Finance Bill

Tim Loughton Excerpts

Tuesday 2nd July 2013 Commons Chamber

[Geraint Davies]

I am sorry that the right hon. Gentleman no longer has any school friends. Those who have abandoned the communities from which they came have proposed legislation to punish the poorest and reward the richest, which is a great shame. It is not too late for the Minister to think again about what is fair and right in distributive economics.

The reality is that the marginal impact of this change on the competitiveness of the City of London is very small indeed; it is not a serious argument. I can imagine the greed-fuelled lobbyists who come here on behalf of the City to demand an extra £145 million being the sort of people who say, “Oh, well, we have got to give these people more money, because otherwise they will leave the country.” We have heard all that before. In any case, many of those individuals have all sorts of tax havens, about which the Government pay lip service to investigating.

At the same time as we hear alleged concerns about those rich people avoiding tax, the Government say to them, “I’ll tell you what; here’s another 5p off the income tax.” People sometimes ask why there has been a 64% increase in bonuses this year. Could it be because the Government have provoked it, as people move their income from a tax year where they pay 50p to a tax year where they pay 45p? It was completely predictable, and it was even factored into the Treasury figures in the form of behavioural changes. The perverse thing was to hear the argument, “Oh, well, we are going to move to 45p instead of 50p because more money can be raised that way. Look, we are going to encourage our mates to move all their money to save tax”—[Interruption.] That proves that it is an absolute farce.

[Tim Loughton (East Worthing and Shoreham) (Con)]

Will the hon. Gentleman give way?

[Geraint Davies]

Of course. I was wondering whether the mumbling man was listening to anything, but I shall certainly give way to him.

[Tim Loughton]

There is of course always a temptation not to listen when the hon. Gentleman is on his feet. Does he remember the Finance Bill 1997, on which Committee he and I both served? I remember him making a similarly prejudicial class-bashing speech then and accusing merchant bankers or anyone working in the City as parasites, yet this industry accounts for many billions of pounds of revenue to the Exchequer and employs 1 million people. Does he still hold to that completely outrageous view? From what he is saying, it sounds as though he does.

[Geraint Davies]

It is interesting to see that the hon. Gentleman has changed from his red braces to blue braces—and very nice, too! I obviously do not regard the whole City of London and the banking community as parasites, as they are a major engine for exports, growth and productivity in Britain. The issue is about managed capitalism and what is the acceptable face of capitalism. It seems to me that many people on the hon. Gentleman’s side are not at all concerned, as more and more money is given to people who have already acquired enormous pots of money.

The distribution of income has shifted massively since 2010. We have seen the incomes of a large number of people in the top 10% growing by 5.5% each year over the past two years—at a time when most people have had pay cuts or pay freezes, certainly in the public sector, or lost their jobs. We have heard the Government boasting—this is their latest creative thought—that an extra 1.2 million people are in jobs, yet that has been contradicted by the Office for National Statistics. Even if there were another million extra people in work, with no extra growth and no extra output in the economy, productivity is going down and things are not going well. Nevertheless, the answer from the Government is still to give more and more money to the richest people and less to the poorest, and that is supposed to get us out of the mess, but it does not.

This stamp duty on transactions is the tip of an iceberg. I am sorry, Mr Deputy Speaker, that I have come on to describe the entire iceberg rather than the tip at the top, which we are talking about. It is important for people to stand up and be counted on this issue. There is no justification for these extra few buckets of money being thrown in the direction of those who have most. There is a great need for a more balanced growth strategy, whereby there is investment in infrastructure across the piece and where the opportunities for tax and spend are more fairly spread, so that together we can build a future that works and a future that cares—a one-nation Britain of which we can all be proud. I do not think that this suggestion makes sense, so I am very much in favour of putting a halt to this £145 million handout to people who are already rich, as it will not make any appreciable difference to the competitiveness of the City of London.

--- Later in debate ---

[Tim Loughton]

I beg to move, that the clause be read a Second time.

