Who CARES about the Family?

Speech: 27th January 2015 House of Commons

Mothers at Home Matter
Having a parent at home to take care of the family
is a choice most families feel they cant make.
The purpose of this booklet is to shed light on the
economic conditions bearing down on families to
better understand the pressures they are under
and the choices available to them.
We have seen an increasing rise in the numbers of
mothers returning to the workplace when their
children are very young. Not such a long time ago
70% families had a mother at home, now only 28%
do and that figure is falling fast. Crucially more
stay at home mothers have gone back to
employment in the past two years than in the
previous 15 years combined.
I am not saying that mothers should not go out to
work or that mothers at home should be regarded
as better but I am questioning whether this is
really what all these mothers want and whether
they have a choice in the matter.
It would appear from a number of surveys that
mothers do not have a choice.
By the governments own statistics released last
January 2014, 37% of working mothers said they

would prefer to stay at home and look after their

children if they could afford it, while 57% said they
would like to work fewer hours and spend more
time looking after the children if they could afford
it.
A similar survey by the Centre for Social Justice
2011 showed that 88% mothers with very young
children said that the main reason for them
returning to work was financial pressure.
Only 7% of those at home cited unaffordable
childcare as the reason.
A survey by Britain Thinks also reported:
Families today are tired, stressed and under
pressure. 80% believe in an ideal world one parent
would be able to stay at home. Britain Thinks
2011
We put the statistics from Netmums Great Work
Debate survey (2006) into a pie chart to give an
image of what mothers wanted. The debate
interviewed 4000 mothers of young children (72%
children under 3). These were the findings.
SLIDE

There are 8 million mothers

25% are at home
25% are at work full time
almost half 48% work part time
2% maternity leave
Of those working full time 19% would like to be at
home
68% would prefer part time work
Only 12% were happy with full time work
Of those working part time 33% wanted to be at
home full time
67% happy

Of those at home only 7% were there because they

couldnt afford childcare.
So nearly half of mothers with young children
would like to be at home raising their children
Nearly a half would like part time work
Only a small percentage want to be working full
time
Netmums concludes
The holy grail of choice remains far beyond the
reach of most mums in this country,
Mothers believe choice has been virtually
eradicated when it comes to deciding whether to
return to work or stay home.
So what has changed to make it so difficult today
for a parent to be at home, particularly over the
last few years.
The way families are taxed is one of the most
important causes of this change. One of the most
significant shifts in tax policy over 50 years has
been from treating the family as a household unit
with allowances for a dependent spouse and
children, to taxing it as individuals disregarding
whether they have family responsibilities or not.
For many single- income couples, (where one
parent is the sole income provider) and the other
the has the primary caring role, the tax burden has
more than doubled.
Our current taxation system favours the double
income family (where both parents work) over the

single income model. The Double income family

benefits from 2 personal allowances, they can earn
double the amount tax free and also can earn twice
as much as a household before becoming liable for
the higher 40% tax rate.
The Coalition governments policies have further
disadvantaged the single income family (SIF).
Increasing the Personal Tax Allowance lifts the
poorest out of the tax net and encourages
employment but without Transferable Allowances
or Income Splitting, the SIF is further
disadvantaged. Removing child benefit from some
families will hit single income families the hardest
while this Autumn a new TAX Free Childcare
Allowance will be made available to families where
both parents work and working lone parents.
Parents with an income up to 150k each will be
entitled to a tax free sum of up to 2k per year, per
child, towards childcare by registered providers. In
short everyone apart from parents at home are
being helped.
SLIDE

This slide shows the extra tax paid yearly by the

SIF compared with the DIF on the same household
income, split equally between partners. So for
example the DIF both partners may be on 10k
each. These figures pre-date the new Tax Free
Childcare Allowance coming in Autumn 2015,
These figures take account of Income tax and
National Insurance but not Tax credits or the new
Childcare Tax Allowance.
Single income families are getting poorer. A JRF
report published last week states:
Single breadwinner families have seen a large
increase in the risk of inadequate income. In 2008,
38% of families with children where someone
works full time and their partner does not work

