22 September 2022

Helping families to grow will help Britain grow

By Gavin Rice

Amidst the solemn state pageantry and outpouring of collective feeling during the period of national mourning, it’s easy to forget that the events of the last two weeks have been about a family. The King and his brothers and sister have lost their mother. The Princes and other members of the Royal family have lost a grandmother. His Majesty has been put through a gruelling public schedule with little time given to him for personal grief.

The fact that the apex of our national constitutional order, with all its pomp and grandeur, is a family like our own makes the abstract concept of the Crown something human. The presence of a family, and the loss of a much-loved member of it, are near-universal experiences.

Sadly, however, many in Britain are not growing up with the security, support and stability that family provides. The marriage rate for the UK dropped to its lowest levels on record this year. Nearly a quarter of families are now headed by a lone parent (usually a mother), compared to the EU average of 13%, and almost half of all British children don’t remain in one household throughout their childhood.

Families come in all shapes and sizes, yet the impact of parental separation and single parenthood on children is well-known. Half of all lone parent families are in relative poverty; six out of seven qualify for means-tested benefits. One in four children living with just their mother report emotional distress, compared with just one in 22 living with both parents. Children with two parents at home on average go on to have better educational outcomes, better physical and mental health, more stable future relationships, and are less likely to encounter the criminal justice system. This is certainly not to denigrate lone parents: many are performing heroically in what is inevitably an uphill battle. Few would deny that raising children is easier with a second pair of hands.

Sadly, government policy does little to recognise and promote family life. We are an international outlier here – in Germany a family on median income with two children will pay just 2% of their income in tax; in France this is more like 10% and in the USA around 5 per cent. In the UK it’s more like 14 per cent. Couples and any dependent children they have are not recognised in our tax system at all.

Meanwhile, many are delaying starting a family due to the cost of living, especially prohibitive house prices. Polls consistently show that British parents tend to have fewer children than they would like, and cite financial constraints as the main reason for this. That’s why the Centre for Social Justice would like to see the Government heed the call of Children’s Commissioner by putting family at the heart of policy.

Tax reform – one of the Government’s top priorities – is a good place to start. People do not and should not form a relationship or get married for a tax benefit, but our current system actively penalises families by treating them like individuals. Far from being neutral, our tax code disincentivises family formation and fails to recognise the extra costs associated with having dependents in the home.

It was very encouraging to see Liz Truss commit to implementing fully transferrable tax allowances for couples with children during her leadership campaign. Doing so would give parents greater choice about how they divide up work and childcare within their household, putting up to £2,500 back in the pockets of hard-working families.

It has been widely reported that Friday’s fiscal event will prioritise a tax-cutting agenda in a bid to spark growth and increase real incomes. Coming good on a key campaign promise by implementing a tax cut which targets families would be an excellent way to deliver on this agenda, while prioritising those who face the steep extra costs that having children brings.

As a matter of principle, government policy should recognise that having and raising children is also a public and social good. The UK suffers from serious demographic challenges; since 1970 Britain has consistently failed to meet the critical replacement rate of 2.1 children per household. This has profound implications for our economy, our tax base, the cost of public services and how the NHS is funded.

Much more can and should be done by government to promote and support families, and to remove the social and economic impediments they currently face. A 100% personal transferrable tax allowance would not be a silver bullet, but it would provide a long-overdue fix for a problem that will affect most of us at some point in our lives – the cost of raising a family – and go some way towards giving family the recognition it deserves.

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Gavin Rice is Policy Director at the Centre for Social Justice.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.