I am delighted to have the opportunity to speak to new clause 1, albeit very briefly. It is rather ironic that this issue has probably been one of the most over-reported aspects of this Finance Bill, when it was not even in the Bill and we have only a minuscule amount of time to discuss it. Many colleagues here would like to speak to the new clause, and many others have come up to me to express their support.

There has been a lot of misreporting about the new clause, which has commonly been referred to as some sort of “rebel” amendment. It is strange when a manifesto commitment, which was also in the coalition agreement, to a measure of which the Prime Minister himself is a huge fan, becomes a rebel amendment. We are not rebels. There has been no campaign to orchestrate some sort of rebellion; in fact, there was never any intention to force the new clause to a vote, as anyone who had asked would have found out. New clause 1 is simply a helpful amendment, tabled solely in my name, to nudge the Chancellor to give a formal commitment in law to a Conservative party pledge—a popular one at that—and to name the day, and so dispel the concerns caused by vague references to the measure being introduced “in due course”.

The measure was good enough to be in the Conservative party manifesto. It was good enough to be argued out in the coalition agreement, with accommodation for the Liberal Democrats. It has been good enough for the Chancellor and Treasury Ministers and the Prime Minister quite rightly to reaffirm its importance, so surely it must be good enough to get on with now, to lay to rest any uncertainty about the commitment to its implementation and to end any delay in its becoming a reality. I am therefore delighted, even if I have little time to express my delight this evening, that the Prime Minister has indicated that the measure in the new clause will now be brought forward. I hope that the Minister will be able to assure me from the Dispatch Box this evening, or, if there is no time, by writing to me and other hon. Members, that the measure will be in the next autumn statement, with a view to putting it in the next Finance Bill, so that, hopefully, the money will be in people’s pockets by the time of the next election.

I have framed the new clause to give the Chancellor maximum flexibility to determine the exact details of its execution. Spouses, civil partners and indeed the beneficiaries of same-sex marriage, if that Bill goes through, will qualify. There is no prescription about whether the provision applies to basic rate or higher rate taxpayers, or whether the whole or part of an allowance should be transferable. That can be specified by order to suit the Chancellor. It is suggested that the tax relief should focus on couples with at least one child under the age of five—that is, under school age—and therefore correspond to the child care allowances to be introduced from 2015, but that, too, can be changed by order. This is not a prescriptive amendment.

What is uncertain is the timing. I hope that the Minister will be able to confirm what the Prime Minister said in the briefing that he and officials gave on the other side of the world that the measure will be in the next Finance Bill.

Perhaps the most extraordinary aspect of this debate has been the reaction of the left to the proposal. This is a popular proposal, and a modest one. It is popular among the public and among the majority of Labour voters. The Lib Dems are split on it, but one would expect that: it is party policy to oppose it, but only recently the Business Secretary attacked the prejudice against stay at home mothers. When we have an organisation, Don’t Judge My Family, apparently formed solely to oppose the measure, saying that it is a throwback to a 1950s fantasy family image, that is deeply insulting not only to the many millions of married couples who decide to make a lifelong commitment to each other in front of their families and friends that is recognised in law, but to the 90% of young people and the 75% of cohabiting under-35s who in recent opinion polls have said that they aspire to get married.

There are many different forms of family in the 21st century, and most do a fantastic job of keeping together and bringing up children, often in difficult circumstances, yet almost uniquely among large OECD countries, the UK does not recognise the commitment and stability of marriage in the tax system until one of the partners dies. Worse still, one-earner married couples on an average wage with two children face a tax burden 42% greater than the OECD average, and that gap has been getting worse.

So to introduce a recognition of marriage in the tax system, particularly in the modest form suggested, is not to disparage those single parents who find themselves single through no fault of their own, perhaps as a result of having had an abusive or deserting partner, nor is it to undermine two hard-working parents, all of whom get help and support from the state in other forms, and quite rightly. But uniquely, married couples, civil partners and same-sex married couples in future are discriminated against in the tax system.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Gentleman for giving way and I am conscious of the time. Like him, I passionately believe in marriage, as do my constituents in Strangford. They are keen to see the benefits for their families and their children in Strangford, across the whole of Northern Ireland and in the United Kingdom. Does the hon. Gentleman have an assurance from the Government that the time scale will be met? In other words, will the marriage tax allowance be delivered before the next election?

