David Cameron to push tax breaks for marriage

Published on Tuesday 5 October 2010 20:30

DAVID Cameron will today use his first address to a Conservative conference as Prime Minister to insist that marriage will be recognised in the tax system, as he attempts to overcome the row over cuts to child benefits for the middle classes.

• Prime Minister David Cameron makes his address today

The Prime Minister will argue that marriage is one of the institutions that can help to pull people out of hardship, saying the era of tackling poverty "by the size of the cheque" is over.

He will say that bolstering families, pushing poor children into the best schools, and making work pay for benefit claimants are "the real routes out of poverty". Mr Cameron's emphasis on poverty reduction comes two days after Chancellor George Osborne declared that parents in high tax brackets would no longer be able to claim child benefit. Treasury sources denied any change on tax breaks was in response to the reaction to the child benefit cuts.

Despite a growing backlash against the policy, Mr Cameron will remain unrepentant today, arguing that middle classes need to take their share of the burden to cut Britain's budget deficit. He will state: "I'm not saying this is going to be easy, as we've seen with child benefit this week. But it's fair that those with broader shoulders should bear a greater load."

Also in the speech today, Mr Cameron will distance himself from economic right-wingers in the party by specifically arguing that government has a role to play in restoring Britain to financial health.

He will say: "I don't believe in laissez faire. Government has a role not just to fire up ambition but to help give it flight."

It suggests both Mr Cameron and Mr Osborne remain determined to stay on the centre ground, in the hope of avoiding accusations that they are leaving the poor behind.

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Mr Cameron will say that he intends to bring forward the married families' tax allowance before the 2015 general election.

Prior to the general election, the Conservatives outlined their plans to give four million married couples and civil partners an annual 150 tax break for basic-rate taxpayers, where one partner did not use their full personal tax-free income allowance. They would have been allowed to transfer 750 of their tax-free personal allowance to their working partner.

But the idea was opposed by their partners in government, the Liberal Democrats, who are not bound by the coalition to vote for it.

Before the election, Deputy Prime Minister Nick Clegg described it as "patronising drivel".

Mr Cameron has already said he accepts the reform is largely symbolic, saying he believes that the State must play a role in promoting marriage.

In so doing, he will argue, the State can help cut poverty. "For too long, we have measured success in tackling poverty by the size of the cheque we give people. We say, 'Let's measure our success by the chance we give'," he will argue."Let's support real routes out of poverty: a strong family; a good education; a job. So we'll invest in the early years, help put troubled families back on track, use a pupil premium to make sure kids from the poorest homes go to the best schools, not the worst, recognise marriage in the tax system - and, most of all, make sure that work really pays for every single person in the country."

The speech is expected to emphasise the need for fairness in pushing through cuts, but Mr Cameron's own party was questioning his choices last night, particularly over the controversial move on child benefit.

It has emerged that every Tory MP had received a letter explaining the plan, in a sign of the concern within Downing Street about a potential backlash.

Former Tory front-bencher David Davis described the move - to withdraw the benefit from any home with a parent earning more than 44,000 - as "an accidental piece of social policy" which would "encourage wives or mothers to go out to work".

Mr Davis went on claim that Britain's middle classes would have to pay "more than their fair share of the burden" of the forthcoming cuts.

He said he hoped some of Mr Cameron's policies on tax, such as the retention of the 50 per cent top rate, would go once the bulk of the crisis had passed.

Back-bencher Penny Mordaunt said the move on child benefit had been "poorly presented" and expressed concern about the impact on married couples.

Another MP, Mark Field, said the cut could cause "aspirational people" on 35,000 a year to forgo their chance for promotion. He added: "By the time I get back to my office, my email box will be more or less full, I suspect, with constituents getting in touch on this very issue."

Meanwhile, confusion emerged after children's minister Tim Loughton suggested that the arrangement might yet be revised before it is implemented in 2013. He later clarified that he was not calling for a review.

Both Mr Cameron and Mr Osborne sought to explain their plan on child benefit yesterday, and address the central criticism that it will unfairly hit families where only one parent works.

If earners pass the 44,000 threshold, they will receive no child benefit, while a double-income family where the two parents each earn less than 44,000 will still receive the full amount.

But Mr Cameron played down the idea of introducing means-testing that would take into consideration joint incomes, saying any such system would be "incredibly bureaucratic and expensive and, frankly, quite intrusive".

He also pointed out that a similar anomaly already exists in the income tax system, as one half of a couple could be required to pay at a higher rate irrespective of their partner's earnings.

Mr Osborne said the Government had looked at whether it was possible to assess total household income."We would have to devise, for the first time in the history of this country, a brand new means test that covers the entire population, that assesses the income of every single household, which we don't do at the moment," he said.

"So we would have to create a brand new system, employ thousands of people to conduct the means test, and at the moment the system where the mother, when she has a baby, fills in the child benefit form, it's very simply done - all that would go.

"We would have a brand new, enormous means-tested system and I didn't want to do that to the 85 per cent of people who will go on receiving their child benefit in exactly the same way."

The Chancellor added that to introduce a new means-tested system would "basically abolish child benefit and replace it with something very different".

However, respected think-tank the Institute of Fiscal Studies said the reform would be seen as unfair and warned that it would "seriously distort" work incentives.

Shadow work and pensions secretary Yvette Cooper described the reform as an "unfair attack on child benefit" and, seizing on Mr Loughton's remarks, said it was already "unravelling".

"They have clearly been taken aback by the reaction of parents across the country. George Osborne and David Cameron obviously don't understand what it means for families on middle incomes to lose thousands of pounds a year."

Mr Cameron also sought to stress separate plans by the coalition to allow stay-at-home spouses to give some of their unused tax allowance to their partner, saying this could help offset the loss of child benefit.

Elsewhere in the speech today, Mr Cameron is expected to rebut claims by Labour leader Ed Miliband last week that the Prime Minister stood for "pessimism" while Labour was on the side of the "optimists".

He will lay out the coalition's growth plan, urging voters to stick with the coalition during the cuts. Mr Cameron will say: "We need to get behind our wealth creators."

He is also expected to refer to the death of his father Ian and birth of his daughter Florence.