were struggling to get by; this figure has risen to

51%.
Another recent report notes: The number of
children in relative poverty1 where one parent is
working has grown fast since 2002.Sole-earner
families account for nearly a third (30%) of all poor
families with children.
The cause they report is because male
employment has fallen and earnings among low- to
mid-skilled men have grown relatively weakly. The
solution given for the family to avoid poverty is for
the mother to work as well. Given the uncertain
prospects for future wage growth, womens
employment will continue to be vital for lifting
families out of poverty.3
What the report does not do is to enquire into the
causes that stop mens earnings grow. I would like
to give you an illustration which may explain why.
Take a family with two children on the median
wage, about 26k. The father is an electrician and
the mother is at home looking after their two
young children. The family need a car and they
work out that he needs to bring in an extra 3k a
year (58 week) to meet the purchase, running
and maintenance costs.
The father is able to do this by taking on extra
hours. However they will discover that to earn 3k
more gross will make very little improvement to
the familys disposable income. He would have to
earn an extra 12,500 a year more to make 3k
net!
This is because for every extra pound he earns the
Treasury takes back 76p - income tax accounts for

20p, national insurance 12p and reduction in

Universal Credit 44p. This in economic terms is
referred to as the Marginal Effective Tax Rate, and
it is 76%.
SLIDE

This graph is another way of showing this tax trap.

The graph shows what happens to a single income
family with 3 children as gross income increases.
The family rent a 2 bed place in Greater London.
The red line is earned gross income, the blue block
is earned income after tax. The black line is
disposable income after universal credit has been
added.
As the primary gross income increases so tax
contributions increase and Universal credit tapers

off . Earning more gross makes little difference to

the money the family can bring home.
If the same family lived in the East Midlands the
graph would look the same but start at 19k as the
housing allowance is smaller.
Four million families, nearly half of all families are
caught in this tax trap. Tax credits subsidise
income and although the subsidy may be a
generous one its effect is to take away the
pressure on employers to pay decent wages (as
wages are subsidized by the taxpayer), it
undermines the fathers ability to provide for his
family and forces the mother (or second earner)
into the workplace if the family need to bring home
extra income.
This tax trap affects lone parents in the same way:
working harder does not result in an increase of
income.
No other country in the world has so high a tax
rate. 25yrs ago before independent taxation was
introduced the tax rate was 34%.
SLIDE

This graph shows the METR for single income

families at 75% of average wages for OECD
countries 2011, at about 26k gross wage in the
UK. The UK has by far the highest tax rate.
The EU and OECD tax rate are about 35%.
Raising the minimum wage, new starting tax rates,
or increasing tax free thresholds fail to tackle the
real problem. As income increases with these
measures so Universal credit will decrease.
Families will hardly be better off by any of these
measures until we tackle these high rates. We
need to look at the family as a whole in our
taxation system.

Treating the family as a unit should be the first

principle of taxation. Not doing so causes
unfairness and anomalies. And the latest most
significant example of this is the removal of child
benefit for higher earners.
I quote from the Conservative Party Press Release
in 2012
We have always been clear that those with the
broadest shoulders should carry the greatest
burden. ...Some people - the richest 15 per cent of
households with children - will lose out from
January next year but ... it is very difficult to justify
continuing to pay for the Child Benefit of the
wealthiest 15 per cent of families in society.1
This claim has been repeated by the Prime
Minister, the Chancellor George Osborne and by
various MPs. Removing child benefit in this way
would be fair if these statements were true, but
they are not. They are misleading and divisive.
Removal of Child Benefit will hit some families in
the lower half of the income distribution while
some families who are in the wealthiest 15% will
be able to keep their child benefit.
How well off a family is can not be calculated by
the gross income of an individual. It is the family
income that matters. To work out where a family
falls in the income distribution the government
adjusts net household income for the number of
people in the house and the ages of any children.
In economic terms this process is called
equivalisation.