[Tim Loughton]

I very much hope so. That was the clear indication that the Prime Minister gave in his briefing in Pakistan. I very much hope that the Minister will be able to confirm, because the timing of the measure is important, that it is not something that will be done “in due course”, but in the next Finance Bill.

[Sir Edward Leigh (Gainsborough) (Con)]

Will my hon. Friend allow me?

[Tim Loughton]

I briefly give way to my hon. Friend, who has been a great champion of this measure for many years.

[Sir Edward Leigh]

Not just the Prime Minister in a faraway place, but the Chancellor of the Exchequer, in my own home, not 300 yards away, in front of 40 MPs, gave a solemn pledge that this was going to be brought in before the general election. This will and must happen.

[Tim Loughton]

So the mystery is why on earth it is not happening and the Prime Minister has not been able to say, “We back this amendment.” However, I trust what he has said. Those I do not trust are those who oppose the amendment, because those who oppose it as some sort of 1950s throwback are the ones who are being judgmental about how certain people choose to live their relationships. That view has been endorsed on many Labour party members’ blogs. Disgracefully, they seek, in effect, to pit working mums or dads against stay at home mums or dads, who are of course no less, and often more, hard-working.

My support for a transferable married couples tax allowance has never been based on some moral stance on types of relationship. My concern, as might be expected, is based on what is best for children. That is why I have suggested that it is limited in the first instance to families with children under the age of five. Two statistics say why. For a 15-year-old living at home with both birth parents, there is a 97% chance that those parents are married. For a five-year-old with parents at home, there is a one in 10 chance of those parents splitting up if they are married, but a one in three chance if they are not married. The cost of family breakdown is £46 billion and rising. That is what we need to attack.

Marriage accounts for 54% of births but only 20% of break-ups among families with children under five. We must recognise that in the tax system and we do not. That is what this modest amendment seeks to put in statute as a starting point to appreciate that.

[Andrew Selous]

My hon. Friend is making an excellent speech. Does he agree that we encourage many things in the tax system—for example, employees cycling to work? It is therefore no great surprise that we want to support marriage, given the number of families that split up each year.

[Tim Loughton]

And marriage was invented before bicycles, so why do we not support that, recognise it and value it, as we all do?

There are those who have come up with arguments against the figures, saying it is all about causation and effect. The millennium cohort research revealed that the poorest 20% of married couples are more stable than all but the richest 20% of cohabiting couples, so it is insulting to say that marriage is the preserve of the middle classes or better educated or better-off people.

This amendment alone will not solve all the problems that I have laid out. I am not naive enough to suggest that £150 or whatever the end result may be when this amendment becomes law in some form, as we hope, represents the difference between staying married or getting divorced, or getting married or cohabiting, but it does send a clear and strong message that we value families who take the decision to bring up their children within marriage. When I stood on our manifesto in 2010, and for many years before, my Front-Bench colleagues agreed with that. My amendment makes that a reality, beyond all doubt.

[Mr David Burrowes (Enfield, Southgate) (Con)]

Is it not also a matter of fairness and social justice, because the Institute for Fiscal Studies has shown that 70% of the benefit of a transferable tax allowance would go to those currently on the lower half of the income distribution scale?

[Tim Loughton]

My hon. Friend is absolutely right. I think that that dispels many of the myths being put around against the measure.

I hope that the Minister will take the new clause absolutely in the way it was intended. I do not intend to force it to a vote. I think that the Prime Minister has acknowledged the imperative of getting on with it now. I hope that, at last, our constituents can expect to benefit from the proceeds before the next election, both financially and with regard to our clear commitment to marriage, and that we can benefit from delivering on a popular, practical and achievable pledge, rather than the promise of jam in due course. If we can do that, it will be box ticked, job done.

