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19 July 2007

IDS and the ’lower deciles’

Iain Duncan Smith has done the poor a disservice.

By Peter Wilby

Single mothers (or lone parents, as they are now called) and old-age pensioners are traditional Labour territory. In Tony Blair’s first term, a proposed benefit cut for the first group and a miserly rise for the second led to Labour’s biggest internal party rows. Equally, marriage and the family belong to the Tories. That was why the “back to basics” fiasco of John Major’s government – when several ministers were revealed to prefer dalliances with actresses and secretaries to the comforts of the family fireside – proved so damaging to Tory morale. (Note to feminist readers: I refer to actresses and secretaries because that’s what the Tories call them.)

These political demarcation lines tend to muddy the waters. Most Labour MPs know the majority of pensioners now live more comfortably than the average working parent. But in the party’s collective mind, all pensioners still shiver in front of one-bar electric fires, subsisting on soup, weak tea and digestive biscuits. Likewise, to the Tory mind, a family comprises two or three polite, God-fearing children, and a couple whose union was blessed at the local parish church. This now unusual domestic arrangement, the Tories think, is to be encouraged. In response, Labour denounces potential “discrimination” against lone parents.

The result is a kind of culture war, which has little to do with tackling poverty and social breakdown, supposedly the subjects of Iain Duncan Smith’s social justice policy group, which has just published its report, Breakthrough Britain. The report rightly highlights what it calls “the couple penalty” in the benefits system. It is generally accepted that two can live more cheaply than one, but how much more cheaply, particularly if children are involved, is disputed.

A jobless couple on income support get a weekly allowance of £92.80; if they live apart, as single people, they get £59.15 each, a gain of 28 per cent. IDS’s policy group regards that as an acceptable penalty, though I am not so sure. The penalty is more dramatic when the working tax credit system comes into play. This is because the system looks at total household income and numbers of children and allows, for a lone parent, the same £1,700 that would be allowed for a second adult in the household. According to the Labour MP Frank Field (in his report Welfare Isn’t Working: Child Poverty, published by Reform), a lone parent with two children under 11, working 16 hours weekly on the minimum wage, had a net income of £487 a week in 2006. To get the same, a couple needed to work 116 hours.

These conclusions are broadly supported by the impeccably non-partisan Institute for Fiscal Studies, which reported last year that the government pays tax credits and benefits to 200,000 more lone parents than actually live in the UK (How Many Lone Parents Are Receiving Tax Credits? by Mike Brewer and Jonathan Shaw). Many parents clearly think there is a financial advantage in living apart and, even if it doesn’t accept the merits of two-parent families, the benefit system should surely be neutral. As Field points out, half the children in lone-parent families now live in poverty, against two-thirds in 1997, but the risk of poverty for children in two-parent families has scarcely changed. In fact, 43 per cent of children in poverty now live in two-parent families with at least one earned income.

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Labour has hugely improved the lot of lone parents and pensioners (poverty among the latter is down by a third), helped two-parent families more modestly, and worsened the position of working-age non-parents (now a third of all poor people in the UK). Yet IDS’s proposal to help poor two-parent families (whether or not they are married) is denounced as an “attack” on lone parents, even though the latter would not suffer any drop in income.

It’s his own fault, however. Reducing a “couple penalty” is one thing; introducing a marriage premium is quite another. IDS proposes an allowance for married couples, worth £20 a week, in the mainstream tax system. The policy group acknowledges this would help mainly the well-off, because marriage is concentrated in the “more educated, middle-class . . . sections of the population”. But it wishes “to shore up marriage in its heartland” and send a “signal to the lower deciles, characterised by greater informality and therefore instability, that marriage . . . is a social good”.

This gloriously patrician passage restates the old Tory belief that the lower orders, now inelegantly renamed “lower deciles”, will follow the example of their social betters, as they no doubt did after John Profumo and David Mellor had bonked so vigorously while in office. Alas, this part of the report has prompted most discussion, allowing both left and right to occupy their old territory. IDS has done both himself and the poor a terrible disservice.

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