10 October 2022

It’ll take more than a tax break to get Brits making babies


Bonk for Britain’ was an eye-catching headline in this week’s Sun on Sunday, and no it wasn’t about yet another Westminster sex scandal. An unnamed Cabinet minister has told the paper that women should get tax cuts for having children.

I’m sceptical about this. When my husband and I were trying for a baby, thoughts of HMRC were not foremost in our minds. I doubt many people decide to have children because it might mean a tax break.

To be fair, this is not official policy, it’s an anonymous quote in a tabloid. But it’s no secret that the Government is concerned about declining birth rates. The current fertility rate is 1.6 children per woman, well below the ‘replacement rate’ needed to maintain the population at its current size, which is 2.08. That has serious economic and social implications, not least for the levels of immigration required to make up the numbers.

But it’s also a sign of tremendous progress. Being a mother is no longer a woman’s only or best choice. Falling birth rates have coincided with far greater female participation in the workforce and access to contraception and abortion. Having fewer children is, to some extent, a revealed preference. And it’s observable in almost every developed economy – even China has abandoned its notorious one child policy in an effort to boost its population. When a trend is repeated across countries with very different political environments it suggests that policy may not be the driving factor. Given the enormous physical, emotional and financial commitment that having children demands, perhaps it shouldn’t be surprising that when women have the freedom to choose, they choose to do it less.

Of course children are not just a burden, they are also a great source of happiness and meaning, and no Government should prevent people who do want to start a family from doing so. Revealed preferences are one thing, but the number of children British people are having is below the number they say they would ideally like

There are many aspects of life in this country that are actively inimical to families. The entire welfare system is skewed in favour of pensioners at the expense of children and working-age people. The two-child limit on Universal Credit claims hardly sends a pro-natalist message, and the callous underpinning assumption that some people may have a third child purely for state hand-outs feels like it comes from another era. As I have said, financial considerations are rarely the only thing a couple is thinking about when they conceive a child. Many pregnancies are not planned and many families will not know that they will need to claim benefits in the future, and it is simply wrong to punish children for the circumstances of their birth. 

That said, having a child in Britain is more expensive than it needs to be. I have written here before about how a baroque system of regulations and subsidies means we have the highest childcare costs in the OECD. It’s very welcome that the Government is no longer testing this as simply an unfortunate fact of life, and is actively thinking about reforming the system. Talk of relaxing adult to child ratios in nurseries has predictably been met with criticism on the grounds of ‘safety’, with the Early Years Alliance calling the plans ‘ludicrous, pointless and potentially dangerous’. Liz Truss shouldn’t listen – what’s really ludicrous is the idea that countries with looser ratios like, err, Scotland or indeed Sweden, which has no mandatory ratio at all, are less safe for children.

One area where safety is a legitimate concern is in maternity care. There have been appalling failures at Shrewsbury and Telford Hospital NHS Trust, where a review that one in four stillbirths could have had a different outcome, and at East Kent NHS Trust, where the death of 200 babies are currently under review. But poor care is by no means limited to these trusts – across the country three out of five NHS maternity services are not safe enough. Black women are four times more likely to die in childbirth. A misogynistic, pseudoscientific emphasis on ‘natural birth’, where approved midwifery textbooks claiming a baby not breathing may mean ‘the spirit is waiting to be called in’, is putting mothers and babies at risk. To put it bluntly, not killing babies would be one way to improve birth rates.

Another clear area of policy failure is housing. Other CapX writers have made the case persuasively that the planning system is in dire need of reform, including our Editor-in-Chief Robert Colvile today. Unless the Government grasps this nettle and makes sure people have adequate, secure homes in which to raise their children, tweaking taxes will make precious little difference. If we want people to bonk for Britain, making bedrooms affordable would be a good start.

It also speaks to a wider problem with the way this Government’s entire agenda has been presented. The misstep over the 45p income tax rate has allowed critics to claim that Truss believes in ‘trickle down economics’. But as CapX readers know, increasing the prosperity of the rich doesn’t magically help the poor. Doing that requires winning people round to the need for wider, supply-side reforms.

Cutting taxes alone won’t grow the economy, and it won’t grow the population either. But framing free-market arguments around boosting babies can certainly make then much more cuddly and appealing.

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Alys Denby is Deputy Editor of CapX.