[Several hon. Members]

rose—

Investing in Britain’s Future

Tim Loughton Excerpts

Thursday 27th June 2013 Commons Chamber

[Danny Alexander]

Local authorities were mentioned in my statement, particularly in relation to the single local growth fund. The money goes to local enterprise partnerships, which as the hon. Gentleman knows bring private sector businesses and local authorities together to spend the money. Part of the money going into the single local growth fund comes from the new homes bonus, so it will enable LEPs to invest in housing if that is what they choose as part of their local economic priorities. As for the mortgage guarantee scheme, it is important that, when it is hard for young people to put together the deposit they need to buy a house, we support them. That demand will also bring forward additional supply. That is the view of the Home Builders Federation, and I agree with it.

[Tim Loughton (East Worthing and Shoreham) (Con)]

I, too, am delighted that the Chief Secretary has named the A27 as part of the road works, but he mentioned only the Chichester by-pass. Will he confirm that the study will include a holistic study of both the bottlenecks at Worthing and Arundel? Otherwise he will just create two bottlenecks further down the A27, which is the longest car park in West Sussex.

[Danny Alexander]

I can confirm that we are getting on with the Chichester by-pass, one of the Highways Agency schemes that is already worked up. We will be conducting further work across the corridor, including Worthing and Arundel, to invest across the corridor between now and 2020.

Finance (No. 2) Bill

Tim Loughton Excerpts

Monday 15th April 2013 Commons Chamber

[Mr Gauke]

The hon. Gentleman is right. We have adjusted the rate, and increased it to a level at which the OBR believes it will bring in £2.5 billion.

[Tim Loughton (East Worthing and Shoreham) (Con)]

Perhaps the Minister will remind Opposition spokespeople that corporation tax is payable only on profits. Many banks that were forced into disastrous mergers by the previous Government are still turning in losses, which might account for the shortfall in the figures given by the hon. Member for Nottingham East (Chris Leslie).

[Mr Gauke]

I am grateful to my hon. Friend for making that helpful point.

Turning to the wider issue of fairness, in addition to the steps that we have taken on avoidance and evasion, the Bill builds on previous coalition policy by ensuring that individuals and businesses will make a fair contribution, while the Government continue to support those on the lowest incomes. We continue to reward work and help hard-working families with the cost of living, and the Bill therefore increases the income tax personal allowance to £9,440 from this month. That represents the biggest ever cash increase, and the Chancellor has announced that the threshold will rise again, to £10,000, from next year.

--- Later in debate ---

[Chris Leslie]

My hon. Friend makes a good point. It is not a good sign that it is taking more and more people to produce the same amount of output. In the long run that is not a sustainable strategy for our economy. Ministers need to look more seriously at that issue. The problem is not just the fact that the Bill neglects economic growth.

[Tim Loughton]

I am slightly puzzled that the shadow Minister cannot see the link between the reductions in corporation tax and attracting businesses to this country. He should get out more. Is he not aware of a number of companies which have relocated from the Republic of Ireland, for example? Bank of America has relocated £50 billion worth of its trading business to the City of London. Firms in my constituency are bringing business back from Denmark to this country because the corporation tax rates are much more beneficial for them. That sends out a clear message that this is the place to do business.

[Chris Leslie]

I am afraid that the former Minister’s suggestions are not borne out by the evidence. Ultimately, corporation tax benefits a company only if it is turning a profit. I am yet to see action being taken in the Bill to help businesses now, particularly those struggling to get back into the black. Those are the steps that are needed to help the businesses that are finding the current economic conditions very difficult indeed.

It is not just the failure on growth; the Bill does not contribute to deficit reduction either. The deficit is already set to be £245 billion larger than the Government planned. The OBR reacted to the Budget and the Finance Bill with some stark predictions. In fact, it stated on the first page of its Budget analysis that the deficit reduction plan has now stalled. The £121 billion deficit recorded in 2011 will turn out to be the same for 2012, and the OBR predicts that it will be the same for this financial year. I challenged the Minister earlier to stand up and say that the deficit is still falling. He tried to claim that the OBR figures pointed in that direction. Well, they point in that direction by less than one tenth of 1%—a fig leaf of £100 million. The claim that the Government still have a deficit reduction strategy is not credible. The deficit reduction strategy is gone.

