Tax Credits more effective than Married Couples’ Tax Allowance

Labour Party

Yesterday’s Financial Times carries an interesting of piece of research showing that Conservative proposals to introduce a married couples’ tax allowance would do little to achieve the party’s claimed goal of reducing child poverty.  This quotation from the FT puts it in a nutshell:

“Conservative proposals to introduce a married couples’ tax allowance would do little to achieve the party’s goal of reducing child poverty, research by the Institute for Fiscal Studies has found.  It would provide a financial incentive for some cohabiting couples to marry, and for some married couples to have children, the IFS concluded.  But the institute said the policy would not necessarily boost the number of marriages, encourage more child-bearing or produce better outcomes for children, since it was not clear that people would act on the incentive in practice.  It would, however, reduce the incentive for second earners in a couple to work at all, or work extra hours.  By contrast, spending the same amount of money on the working tax credit or the child tax credit would be a far more effective way of cutting child poverty. A married couples tax allowance would lift 10,000 children out of poverty, compared with 100,000 if the working tax credit were used or 130,000 if the money went into the child tax credit.”

I was thinking of writing a blog but was contacted by Progress for my views. You can read them here and those of others like pictured Kate Groucott; part of the impressive Labour team in Islington standing for the other elections this year, the London Council elections in May. I expect Labour to win back control of Islington, and whilst the General Election is most important, I will also be campaigning to increase the number of Labour councillors in London in the coming months.