Family Life

Robert Key says...

David Cameron is delivering a keynote speech on the importance of family life today.

Key points:

• If we can develop a new and exciting agenda for family life, it will be the most important thing we can do for the future well-being of our country.
• We are examining the option of giving transferable tax allowances to married couples - and couples in civil partnerships - with young children.
• We must be pragmatic about childcare. Tax relief on childcare for working parents is also under consideration - this would put real choice in the hands of parents.

Tax Credits

Gordon Brown’s solution to helping families has been to target support – providing specific amounts of money to specific groups of people for specific purposes, all worked out from his office in Whitehall. Although well-intentioned, tax credits are now a major source of financial distress – payments are often clawed back at the end of the year when the family has already spent the money, and there are the huge costs in running such a complex, bureaucratic system.

We will work with the tax credits system we inherit, but our first aim should be to make the system simpler and fairer. In the longer term, we should think about how to apply our Conservative belief in trusting people to the challenge of easing the financial pressures on families. One option would be to give transferable tax allowances to married couples - and couples in civil partnerships - with young children. Transferable allowances would be expensive, and they would not benefit families on low incomes or out of work, where family poverty is most endemic. So we will need to consider other policy options to help poorer families. In particular, we will need to find ways to help lone parents.

Childcare

We must be pragmatic too about childcare: this is the biggest issue for many families and looking for, and paying for, childcare is now breath-takingly complex. We believe that government has a duty to make good childcare affordable. Sadly, our childcare costs are now among the highest in Europe. Gordon Brown’s solution is again symptomatic of a top-down approach: the childcare tax credit is complicated to claim and eligibility is restrictive - for example, it can’t be spent on informal care like that provided by friends and relatives. Perhaps that’s why less than a quarter of low-income families claiming both the child tax credit and the working tax credit claim the childcare tax credit element too.

We are looking at ways of making the support provided by the childcare tax credit simpler and more user-friendly. Making sure that working parents get the money irrespective of the childcare they use is one simple way of improving the current system. But in the longer term, a more Conservative approach is to trust people to make their own decisions about their family lives. Tax relief on childcare for working parents is one option being investigated by our policy review - alongside transferable tax allowances, it would put real choice in the hands of parents.