The Deputy Prime Minister and the Chancellor of the Exchequer both promised that they would balance the books by 2015, so what has happened to that promise? Their explanations for the failure become more and more desperate. They blamed the snow, the royal wedding, Europe, the banks and the unemployed. The blame has been laid at everyone’s door except where is belongs—No. 11 Downing street. The time has come for Ministers to take some responsibility for their failings.

The OBR also predicts—these are pretty shocking figures—that real wage levels will fall by 2.4% over the course of this Parliament. Wages are forecast to fall most steeply this year, relative to prices. The cost of living it increasing, but it is getting harder and harder for people to keep pace.

Where are the measures in the Bill to create a fairer society? The Budget and the Bill are deeply unfair for millions of hard-working families who will be, as my hon. Friend the Member for Corby (Andy Sawford) said, on average £891 worse off this year because of the changes introduced since 2010. In fact, the Institute for Fiscal Studies statistics show that a lone-parent household in work will lose £1,206 this financial year, a couple with children where both parents are earners will lose £1,869 and—this is the most staggering statistic—a couple with children where only one parent is an earner will lose, typically, £3,995 this year as a result of the changes the Government have announced since 2010.

[Tim Loughton]

On that point about families in which one parent is an earner, will the hon. Gentleman therefore commit his party to supporting a transferable tax allowance for married couples, which, as well as sending out a strong message, would specifically help those couples where one person goes out to earn and the other looks after the children?

[Chris Leslie]

I understand that the hon. Gentleman will be tabling amendments on that issue and look forward to seeing how he will frame them. I know that Ministers are looking forward to seeing those amendments, because they will spark a useful debate within the Government ranks. Personally, I do not think that is the best strategy. I think that it would be better to look at the damage his hon. Friends have been doing to the tax credits system. It is women and families, in particular, who are paying the price for the Chancellor’s economic mistakes. In fact, the Government have cut support for parents by reducing statutory maternity and paternity pay so that by 2015 it will be worth £180 less than it would have been had it been uprated in line with inflation. I think that the hon. Gentleman needs to look at that point. The Prime Minister once promised—I know that this is something the hon. Gentleman feels keenly—that he would lead the most family-friendly Government ever, but it is ordinary families across the country who are paying the price for the Government’s failed economic strategy.

The Finance Bill will make Britain less fair. We are definitely not all in this together. For example, let us look at the Government’s “shares for rights” scheme, set out in clause 54, which I know we will be considering again in the Chamber. The Government’s view of a fairer society is one in which businesses are allowed to force new employees to give up their rights at work, including the right not to be sacked unfairly and the right to redundancy pay, something so unpopular that even former Conservative Ministers voted against it in the House of Lords. It is not even as if the business community is asking for that power. Of the 184 businesses that responded to the official consultation, only three said that they wanted to use the scheme. Ministers are totally out of touch with employees and employers on that issue.

Whatever rosy picture the Minister tries to paint, the public can tell that living standards are falling, not rising. The Government just do not seem to understand how extreme austerity has hit consumer confidence, how it is sapping business confidence and how precipitous cuts and tax rises have had the opposite of their intended effect. Let us take the study published only last week by the Financial Times showing that they are harming the prospects of recovery for some of our most fragile local economies, especially in poorer areas of the country, by removing £19 billion of spending power from their residents. It is the regions of the UK most in need of regeneration and private sector investment that are feeling the heaviest impact.

Oral Answers to Questions

Tim Loughton Excerpts

Tuesday 12th March 2013 Commons Chamber

[Fiona Mactaggart (Slough) (Lab)]

8. What plans he has to increase corporation tax payments in the UK by large multinational companies; and if he will make a statement.

[Tim Loughton (East Worthing and Shoreham) (Con)]

13. What steps he is taking to ensure that international companies pay the appropriate levels of tax on revenues earned in the UK.

