IDS to mislead the public. Melanie, you’re not doing serious journalism. A proper journalist would have done their research and would point out to readers that IDS is doing some blatant lying here.

    • Daveyyy12

      Child poverty act, why read nonsense. Commies love making nice sounding stuff, Tax Dowry.

      Tax credits they distort the employment market.,

      I get a few quid from the government. If I do a few hours extra the government will take some of that money off me. If I get a pay rise, they will take some off me. If I get promoted I could be worse off. The concept of working hard and being rewarded is removed. Also means 2 guys working doing the same job do not earn the same. The money has to come from somewhere so some else will be poorer. You will have to pay someone to fill the forms and distribute the money. You will have to protect against fraud. We also have companies keeping wages below the tax credit thresholds, already have happening. Then we all end up poorer.

      We have no poverty we have, quote “relative” poverty. The biggest threat to the poor in the west is obesity.

      I wish these commetnators would actually read the Child Povety Act, and help stop spreading lies and spin about it from people like IDS to mislead the public. Melanie, you’re not doing serious journalism. A proper journalist would have done their research and would point out to readers that IDS is doing some blatant lying here.

      No one is lying, it is how people see the world. Being a lefty you have no concept that people do not see the world the way you see it. We see the nonsense, hatred and lies spouted by the left which make us realise whoever is right or wrong, we do not want to live in a country run hateful and spite filled socialists.

      Go to cuba and explain why Castro taxes the hotel workers at 95%

      • Tim Nichols

        I love you Daveyyy12, but I fear I have unwittingly unsettled you. Come on, gimme a hug! Now that we are friends, I agree that there are problems with tax credits. But there is little evidence to suggest that by removing tax credits we would magically end up in a situaion where employers suddenly started paying living wages. And the neoliberals say we cannot have a living wage anyway as it would force employers to lay people off. But there is something we could do – we could introduce a levy on the profits of employers who are exploiting the public purse through the wage subsidies that honest taxpayers like you and me fork out for through tax credits and housing benefits. Why should our taxes go to help boost the executive pay packets and shareholder dividends of companies whose profits are already enough to pay living wages? Now, if a company is struggling, and is not in profit, there would be no levy, so it would not damage any company’s ability to retain staff in tougher times.

        As for real poverty and relative poverty, I don’t really mind a bit if you do not wish to call the problems resulting from inequality, relative low wealth and income, and social exclusion ‘poverty’ or not. That’s a debate on pedantics. But for Britian’s child wellbeing, the benchmark is not a child in Africa any more than the benchmark for the quality of the NHS is the healthcare provision in Somalia. It is right that we should be looking to countries like Denmark, Sweden, Norway, the Netherlands and Germany and saying “If they can do so much better for more of their children, so can we!”. Britain should be competing with the best in the world – our children deserve no less.

  • Daveyyy12

    Sadly it will be used by the Islington elite to attack the Tories as out of touch. The Beeb will do stories how it fails single parents. Guardian will do cartoons of nasty rich Tories taking food from the poor.

    The sad thing is that your average voter, Tory or Labour, share a lot in common. Always have and always will. The Tories need to target this. Target this by raising tax thresholds for everyone. Drop employers taxes.

    Cut back foreign aid, this is only be an issue in Islington.
    Cut legal aid for human rights cases, this is only an issue in Knotting Hill.
    Cut all the things that only matter to the liberal elite and use the money saved to raise tax thresholds, do the same for NI. Cut the arts budget. It seems that the Beeb is making billions so drop the TV tax. Seems the petrol companies are not dropping petrol fast enough then force them to display the wholesale price. Do things that help the working man and you may get re-elected.

    Labour will use the living wage to attack the Tories, by taking millions out of tax altogether you may be able to fight back.

    Raise the threshold for employers tax to double the average wage or remove it altogether.

    BTW, stop saying you will think about something. Work it out then do it.
    Target things the help the working class you will be rewarded with their vote.

    Still want and EU referendum.

  • David Lindsay

    Now that the debate is open, both on the fiscal recognition of marriage, and on the division of assets after divorce, let us make the most of it.

    Any marrying couple should be entitled to register their marriage as bound by the law
    prior to 1969 as regards grounds and procedures for divorce, and any religious organisation enabled to specify that any marriage which it conducted should be so bound, requiring it to counsel couples accordingly.

    Statute should specify that the Church of England be such a body unless the General Synod specifically resolved the contrary by a two-thirds majority in all three Houses, with something similar for the Methodist and United Reformed Churches, which also exist pursuant to Acts of Parliament, as well as by amendment to the legislation relating to the restoration of the Catholic hierarchy.

    Entitlement upon divorce should be fixed by statute at one per cent of the at one per cent of the other party’s estate for each year of marriage, up to fifty per cent, with no entitlement for the petitioning party unless the other party’s fault be proved.

    That would be a start, anyway. The marital union of one man and one woman is a public good *uniquely and in itself*, and the taxation system, among so very many other instruments of public policy, should recognise that fact. It should recognise marriage as a
    unique public good, to which civil partnerships (which, never having needed to be consummated, ought not to be confined to unrelated same-sex couples) are not comparable. And it should recognise marriage as a public good in itself, whether or not there are children, a related but different public good of which other forms of recognition rightly exist.

    But will any Party Leader say this, as once they would all have done? What do you think? David Cameron, having proved himself the heir to Margaret Thatcher’s legislation for abortion up to birth, which was opposed by John Smith, is doubtless also the heir of John Major’s legislation to make divorce legally easier than release from a car hire contract, to abolish the fiscal recognition of marriage simply as such (in a Finance Bill against which every Labour MP voted at the time), and to end the situation whereby, by recognising adultery and desertion as faults in divorce cases, society declared in law its disapproval of them even though they were not in themselves criminal offences.

    But Ed Miliband? Over to him.