Lib Dems conference 2014 – speech by Anne Fennell, Vice Chair MAHM

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by Anne Fennell, MAHM Vice-Chair

Speech at Liberal Democrats Conference 2014

Thank you for inviting me here to speak, it is a great privilege. I was rather amused when I read the Directory and saw myself described as a Lib Dem high profile speaker. In reality I am a mother who about 4 years ago was moved to start fighting for a cause I passionately believe in because I felt mothers at home were being unfairly treated.

I believe that the Lib Dem party do have something unique to offer and that is a fairer society, opportunity for all and breaking down the barriers which stop families making the choices they would like.

I am here to talk about Mothers at Home. Fewer and fewer mothers are able to make the choice to stay at home to raise their children and I would like to show how this is happening and why it is an important issue.

We have seen an increasing rise in the numbers of mothers returning to the workplace when their children are very young.

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But crucially more stay at home mothers have gone back into 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 that this mass exodus from the home is more due to policies that have driven mothers to the workplace than a desire of mothers to be there.

I would like to give you two illustrations which may explain why.

Take a family with 2 children on the average wage about £26k. The father is a primary classroom teacher and his wife is at home looking after their two young children. The family decide they would like to buy a car and need an extra £3k year or £58 week to meet the purchase, running and maintenance costs of a car.

The father is able to do this by taking on extra hours however they calculate that although he can earn £3k more this will not make much difference to the family’s income. He would have to earn almost £220 per week more or £11,500 a year more to do so.

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This is because for every pound he earns the Treasury takes back 73p – income tax accounts for 21p, national insurance 11p and reduction in tax credits 41p. This in economic terms is referred to as the effective marginal tax rate, and it is 73%.

What option does this family have?  It is impossible for him to earn an extra £11.5k. What they can contemplate is his wife going out to work. And she can work hard and bring home extra income to the family. He earnings will bring home more than his can. She will be taxed at a lower rate or not at all. However she is already employed taking care of the young children (although unpaid). She has to find someone to replace her and obviously the person who replaces what she does has to be paid a decent wage. The mother therefore needs to earn more than she pays out to a childminder or nursery to do the job she was doing for ‘love’ and ‘not money’ to make this affordable. The family feel trapped.

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, it destroys incentives for the main breadwinner to work harder and forces the mother (or second earner) into the workplace if the family need to bring home extra income.

It also has the effect that when great policies are introduced such as the raising of the tax threshold to £10k,  families on tax credits will see very little difference to what they have to spend because as their income increases so their tax credits decrease!

The UK has the highest marginal effective tax rates in the world. 25yrs ago before the introduction of independent taxation and tax credits its tax rate was 34%.

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Because of the removal of Child Benefit this Marginal Effective Tax rate affects also those much higher up the income scale.

Take a family with 3 children, living in London. The father is a Head of Department at a secondary school and is earning £50k salary. He has a family with 3 young children and his wife stays at home to care for them.

He has been offered promotion as a Deputy Head at a different school a bit further away. His hours be longer, he will have extra responsibility, and 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 will bring home only £3,300 of that increase.

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He loses 65p for every pound earned in tax, NI and loss of child benefit.

Should his wife return to work instead she can earn the full £10k without paying tax, and they can keep their child benefit. They will be significantly better off. This is why some mothers are returning to work.

The removal of child benefit has been implemented in a most unfair way and in a way that demonstrates what is so wrong with our taxation system.

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“It’s not fair for those earning 15k to pay taxes towards a benefit for those earning so much more.”
“The point we would make is that it is right…that that section of the population, the top 15-10%, make a contribution.”

 

These are the stock phrases by the Treasury and PM that apparently justify the last remnants of family allowance or child benefit being withdrawn from those earning £60k at the start of 2013.

Yet these statements are nonsense and are intended to cause jealousy and division. Firstly those on £15k receive far more in tax credits than they give in tax and secondly many families affected are not in the top 15% of income distribution. Some of the families caught will be in the poorer half of the population!