Equivalisation calculates household, not individual

income. It calculates income after tax (net), not
gross income. And it allows for the number of
dependents.
SLIDE

This graph shows where households fall at various

points of the income distribution after tax, tax
credits and benefits and dependents are taken into
account. The red triangle is the single income
family with 2 children.
At 50k a single earner family with 2 children fall
just above the middle of the income distribution. If
a single income family had 4 children it would fall
in the lower half of the income distribution.
The other point which is worth bringing out is that
at almost every point on the income scale the

single income family is worst off of the different

forms of family.
The effect of removing Child Benefit from these
families will be to make them poorer than many
other families who earn less than them.
Let me illustrate.
SLIDE

This graph shows 3 families on different incomes

living in London. All families have 3 children. The
first family is a single income family on the
minimum wage, the second family is a double
income family on 45k (husband earns 25k, wife
20k). The yellow block shows tax paid by each
family, the next row shows monthly income after
tax. This row shows entitlement under Universal
credit. Child benefit allowance and finally monthly
disposable income after all these factors have been
accounted for.

The single earner family on 60k is scarcely better

off than the family on the minimum wage and
worse off than the family on 45k.
Location plays a major factor. Rent is 1k more
expensive per month in London than in the East
Midlands, so that a family on 60k will be
significantly better off in EM compared to London.
SLIDE

However the graph illustrates that the single

income family on 60k is not in the richest 15%
families. Is it fair that families which are able to
command the top 15% incomes are being brought
into the poorer half of the income distribution
because of government policies?
The removal of child benefit has one other major
effect for single income families which is to bring
them into a new tax trap forcing mothers out to
work.

Take a family with three children, living in London.

The father is a Head of Department at a secondary
school earning 50k salary. The mother cares for
their children at home.
He has been offered promotion as Deputy Head at
another
school a bit further away. He will have extra
responsibility, his
will hours be longer, and he will have to travel
further but he will
be rewarded with an increase to his wage of an
extra 10k. In
practice however he will find that he brings home
only 3,300 of that increase.
For every extra 1earned he loses 65p in tax, NI
and loss of child benefit. He keeps only a third of
the extra value he is adding for the school.
Should his wife return to work instead she can earn
the full 10k without paying tax, and they keep
their child benefit. They will be significantly better
off.
So this is what is happening. The taxation system
is making it difficult for the main provider to earn
more. What options do these families have but for
the mother to return to the workplace to fill the
income gap.
All political parties are clamouring for affordable
childcare to help mothers back to work to plug this
income gap, also citing the emancipation of
women from the home and their fulfilment in the
workplace.
Indeed Lucy Powell at the Labour party conference
in Sep said We are almost seeing a bit of an arms

race going on between the three main parties

coming forward with policies on childcare.
But no political party is talking about the injustices
that force the mother away from the family in the
first place. Or the enslavement to a wage and
timetables set by work. Or whether it meets the
needs of very young children. This factor is almost
entirely absent from debate.
Nor is any party highlighting the fact that mothers
will be working very hard to bring home very little
income because she too will be caught in the same
tax trap. It will not be sufficient for her to earn only
3k gross to bring home the money needed to
purchase the car (in the example given earlier).
Her METR will be 65%. Even if childcare was fully
subsidised she will have to earn at least 8.5k to
bring home the 3k net. This is before travel costs.
In an IFS briefing on the budget 2014 it said:
We still lack a proper rationale and evidence base
for the more than 7 billion a year public money
that is now spent on childcare. Beware areas of
spending with quite such unanimous cross-party
support. It does not always lead to the best policy.
The mother gains little financial benefit from
working long hours. What she loses is the ability to
care for her own children. What the children lose is
their mother. Affordable childcare is not the answer
all families are looking for. They already have good
quality childcare in the form of a parent that could
be affordable if families were supported in the tax
system.

But the Treasury do not see this as a loss. They

celebrate the fact that more mothers than ever
before are in the workplace. They have even set a
target for half a million more mothers to be in
employment by 2016. This would would allow the
UK to match the female employment rate in
Germany and the second-highest overall
employment rate in the G7 grouping of major
economic powers. It would help the Treasury
meet the Europen target employment rate of 75%
overall for women and men by 2020. 3
The 2nd reason is that working mothers look good
on Treasury books. Working mothers, along with
paid nursery workers, and additional commuting
expenses, can be shown as an increase GDP. This
is not a measurement of real growth. GDP
registers an increase where something that was
previously not bought and sold (such as care in the
family for love) becomes a traded commodity
(cared by agencies for money), and is measured as
growth. Transfering care from the unpaid to paid is
not an increase in output. And What GDP also can
not count is the quality and continuity of care and
the emotional well-being and the strength of the
family unit.
Thirdly the Treasury can collect the tax
contributions, employers contributions from this
new workforce. But given that the cost of
supporting working mothers through subsidised
childcare is estimated at 7billion we challenge the
Treasury to show the evidence it is better off by the
contribution made by those juggling work and care

