At long last, on Friday, the Prime Minister launched his new Marriage Allowance as a signal that his government wants to support and reward marriage.
From April, married couples with one earner paying basic rate income tax and the other not paying tax can transfer £1,060 of the unused tax-free allowance. Multiply that by 20% and it amounts to a reduction in income tax of £212 per year.
LBC radio presenter Andrew Pierce put it to me in an interview this weekend that the Tories should be shouting about this policy from the rooftops. But they are not because they are embarrassed. It comes four years into a coalition government. It smacks of electioneering. And frankly £212 – or £4 per week – is not going to make a great deal of difference to anybody.
I had to agree.
On the one hand, the principle of supporting marriage is unquestionably right. Bringing children up in a two parent family is what most parents want and what benefits children most. When couples split up, lone parents struggle to do with one pair of hands what the rest of us who have remained intact – sometimes by the skin of our teeth – can do with two.
Picking up the pieces of family breakdown now costs £47 billion per year, according to the latest analysis from Relationships Foundation. That’s still more than the entire defence budget.
Staying together as two parents is most likely to happen if those parents are married. Only 7 out 100 couples who are still together by the time their children are teenagers are married. There’s a lot of guff talked about how it’s all about the kind of people who marry and not marriage itself that keeps couples together. This is only partly true at best. It’s basic human nature – supported by the evidence – that when we make decisions about things we are more likely to stick at them, more likely to want to stick at them, and more likely to enjoy them.
It ought to be possible for unmarried couples to do perfectly well. And it clearly is possible for a minority. But they are the exception. We shouldn’t be setting our policies on the minority who get away with it. We should be setting our policies on what works. Most marriages work.
The Marriage Allowance is the first policy in decades to support marriage quite so explicitly. But that’s about all that can be said for it. As a policy, it’s badly targeted, it’s expensive, and it will have minimal impact, if any, on the decisions couple make.
Ironically the Deputy Prime Minister, the same one who thinks that marriage is important for himself but a throwback to the Edwardian era for everybody else, put his finger on it when he said that it is unfair. “The woman whose husband runs off with his secretary” will lose this allowance.
That does seem unfair.
But what’s really unfair is that she will LOSE her entitlement to £212 in Marriage Allowance but GAIN up to £7,295 in extra tax credits as a lone parent with one child and an extra £9,417 if she has two children.
Had this policy been targeted where family breakdown is most common – in the first few years of parenthood for unmarried mothers – it could have been worth thousands instead of hundreds and gone a long way to offset this perverse policy that pays people to split up.
So here’s why I’ve yet to hear anyone other than the PM and his Chancellor come out all guns blazing in favour of the new Marriage Allowance.
- £212 to stay together.
- £7,295 to split up.
Government policy is very embarrassing indeed.