John Humphrys asks: is Cameron right to recognise the system of transferable tax allowances, as his party wants
Belief in marriage as a vital social glue is one of the things that’s supposed to unite Conservatives. Yet recently it has been dividing the party from its leader. In the eyes of many grassroot Tories, David Cameron has been far too interested in extending marriage to gays (which many Conservatives believe undermines the whole thing) and far too little concerned to fulfil a manifesto commitment to recognise marriage in the tax system. The Prime Minister has got his way over gay marriage but now he’s making signals he’ll give the party what it wants over marriage and taxation. Is he right to do so?
The 2010 Conservative election manifesto pledged to restore the system of transferable tax allowances. It would mean a married person who was not working could transfer part of their tax free allowance to their spouse and the manifesto said it would show that the country “values couples and the commitment people make when they get married”.
This policy had been abandoned partly as a result of the separate taxation of married women, which recognised the independence of working women whether or not they were married. The issue of whether or not to restore the transferable allowance was a bone of contention between the two parties in the coalition that was formed after the last election and the policy that emerged rankled with many Tories. It meant legislation to restore the transfer system would not be enacted until after the next election.
The Tory grassroots have been unhappy for several reasons. First, they think that transferable allowances are the most obvious symbolic way for the state to acknowledge the value of marriage, just as the manifesto spelt out. Secondly, they believe the government, albeit a coalition, ought to fulfil the promise that the majority party in that coalition made at the last election. And thirdly, they wanted to help their own voters.
Many Tory MPs and the party workers in their constituencies are aware how the government has hit in their pockets many people who are natural Tory voters. The proposed limiting of child benefit to high earners and the withholding of state subsidies for child care to mothers who stay at home to look after their children are the most obvious examples. So restoring the transferable allowances seems a good way to make amends.
That has been the view especially of Tim Loughton, a Tory backbencher and former minister, who has been seeking support to amend the current finance bill to bring this about. And it seems to be in anxious reaction to Mr Loughton’s efforts that the Prime Minister has now acted. He signalled earlier this week that the government would move on the issue in the autumn, opening the possibility that the transfer system might be restored during this parliament. He said: “The point is we are going to be putting in place the marriage tax proposal in law.”
The idea seems to be that non-working married people will be able to transfer their income tax allowance to their wife, husband or civil partner up to the point at which that spouse would start to pay higher rates of income tax. Currently that limit is £41,151. The 2010 Tory manifesto estimated that the policy would save married couples up to £150 a year.
Not everyone thinks this a good idea. When money is so tight many people argue that there are far better things for the government to spend its limited resources on: giving help to ‘problem’ families for instance. Others argue that there are better ways of helping middle-class Tory voters.
More fundamentally, though, many challenge the whole idea that government should seek to ‘promote marriage’ in the way that Tory ideologues advocate. Nick Clegg, the deputy prime minister and Liberal Democrat leader, has said such policies are “patronising drivel that belong in the Victorian Age”. Even some Conservatives worry that policies to promote marriage are too reminiscent of John Major’s “Back to Basics” policy which did the party much electoral harm.
Sceptics also argue that marriage is hardly going to be promoted by giving couples an extra hundred and fifty quid a year. And they go on to point out that if politicians are serious about promoting marriage they should concentrate on what really does undermine the institution. It’s not the tax system, or extending marriage to gays that undermines marriage, it’s divorce that does so. But is anyone seriously arguing we should tighten up the divorce laws to make it harder for people to end their marriages?
Whether Mr Cameron will be able to restore the system of transferable tax allowances for married couples and civil partners remains to be seen. If the LibDems go on being sceptical about the idea and Labour opposes it, then he will have difficulty. Maybe the most he can do is show willing. But will that be enough to appease his own party? We shall see.
What’s your view?
- Do you think the old system of transferable tax allowances is a good one that ought to be restored or not?
- Given the shortage of funds at the government’s disposal, is this the best way for the government to spend our money?
- And, at a fundamental level, do you think it is the government’s job to “promote marriage”?
