PRESS RELEASE - The social policy charity CARE has expressed shock and disappointment in response to the announcement of a significant new childcare provision that discriminates against stay-at-home parents.

The Prime Minister and Government ministers have repeatedly reiterated their commitment to recognising marriage in the tax system by supporting one-earner married families through the introduction of transferable allowances. This was heralded as a fundamental step forward in addressing the systemic unfairness experienced by families with a stay-at-home parent. However, rather than acting to implement this Coalition Agreement pledge, the Government has compounded the disadvantage confronting these families with its latest childcare support plan.

Our tax system penalises families with a stay-at-home parent.
Only 20.1%1 of people in the OECD live in countries that do not recognise marriage or have some kind of couple allowance. The vast majority of that 20.1% live in just two countries: Mexico and the United Kingdom2. In this unusual context it is not surprising that our fiscal arrangements make it harder for married couples than is the case for most OECD residents on average.

The UK is out of line with international convention in not recognising marriage in its tax system.
The latest OECD figures demonstrate that the tax burden on a one-earner married couple with two children on average wage has now increased from being 33% greater than the OECD average to 42% greater3.

Introducing a transferable allowance for married couples will disproportionately benefit those in the lower half of the income distribution.
Figures from the Department of Work and Pensions’ Family Resources Survey illustrate that the average income for a one-earner household was just £28,000 per annum, only marginally above the UK average wage of £26,500. This evidence reveals the inaccuracy of popular assumptions that one-earner households have the luxury to choose to be so on the basis of wealth4.

Director of Parliamentary Affairs for CARE, Dr Dan Boucher, said:

"The Government’s inaction on transferable allowances and recent statements by the Early Years Minister5 points to an underlying misguided ethic that suggests both members of a couple should work irrespective of their other responsibilities. This ignores the fact that stay-at-home parents sacrifice a second income to make an important investment in the lives of their children with knock-on implications for the rest of society.

The Government’s plans for tax-free childcare support for parents working at least 16 hours a week will exacerbate the unfairness already experienced by single-earner households within the tax system.

"For one-earner households earning just over the average wage it is even more critical that the Government honours its commitment to support them through transferable allowances, as promised in the Coalition Agreement. The 2013 Budget is the last opportunity to do this in order to have transferable allowances up and running by the next General Election."

For further information or an interview with Dr Boucher please contact James Mildred, Public Affairs Media and Communications Officer on tel: 020 7227 4731 or 07581 153693 or email: james.mildred@care.org.uk

Editors Notes:

1. Pearson and Binder, Taxation of Families – International Comparisons 2011, London, CARE,2012, p14
2. Ibid.
3. Ibid. p9
4. Figures derived from Department of Work and Pensions’ Family Resources Survey 2010/11.
5. Elizabeth Truss MP on ITV Daybreak, Tuesday 19 March 2013: “We have helped stay-at-home mothers with increasing the free early education from 12.5 hours to 15 hours. We all know that childcare is so expensive that parents simply don’t have the choice to go out to work because they can’t afford the childcare. What we’re doing is helping parents make that choice.”
6. A transferable allowance:

1. Would address the fiscal unfairness faced by one-earner married families compared with other developed countries
2. Would accrue most of the benefit to those in the less well-off half of the population
3. Would address some of the significant unfairnesses resulting from the demise of the Married Couples Allowance
4. Would help reduce the number of households currently facing a 73% marginal rate
5. Would help re-establish a sense of commitment to one-earner families following the additional pressure imposed through the recent child benefit changes
6. Would recognise both the important contribution made by one-earner families and the fact that most one-earner families are so out of necessity, not choice