[Jane Ellison (Battersea) (Con)]

15. What steps he is taking to improve international co-operation to tackle tax avoidance. [R]

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[Mr Gauke]

It is worth pointing out that these places are not simply colonies in which we can direct orders; they have a degree of independence. We are working with other countries at the G20 and the G8 and through the OECD to ensure that we have a modernised tax system, which includes addressing jurisdictions where there is a lack of transparency.

[Tim Loughton]

Does the Minister agree with me on this very simple principle: companies should expect to be liable for appropriate tax in the UK on goods and services paid for and used by people and organisations based in the UK?

[Mr Gauke]

The point I would make is that we want to have an international tax system under which economic activity is taxed where that economic activity takes place. The fact is that the international rules have not moved with the times, but they need to do so, and I am delighted that the Chancellor of the Exchequer is leading the way in this debate.

Transferable Tax Allowances

Tim Loughton Excerpts

Wednesday 28th November 2012 Westminster Hall

[Mr Jackson]

My hon. Friend makes an astute point and I hope that the Chancellor is listening. We will hear his autumn statement a week today. In fairness to the Government, they have sought to ameliorate the cliff-edge effect of the changes that were announced in October 2010, but uprating benefits by 5.2% while seeming to punish people who are aspirational and have done well for themselves sends a confused message, and the Chancellor should seriously think again about that policy. With respect to the Minister, I am not convinced that the infrastructure is even in place to enact that policy change to the maximum degree, but I must not meander on to child benefit.

Back in February 2007, the fact that Britain came bottom of the UNICEF league table for child well-being hit the headlines and rightly caused a stir. On 16 February 2007, that was picked up in an important speech by the then Leader of the Opposition entitled “Nothing matters more than children”. He gave a strong affirmation of the importance of marriage for child development and said,

“I want to see more couples stay together, and we know that the best way to ensure this is to support marriage. Not because it matters how adult men and women conduct their relationships. But because it matters how children are brought up. Nothing matters more than children.”

Who in this Chamber could disagree with that?

Why is marriage so central to child well-being? As “Breakthrough Britain” demonstrated, fewer than one in 10 married parents have split by the time a child is five, compared with more than one in three couples who were not married. That is hugely important because although most single parents do a fantastic job in very difficult circumstances, the evidence is clear that, on average, children brought up in married families do better than those brought up in single-parent families on every significant measure: educational attainment, health, likelihood of getting into trouble with the law, and alcohol and drug abuse.

As the Secretary of State for Work and Pensions said in February 2011:

“The Centre for Social Justice has found that those not growing up in a two-parent family are: 75% more likely to fail at school; 70% more likely to become addicted to drugs; and 50% more likely to have an alcohol problem…And the Joseph Rowntree Foundation has found that children from separated families have a higher probability of: living in poor housing; developing behavioural problems; and suffering from a host of other damaging outcomes, whose effects spill over to the rest of society.”

Some might be tempted to respond to that by suggesting that the principal cause for those different outcomes is not marriage, but wealth, and it just so happens that wealthier people are more likely to get married. However, that analysis does not add up. No one is trying to argue that marriage is the only important consideration or that wealth is not relevant. However, as the Under-Secretary of State for Education, Lord Hill of Oareford, has noted, research from the millennium cohort study suggests that the poorest 20% of married couples are more stable than all but the richest 20% of cohabiting couples.

In that context, the least we should do is to ensure that getting married in this country is no more difficult than in other developed countries. Given that Britain is unique among large, developed OECD economies in failing to provide any kind of spousal allowance or credit, the fact that it is relatively insensitive to couple and family responsibility must come as no surprise. In making that point, I am aware that when the recognition of marriage in the tax system is mentioned, it provokes in some quarters embarrassed smiles and sarcastic comments such as, “I got married for love.” I hope that we all did—those of us who are married—but such comments demonstrate a complete failure to understand the situation in which we find ourselves.

