Why a married couples' tax allowance could be deadly for the Tories

Clegg's argument that any spare money should be used to support "all working families" is a powerful dividing line with the Conservatives.

After three years in government, it is only now that David Cameron is talking seriously about introducing a married couples' tax allowance, promising to announce plans "very shortly". The proposal was included in the 2010 Conservative manifesto and the Coalition Agreement (which gave the Lib Dems the right to abstain), so what's taken him so long? The reason for the delay, I suspect, is that influential Tories, most notably George Osborne (one of the most socially liberal MPs), recognise that it is a profoundly flawed measure. 

As Nick Clegg observed at his press conference this morning, a policy that "basically says to people who are not married: you will pay more tax than people who are married" will seem odd to many voters. Clegg's argument that a spare £550m would be better spent "on all working families" is a powerful dividing line with the Tories. 

It's true that a YouGov poll in January found that 53 per cent of the public support the introduction of a  tax allowance, with just 36 per cent opposed, but this total is likely to fall when voters find out that less than a third of married couples would benefit. As outlined in the Tory manifesto, only those couples in which one member is not using all of their personal tax allowance would gain (they could transfer £750 of their unused allowance to their spouse), with higher-rate taxpayers excluded. The policy could, of course, be redesigned so that all or most married couples benefit but this, not least for the fiscally conservative Osborne, would be prohibitively expensive. Clegg's argument that any spare money would be better used on raising the personal allowance is likely to resonate.

In his recent GQ article, Andy Coulson described the perception that David Cameron does not like single parents as "electoral halitosis", but this policy unambiguously discriminates against them. Among those who also don't gain from the policy, as Don't Judge My Family notes, are widows and widowers, people who leave abusive relationships and working couples. The policy will also alienate the young, socially liberal voters that the Tories need to win over if they are to ever secure a majority (18-24-year-olds opposed the policy by 40-36 in the YouGov poll). 

In reaffirming his support for an allowance, Cameron may enhance his standing with his party and with traditional Conservative voters but only at the cost of further limiting the appeal of the Tory brand. 

The decoration of a wedding cake is seen at the wedding fair on January 8, 2012 in the western German city of Essen. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Theresa May gambles that the EU will blink first

In her Brexit speech, the Prime Minister raised the stakes by declaring that "no deal for Britain is better than a bad deal for Britain". 

It was at Lancaster House in 1988 that Margaret Thatcher delivered a speech heralding British membership of the single market. Twenty eight years later, at the same venue, Theresa May confirmed the UK’s retreat.

As had been clear ever since her Brexit speech in October, May recognises that her primary objective of controlling immigration is incompatible with continued membership. Inside the single market, she noted, the UK would still have to accept free movement and the rulings of the European Court of Justice (ECJ). “It would to all intents and purposes mean not leaving the EU at all,” May surmised.

The Prime Minister also confirmed, as anticipated, that the UK would no longer remain a full member of the Customs Union. “We want to get out into the wider world, to trade and do business all around the globe,” May declared.

But she also recognises that a substantial proportion of this will continue to be with Europe (the destination for half of current UK exports). Her ambition, she declared, was “a new, comprehensive, bold and ambitious Free Trade Agreement”. May added that she wanted either “a completely new customs agreement” or associate membership of the Customs Union.

Though the Prime Minister has long ruled out free movement and the acceptance of ECJ jurisdiction, she has not pledged to end budget contributions. But in her speech she diminished this potential concession, warning that the days when the UK provided “vast” amounts were over.

Having signalled what she wanted to take from the EU, what did May have to give? She struck a notably more conciliatory tone, emphasising that it was “overwhelmingly and compellingly in Britain’s national interest that the EU should succeed”. The day after Donald Trump gleefully predicted the institution’s demise, her words were in marked contrast to those of the president-elect.

In an age of Isis and Russian revanchism, May also emphasised the UK’s “unique intelligence capabilities” which would help to keep “people in Europe safe from terrorism”. She added: “At a time when there is growing concern about European security, Britain’s servicemen and women, based in European countries including Estonia, Poland and Romania, will continue to do their duty. We are leaving the European Union, but we are not leaving Europe.”

The EU’s defining political objective is to ensure that others do not follow the UK out of the club. The rise of nationalists such as Marine Le Pen, Alternative für Deutschland and the Dutch Partij voor de Vrijheid (Party for Freedom) has made Europe less, rather than more, amenable to British demands. In this hazardous climate, the UK cannot be seen to enjoy a cost-free Brexit.

May’s wager is that the price will not be excessive. She warned that a “punitive deal that punishes Britain” would be “an act of calamitous self-harm”. But as Greece can testify, economic self-interest does not always trump politics.

Unlike David Cameron, however, who merely stated that he “ruled nothing out” during his EU renegotiation, May signalled that she was prepared to walk away. “No deal for Britain is better than a bad deal for Britain,” she declared. Such an outcome would prove economically calamitous for the UK, forcing it to accept punitively high tariffs. But in this face-off, May’s gamble is that Brussels will blink first.

George Eaton is political editor of the New Statesman.