Tomorrow’s strong economy is dependent on the success of today’s families
Miriam Cates MP - The Daily Express
Britain needs a tax system that's fair for families
One of the struggles that I and so many other parents have faced during the pandemic is how to balance work with looking after children. But even in normal times, the difficulty of combining paid work with childcare can put huge pressures on family life.
Many parents have to work long hours, or more than one job to pay the bills, but then miss out on spending time with their children, paying someone else to look after them instead. A new report on The Taxation of UK Families published by Care explains why British families have so little financial breathing space.
Unlike many other similar countries, in the UK we tax every adult individually, rather than taking into account total household income and family responsibilities. So, if you earn say, £30 000 a year, you will pay the same amount of tax and National Insurance regardless of whether you are a single adult with no dependents or a lone parent supporting three children.
This means that in the UK, a one-earner household with four children has to earn nearly £80 000 to have the same standard of living as a single person earning £27 000. Single parents also face a much bigger tax burden here than in other countries.
This problem is made even worse by the way that benefits are clawed back as parents try to work more hours. Some families face losing 75p of every additional £1 they make, making it almost impossible to earn their way into a better financial position.
It doesn’t have to be this way.
For example in Germany, couples are taxed on their combined income, meaning that single earner families, or households where one partner earns a lot more than the other, are not penalised. Parents also benefit from significant tax credits – around €2500 for each child. Tax credits are doubled for lone parents where the absent parent doesn’t contribute to support.
The German tax system, and similar ones in France and the US, take into account the significant costs of raising children. These allowances also recognise that parenting is an important responsibility and encourage parents to invest time and energy in raising their children and not just in the workplace.
In contrast, the situation in the UK leaves many parents feeling forced to work more hours than they want to, particularly when children are small. When my first child was born, I was fortunate enough to make friends with a wonderful group of other first-time mums. We spent six months learning to be parents together, sharing the highs and lows of colic, first teeth and putrid nappies. But when the end of maternity leave approached, none of us, whatever our job, looked forward to leaving our babies.
I know a lot is said about women being desperate to resume their careers, but in my experience most women feel very conflicted about returning to work, and few would choose to work full-time. The attachment between mother and child is strong and it is real; there is a reason why we are biologically programmed not to want to leave our babies. And yet so many mothers have no choice; very few families can survive on one income so parents return to work for more hours than they’d like, often spending a high proportion of wages on nursery fees.
Some think the answer to the problems faced by working families in the UK is more cheap childcare. I disagree, and in some ways providing more and more free hours of childcare could be seen to devalue the role of parenting. Of course, parents have a responsibility to work to provide for their children, but this is not their only important role.
We don’t have children just to put food in their mouths and clothes on their backs, but also to pass on our values, teach them how to make good choices and prepare them for successful adult life. Parenting well takes time, effort and a huge amount of emotional resilience; resources that are in short supply when stressed parents are working long hours and have little energy to spare.
Instead of trying to reduce the costs of childcare, I believe we need to look again at our UK tax system and how it can be made fairer for families. Tax policies reflect – and often drive – the behaviour we value as a society and our current system encourages as many people as possible into paid work without recognising any wider contribution made by individuals such as providing unpaid care.
Parenting is absolutely vital to society, and we see all too often what happens when things go wrong. Reforming our tax system to recognise family responsibility would be costly, but perhaps we should put our money into preventing families from collapsing rather than picking up the pieces.
Children are a blessing and a responsibility; caring for them should not be seen as an inconvenience to the economy. Ultimately, we need to recognise that tomorrow’s strong economy is dependent on the success of today’s families. Let’s look again at how we can support parents in their crucial role.