Let me be clear that people do not fall in love for fiscal reasons. However, when they fall in love and decide that they want to be together, they face a choice. Do they marry or cohabit? Do they make a public lifelong commitment to each other in front of families and friends that is recognised in law, or do they just move in together relatively casually and see how things go? The suggestion that that judgment is in no way impacted by financial considerations can be made only by people whose wealth is such that they are entirely insulated from the real-world considerations that impinge on the lives of most, and they are in danger of seeming very out of touch—I hope, again, that the Deputy Prime Minister is listening.

What of the pertinent financial considerations? The latest international comparison figures demonstrate that one-earner married couples on an average wage with two children face a tax burden that is 42% greater than the OECD average. Why should we make it so much more difficult for people to marry in the UK than in other OECD countries? That is a pressing question, especially when considered in the context of polling.

[Tim Loughton (East Worthing and Shoreham) (Con)]

My hon. Friend makes a powerful case. Let me emphasise that what he is asking for is not a preserve of the middle classes, and nor would it undermine other forms of cohabitation that people are in, in many cases through no choice of their own—particularly when a husband has abandoned a wife. The reason why people go into marriage in the first place is also not based on money, but the empirical evidence that he has started to reel off absolutely shows that marriage is the most sturdy and stable form of bringing up children.

Does my hon. Friend agree that next week’s autumn statement by the Chancellor is absolutely the last opportunity for the Government to make clear the importance that they place on marriage? A commitment was made in the coalition agreement, but we need a full-blooded commitment, not one that only tinkers around the edges with a half-hearted endorsement of what we all believe in.

[Mr Jackson]

I could not have put it better myself. My hon. Friend’s intervention allows me to pay warm tribute to his fantastic work as children’s Minister. I look forward to the day that he is back in government, sharing his plethora of talents with the nation, but I know that he will do a fantastic job on the Back Benches for his constituents and the country.

I return to my argument about polling. My right hon. Friend the Secretary of State for Work and Pensions said during marriage week in February 2011:

“When asked about their aspirations, young people are very clear: three quarters of those under 35 who are currently in cohabiting relationships want to get married, and some 90% of young people aspire to marriage. So perhaps the question we should be asking ourselves is this: if people from the youngest age aspire to make such a commitment in their lives, what stops them doing so? Government cannot and should not try to lecture people or push them on this matter, but it is quite legitimate to ensure people have the opportunity to achieve their aspirations.”

I must, in addressing this point, congratulate the Secretary of State on bringing in the long-overdue reform that our benefits system requires and on introducing universal credit, which takes important steps to erode the couple penalty. However, the couple penalty remains such that, even with a fully transferable allowance, it would still be in place for all couples, apart from those without children. In other words, where one is dealing with one-earner married couples with children, the provision of a fully transferable allowance would not even create a level playing field, let alone any incentive to marry. It would simply erode the disincentive not to marry.

In the current context, where we make it harder for people to marry in this country than it is across the EU on average, the lack of support for marriage gives rise to family breakdown, not primarily through the breakdown of existing marriages, but by making marriage no more fiscally attractive than cohabitation, despite requiring a much higher and much more costly level of commitment than cohabitation. In such a context, cohabiting, which, as we have seen, is far less stable, inevitably becomes more attractive.

“Family breakdown in the UK”, a publication from December 2010, made the point that

“the problem is not divorce. While marriage accounts for 54% of births, the failure of marriages—i.e. divorce—accounts for only 20% of break-ups and 14% of the costs of family breakdown, amongst all families with children under five. Unmarried families account for 80% of the break-ups and 86% of the costs.”

It subsequently stated:

“These new statistics demonstrate dramatically that family breakdown is a huge and growing problem and that the main driver of family breakdown is the collapse of unmarried families. A failure to acknowledge these key points will lead to the inevitable failure of any government policy aimed at strengthening families. Witness the continued rise of lone parenthood since the 1980s at a time while divorce rates remained stable or declined.”

The arguments for a transferable allowance for married couples, defined narrowly in terms of the benefits of marriage, are more than enough to justify the change, but there are other compelling arguments for introducing transferable allowances: first, to make the tax system fairer by reducing the tax burden on one-earner families with modest incomes; and secondly, to make work pay, which is even more important.

