A clear choice

Stephen Timms MP argues that supporting marriage through the tax system would favour those least in need of support.

Most people remember the policy issue that first got them into politics. For me it was the hardship I saw around me each day in east London. My practical response was to join the Labour Party. As a result I’ve been able to take a keen interest in policies to tackle poverty.

Labour’s priority on poverty has never been as evident as during this recession. Helping those facing hardship has been at the heart of government efforts. Our Real Help Now programme has put extra cash in people’s pockets and saved jobs, businesses and homes.

Britain’s experience in this recession – the result of the worst global downturn since the 1930s – has been very different from during the Tory recessions whose impact I saw in east London in the 1980s and 1990s. If we had repeated the Tory record, you could have expected:

almost four times as many people to have lost their jobs
almost twice as many households being repossessed; and
almost three times as many businesses becoming insolvent.

Labour has been right to act. Things continue to be difficult, and there is absolutely no room for complacency. But, under the Tories, hardship would have been much worse. They argued at the start that we had no choice but to let the recession take its course. Throughout, they have called for drastic public spending cuts, which would have precipitated the kind of disaster they presided over twice between 1979 and 1997. Labour’s approach has been different, and the results have been dramatically different too.

David Cameron has claimed Conservative policies would help tackle poverty; that Labour had squeezed kindness and encouraged selfishness and that redistribution had reached its limits. It’s an odd argument since under Labour we’ve seen the number of charities grow by 40%, with charitable income doubling. Both volunteering and giving are up.

This should not be a sterile argument about government action being better than the actions of others. Instead it is about everyone’s action, with Labour building a partnership against poverty.

I’ve been taking the Child Poverty Bill through the Commons. It lays an obligation on government to develop a strategy to eradicate child poverty by 2020. It’s based on Tony Blair’s ambitious 1999 pledge, giving it legal force. Campaigners on child poverty are giving the bill strong backing.

Child poverty is everyone’s business. That’s why the bill demands action by local and national government, devolved administrations, charities and businesses. We have already reduced child poverty by 500,000 since 1999; under the Conservatives, child poverty doubled.

Conservative rhetoric and the consequences of their policies are two different things. This is seen in their much-trumpeted proposal to boost marriage through the tax system. A transferable allowance would allow one partner to stay at home while the other gets their allowance.

Leaving aside doubts about whether such a policy would help people stay together, there is no doubt about its fairness. Those on the highest incomes would benefit 13 times more than those on the lowest. The highest earners would get an extra £380 a year; the lowest £30.

Only 41% of couples would benefit at all. Widows or widowers, and children living in divorced households or whose parents were unmarried, would get nothing.

And yet the policy would cost £5bn – funded from as yet unspecified Tory tax rises. It is a similar amount of money – every year – to what Labour has invested in jobs during this recession. The Tories refuse to spend to help people into work, but are willing to spend it keeping them at home.

Conservative policies must now get serious scrutiny. It’s difficult, because they are extremely reluctant to set out what they are. They are policies the British people can’t afford, because they would entrench inequality and benefit only the well off. Their inheritance tax policy directs all its benefits to the 2% of wealthiest estates. By abolishing the 50p income tax rate, the benefit goes to the highest earning 1%. And by reversing fairer pension relief rules, the benefit goes to the top 1.5% of pension savers. 98.5% of pension savers get nothing.

This queue of tax plans gives billions to the 2% best off, while leaving the rest of the public to pay the cost through cuts to schools, hospitals, police and transport. The next election will be a big choice about the change we want for Britain. Labour offers change for the mainstream many. The Conservatives offer change to benefit the privileged few.

From The Common Good, Issue 201 (Family Matters)

The Rt Hon Stephen Timms MP is Financial Secretary to the Treasury, Minister for Digital Inclusion and Labour Party Vice Chair for Faith Groups.

Stephen Timms, 07/01/2010