Laura Perrins: The betrayal of single-income families

Laura Perrins is a former barrister turned stay at home mother. She campaigns for Mothers at Home Matter. 

Shortly before the last election, David Cameron said that “I want the next Government to be the most family friendly Government we’ve ever had in this country and that is about everything we do to support families and it’s about supporting every sort of family.” Well, there is one sort of family which can only feel deeply betrayed: for the policies introduced by the coalition have all aggravated the pre-existing penalisation of single-income families and stay-at-home mothers.

Many single-income families have sacrificed an income to care for their children themselves at home. In addition to this, they pay a disproportionate amount of tax compared to double-income families. A single-income family earning £36,000 per year will pay £9,000 in tax whereas a double-income family earning the exactly same amount will pay £6,500. The penalisation increases the higher up the income scale a single-income family is. The Coalition further penalised single-income families by removing child benefit completely for those earning £60,000; double-income families with combined earnings of just under £100,000, where each party earns £49,000, retain their child benefit. The reason given for removing child benefit from higher rate tax-payers was that ‘we were all in this together’ – but it seems single-income families are in it more than others. George Osborne has staked his political career on implementing the cuts in a fair way; he has failed to do so in this case.

At this point, the fairest and most logical policy to implement would be to honour the pledge to introduce the transferrable tax allowance for married couples. But ignoring the mandate given to them, the Coalition has again favoured double-income families by introducing the childcare allowance. This allowance, worth £1,200 per child, only applies to double-income families with external child-care costs. Families earning up to £300,000 will benefit from the allowance. Single-income families who have sacrificed a salary to care for their children themselves and who pay a disproportionate amount of tax and who have lost their child benefit are explicitly barred from the scheme.

Adding insult to injury was the suggestion that single-income families are lazy. The child-care allowance only applies to double-income families, as these are ‘hard working’ and ‘aspirational.’ By implication if you are a mum who cares for your infant yourself, while soothing your toddler’s third tantrum of the day you are a slacker.

So why has the Coalition targeted single-income families and stay-at-home mums in this way? It seems even the children must be sacrificed to increase GDP. It has become official policy that children are ‘obstacles to work’ and women must overcome these obstacles to get back to work. The Daily Telegraph recently reported that David Cameron’s official spokesman said it was “good for the economy” that the Coalition was helping parents to pay high nursery fees so that they could overcome “obstacles” to work. A fancy report, Maximising Women’s Contribution to Future Economic Growth (June 2013), supported by Culture Secretary Maria Miller, stated: “Our national economy needs women’s contribution, and action is required to remove the obstacles that currently restrict women from realising their full potential.”

In essence, if you are not working outside the home you are not only letting the economy down, but you are letting yourself down. This is deeply derogatory and demeaning to stay-at-home mums. However when counting the GDP generated by working Mums, we must also consider if tax credits are needed to top up her income and the income of the childcare provider.

The reality is that the tax system not only penalises single-income families, but that the taxpayer is also subsidising both directly and indirectly the childcare industry. Many of the workers in the industry are so badly paid that their incomes have to be topped up by tax credits, and many of the jobs done by the working mums are also so badly paid they have to be topped up with tax-credits. In addition, there will now be a direct subsidy in the form of the childcare allowance.

So for single-income families, some at least will be contributing to childcare costs of another family, while their family has sacrificed a salary to care for their children themselves. This is in addition to the fact that they get penalized in the tax system. But since the tax credits used to keep the expensive childcare industry afloat are totted up in a different column to GDP, the Government can continue to claim the GDP generated from every working Mum is ‘real’ GDP. But it really is a classic example of robbing Peter to pay Paul.

This focus on getting mothers back to work preferably full-time could be justified if this is what they wanted, but it is not. Many surveys say the majority of mothers of young children want to care for their children themselves the majority of the time. In a Netmums survey of 4,000 mums only 12 per cent  of those working full-time were happy to be doing so, and 19 per cent said they would prefer to be a stay at home mum. A full 68 per cent said they would rather go part-time. In addition, the survey reported that: ‘There is a feeling of frustration that tax incentives help pay for childcare, but there is no direct support for those who would like to choose to stay at home while their children are young.’ This was before the introduction of the childcare allowance.

In the same survey, 50 per cent of stay at home mums said they wanted to look after their own children and only seven per cent said they would like to work but could not afford the childcare. In a USwitch survey of a thousand mothers, three out of four new mothers said that they would stay at home to bring up their child if they could afford to. According to the research, six out of ten mothers who return to work after having a baby do so only to pay off debt or ease financial pressures. Just one in seven said they wanted to develop their career. More needs to be done to facilitate the clear desire of some Mums to care for their children at home.

The good news is that something can be done to lessen the penalisation of single-income families. The Coalition now must implement its pledge to introduce a transferrable tax allowance for married couples with children. Tim Loughton MP has tabled amendments to the Finance Bill for Report Stage when it returns to the floor of the House of Commons shortly. Every single Conservative MP should support it – if they fail to do so their voters should hold them to account. This would go some way to addressing the discrimination against single-income families. It will not achieve parity, but it is a long over-due recognition of caring duties within the tax system.