In the first instance, it is not fair to place a tax burden on the income of one-earner families that is 42% greater than the OECD average. Crucially, most one-earner families who would benefit from a transferable allowance are in the poorer half of the population. The Institute for Fiscal Studies published figures shortly before the election showing that the transferable allowance proposals in our manifesto would have overwhelmingly benefited families in the poorer half of the population. In contrast, the IFS said that raising the tax threshold—the implementation of which has been prioritised to date in order to please the Liberal Democrats—would benefit mainly taxpayers in the top half of the population.

When independent taxation was introduced in 1990, it was realised that, unless special provision was made for families, they would lose out. As Nigel Lawson recognised at the time, the logical solution was to give a non-earner in a one-earner household the right to transfer their unused personal allowance to their spouse. He was not able to do that and as a compromise, the married couples allowance and the additional personal allowance were introduced. It is now clear that, without those allowances or transferable allowances, one-income married couples, most of whom are relatively poor, were bound to end up bearing an increasing share of the tax burden. That is what has happened, generating a completely unfair situation.

A few years ago, the Treasury published figures showing that, in 2009-10, a single taxpayer on three quarters of the median wage—approximately £20,000—was paying 21% less tax than in 1990. A single-earner married couple were paying 11% more tax. Under the coalition agreement, we are putting considerable resources into raising the tax threshold. For a single person under 65, the tax threshold this year is 170% higher than it was in 1990. However, the tax threshold for a one-earner married couple has risen by only 71%, so in real terms it is lower than it was in 1990. I urge the Minister to examine those figures carefully and to draw them to the Chancellor’s attention.

Oral Answers to Questions

Tim Loughton Excerpts

Tuesday 6th November 2012 Commons Chamber

[Greg Clark]

The hon. Gentleman calls for action, but I would have thought that the funding for lending scheme was precisely the type of action that he wanted. The Bank of England has been clear that, in the absence of funding for lending, it was quite possible that rates and lending would have declined because of the turbulence and anxiety in the eurozone. Actually, it has been an important factor in getting money to businesses. I hope that the hon. Gentleman will welcome that.

[Tim Loughton (East Worthing and Shoreham) (Con)]

T1. If he will make a statement on his departmental responsibilities.

[The Chief Secretary to the Treasury (Danny Alexander)]

The core purpose of Her Majesty’s Treasury is to ensure the stability of the economy, promote growth and employment, reform banking and manage the public finances so that Britain starts to live within her means.

[Tim Loughton]

That is all very interesting, but Anne Marie Carrie, the excellent head of Barnardo’s, recently said that the proposal to remove housing benefit from all under-25s

“is reckless and unfair as it will leave some of this country’s most vulnerable people stranded.”

I am particularly concerned about the impact on care leavers, who do not have a family home or family to fall back on and for whom a safe and stable roof over their heads means they can keep off the streets, out of the NEET statistics and out of trouble. Will the Chief Secretary guarantee now that he will work with other Ministers to make sure that any changes to housing benefit for under-25s do nothing further to disadvantage that already disadvantaged group?

[Danny Alexander]

My hon. Friend makes a very important point about care leavers. These ideas have been floated as part of a discussion within Government on the next phase of welfare reform. I will certainly make sure that his point is brought to bear in any discussions on that proposal.

Finance (No. 3) Bill

Tim Loughton Excerpts

Wednesday 4th May 2011 Commons Chamber

[Grahame M. Morris]

Yes, I will try to bring my remarks back to the clause.

I am fully aware that the amendment that was tabled in the name of my hon. Friends on the Front Bench was not selected—[Interruption.] We shall not be able to talk about it in the debate. Getting back to clause 35, we would require the Government to look at how their policies of tax and spend are affecting families right across Britain—

[The Parliamentary Under-Secretary of State for Education (Tim Loughton)]

Have you read the clause?

[Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)]

Will my hon. Friend give way?