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What's the Chancellor's policy towards one-earner families?

By Tim Montgomerie
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It's hard to find much welcome for the Chancellor's new £1,200 childcare giveaway in any of today's newspapers. Left-leaning pundits complain that the allowance that benefits families earning up to £299,999.99p is a poor use of limited funds when many low income families are struggling to make ends meet. Right-leaning commentators worry that it is a measure that complicates rather than simplifies the tax system. Social conservatives see the subsidy as another snub to those parents who choose to stay at home to raise their children.

I admit to being something of a traditionalist on these matters. I believe that children and communities benefit a great deal from having a parent at home in formative years but I also respect the fact that some parents cannot afford to stay at home or are quite simply happier mixing work and parenting. What isn't right is a tax system that heavily subsidies one lifestyle choice at the cost of another. There are two words for that: social engineering. Throughout the OECD we have a tax and benefits system that penalises one earner couples. We need a much simpler tax system that doesn't cajole parents out of the home environment and into the workplace or we need forms of transferable tax allowance that compensate for the heavy taxation of one-earners. Parents should be able to make their own choices about whether to spend more time in the workplace or at home with their kids (or to undertake other caring responsibilities). Those choices are deeply personal and shouldn't be subject to manipulation by the state.

For me and Samantha Callan of the Centre for Social Justice there is also a concern about political integrity. "As quasiuniversal childcare fundng NOT in Coalition Agreem't," she Tweeted, "lack of TPA implementation on cost grounds utterly indefensible". By TPA Samantha is referring to the transferable tax allowance for married couples that David Cameron promised eight years ago as one of the first and central themes of his bid to become Tory leader. Today's Budget is George Osborne's fourth. If he doesn't announce its introduction today my fear is he never will. There is provision in the Coalition Agreement for an allowance to be introduced (which, btw is more pro-poor than raising the income tax threshold) and in order for it to pass the Liberal Democrats agreed to abstain. My fear is that if the Chancellor announces the measure in next year's Budget the LibDems will be in pre-election mode and will struggle to honour the Coalition commitment to allow something to pass that they heartily oppose.

I mustn't get too disappointed (Telegraph and Mail leader-writers are both very angry this morning) because it's just possible that a deal has been struck inside the Quad*. Perhaps Osborne has traded the LibDems this childcare allowance in return for the married couple's allowance? We'll know in about five hours...

* The Quad is now actually a Hex. Oliver Letwin and David Laws join Cameron, Clegg, Osborne and Alexander in this central decision-making body.


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