An individual’s gross income on its own is a very poor indicator of where a family falls in the income distribution. When a government measures poverty it looks at the household income and the number of dependents that income has to support. It follows that an individual needs much less to achieve a minimum standard of living than a family with 2 or 3 children.

SLIDE –   I would like to demonstrate how income does not relate to how well off a family is.

 

Most countries across the world recognize this and make some sort of allowance in the tax system for the cost of raising children.  The UK is almost alone amongst developed countries in not recognizing either the household income or the number of dependents on that income in the taxation system. It has led to the grossly unfair anomaly that single earner families on £60k will lose their child benefit while dual earning families can earn up to twice that much as a household before they lose it.

Added to this the Coalition government has announced that families will receive a tax allowance to help with the cost of childcare, BUT ONLY WHERE TWO PARENTS WORK. These families will receive a tax allowance up to £2k per child per year up to an extraordinary household income of £300,000. But unfortunately Treasury coffers are limited and they could not possibly think of supporting the stay at home mother in her ‘lifestyle choice’!

Focus groups have identified the impoverishment of single earner families. Joseph Rowntree Foundation have found that the number of children in poverty where one parent is working has grown massively since 2002.

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52% of children living in poverty are in single earner families!  JRF and Resolution Foundation have been campaigning for ‘work to be the way out of poverty’. Together with Childcare pressure groups the clamour has been for affordable childcare.

All political parties have joined this bandwagon also citing the emancipation of women from the home and their fulfillment in the workplace.

Indeed Lucy Powell at the Labour party conference 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.

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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.”

IFS Budget Briefing 2014

Nor is so called ‘affordable childcare’ the answer that some families want. They already have ‘good quality childcare’ in the form of a parent that could be affordable if families were supported in the tax system. By the government’s own statistics released in January, 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.

$1·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.

But this is not the end of the story. What families are not being told is that even by sending the mother out to work, and even if universal childcare was achieved low income families will scarcely be better off! The mother will be working flat out forced away from her family for no increase in material benefit!

It is not surprising that the Treasury is making it difficult for mothers to be at home and driving them into work because her income will pay back to the Treasury some of the subsidy the family have received.

For every pound she earns she too will have to give back over half to the Treasury. Under UC her effective tax rate will be 65%. The family will see little rise in their overall income despite both parents working very hard.

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.

The Conservatives, in David Cameron’s speech on Wednesday 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 perhaps for some children the best start is a mother at home. And some 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 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 mothers who stay at home to raise their children are not aspirational or hard working undermines the very real sacrifice that mothers 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.

For me raising young boys has been one of the most physically and emotionally demanding jobs I have done. But it has also been the most magical, fun and fulfilling time in my life.

The reason I joined MAHM was because I didn’t want to see this opportunity denied to mothers because they felt emotionally or economically bullied into work.

And I know that many of the mothers we represent feel that what they do is regarded as worth less, so I felt it has become necessary to speak out. We are creating an unequal society where only the rich can afford to have a mother at home.

The Conservatives do not represent all families. Labour are heading for a socialist model where they want wrap around childcare provided for by the State. It is left to the Lib Dems to speak about Choice. The Lib Dems have long fought for equality and fairness. The stay at home mother would like to be valued as equal to the mother going to work. We need to allow families the right to determine how best to live their lives.

Where there is a debate about affordable childcare, the affordability of parents to care for their children should be given equal weight. If working parents are given an allowance to help with costs, stay at home parents should be given an allowance. This is only fair.

Child benefit should be removed fairly in a way that does not deprive families in the lower half of the income distribution.

It is also essential that we start to remove the causes of these high marginal rates and the disadvantages of an individualistic tax system.

In economic policy the underlying principle is that the Family should be the basic unit for economic consideration.

In matters relating to the family the family or household income must be taken into account. All anomalies arise from not doing so.

Thank you.

END

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