So, after much kerfuffle, bluster and insufferable tweeting, the main party manifestos have now been launched in all their glory. In the red corner, Labour have pledged to be the party of ‘working people’ (you can presumably get stuffed if you’re out of work I presume?) whilst the Conservatives have promised ‘the good life’!
Both parties claim to be very different in terms of their offer, yet one issue on which they are seemingly united is that of childcare, or more specifically, state sponsored childcare. The Tories have promised 30 hours of free childcare for 3 and 4 year old children when both parents are working up to a value of £5000 per child whilst Labour have promised the same, if ‘only’ for 25 hours. Conversely, for parents (perish the thought) who would like to stay at home and look after their children, either temporarily during early years or on a more permanent basis, nothing of any substance was pledged, unless of course you count the derisory Tory transferable tax allowance for married couples, resulting in a net benefit of £212 per year.
Thus, when comparing this to the £5000 per year pledged to couples who are both in paid employment, it’s clear to see where the Tories (and indeed Labour’s) priorities lie – getting both parents in work earlier and for longer. Whilst many couples will both need paid employment for a host of reasons, to see nothing of any note for a family type whom the Joseph Rowntree Fondation says are at particular risk of poverty is disappointing to say the least.
We’ve known for a while now that one-earner couples are penalised in the UK tax and benefits system compared with equivalent families elsewhere around the world. Observe the following:
2. Research I conducted found that on ‘squeezed middle’ incomes (75 per cent, 100 per cent and 125 per cent of the OECD average income) one-earner couple families with two children would better off as dual-earners, even when childcare costs of £176.60 per week are taken into consideration. The disparity is greatest at 100 per cent of average wage where a one-earner couple is nearly £1000 worse off per year than the dual earner equivalent.
3. When earning between £12,559 and £31,577 one-earner couple families face marginal effective tax rates of 73 per cent. This means that for every extra £1 earned by the earner in paid employment, only 27p is taken home. Unsurprisingly, this situation forone-earner couple families is the worst in the OECD and such shocking figures put last week’s encouraging news of reduced employment into some perspective.
And talking of paid employment, don’t let anyone tell you that one-earner couple families are solely, or even predominantly made up of millionaire husbands whose wives sit at home all day playing bridge, this simply isn’t true. One-earner families are not some sort of 1950s relic that belong in the past. The truth is that many families choose to structure their families like this for a range of understandable reasons. Indeed, figures from the Department for Work and Pensions tell us that there are currently around a million one earner couple families in the UK who have children under the age of 10.