responsibilities as a result of receiving childcare

support and tax credits.
It is credible that the Government would save by
making it possible for parents to choose to care for
their children themselves. Can we not offer parents
the choice to use an allowance to either care
themselves or spend it on third party childcare?
Instead the Treasury promises more help with
childcare: a new Tax Free childcare allowance for
all working families with an income up to 150,000
per parent. And they have promised to spend an
extra 2million on creating 50,000 new childcare
places. The stay at home parent is not regarded as
deserving enough for an allowance.
Nicky Morgan, the Minister for Women says: No
woman should have to choose between their
career and their family. The irony is that the
government, in supporting double earning families
with tax allowances and subsidised childcare while
at the same time disadavantaging single earner
families is urging women to choose their career
above their family.

So this is what is happening. The State is

effectively telling families how they should live
their lives, and in the process they have demeaned
the role of mother at home.
Various Labour figureheads from Cherie Blair to
Patricia Hewitt have referred to mothers at home
as wasting their education and not contributing to
the economy. The Deputy Prime Minister has often
referred to the ideal of the mother at home as

Edwardian or sepia tinted while the Prime Minister

and Chancellor have implied that parents who stay
at home are not hard working and lack aspiration.

The Conservatives, in David Camerons speech at

the Autumn conference have openly stated that
they prefer and represent only families where the
mother is working.
If you work hard and do the right thing we say
you should keep more of your own money to spend
as you choose.
The Conservative party is the union for the mother
who works all the hours God sends to give her
children the best start. These are the people we
represent...the people who want to make
something of their lives. These are the people we
are fighting for.
But this is obviously an unjust situation where the
main breadwinner is unable to bring home extra
income by working harder. It is not a virtue in these
cases that the mother is driven out to work when
for some children the best start is a mother at
home. Many mothers do want to be at home. And
children want their mothers to be around more.
And the community, elderly neighbours and
relatives, schools, churches all benefit from the
input given by mothers who stay at home.
It is not right for the State to interfere in this way
and discriminate against certain types of families.
It denies aspiration. It denies some mothers the
chance of fulfillment and the simple enjoyment of
being with their children and nurturing them. It

denies children their mothers. It denies families the

right of following their own conscience to live their
lives according to what they believe is the right
thing to do, not what the State dictates is the
right thing.
Moreover to imply that those parents who stay at
home to raise their children are not aspirational or
hard working undermines the very real sacrifice
that mothers or fathers make when they decide to
give up a career, and make the economic sacrifice
of living on one income. Families are making huge
financial sacrifices to stay at home.
All political parties know that women are the most
disenchanted group. I have given you a few
reasons why.
Political parties would make a mistake to think that
stay at home mothers are just a small band of a
few middle class women.
This is a much bigger issue affecting many more
mothers. What we represent is the desire to be
able to care for our own family members within the
family set up, and this includes the old as well as
the young. We want real family friendly policies
that value the role of care.
We can only begin to do this if we recognize the
family as the fundamental unit for economic
consideration.
Individual earnings are not a good indicator of the
prosperity of families.
Families need to be given the option of being taxed
jointly.

Taxation and benefits should not be the cause that

separates a mother from her children, or a
husband from his wife. If a family would have been
viable before tax on a single income, tax should
not render it unviable.
Mothers at Home Matter call on all parties to:
end the discrimination against parents who stay
at home
recognise family responsibilities within the
taxation and benefit system
treat child benefit in a way which is fair for all
families
include the desire of parents to care for their own
children in the debates on affordable childcare
change the divisive language used which
disregards stay at home parents as lazy and
unaspirational
The aspiration we represent is the aspiration of
care. Mothers at Home Matter campaign against
the odds because we do not wish the ability to
care for our own family members to be denied
either to this or to the next generation.