Anne McElvoy: Chancellor's tax credit is the love child of a low-income family

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Indy Politics

Today, the Chancellor hosts one of his informal receptions in Number 11 Downing Street. Rarely for a man who has tended to keep an all-male clique close to him, the majority of guests will be women. The purpose of this post-Budget jolly is to test how yesterday's disbursements are likely to be seen by women and how effective he has been in establishing himself as a family-friendly figure.

Today, the Chancellor hosts one of his informal receptions in Number 11 Downing Street. Rarely for a man who has tended to keep an all-male clique close to him, the majority of guests will be women. The purpose of this post-Budget jolly is to test how yesterday's disbursements are likely to be seen by women and how effective he has been in establishing himself as a family-friendly figure.

On the Chancellor's own introduction, this was a Budget intended to appeal to families with children. He even adopted a rather shocked tone about the callousness of past Budgets towards the women and children who "were barely mentioned" in the dispositions. Well, they are mentioned now. Family policy has become one of the main battlegrounds of the coming election and Mr Brown is determined to be seen to be at the front of the charge, rather than somewhere at the back grumbling about the cost of it all.

The children's tax credit (which will eventually be absorbed into an integrated tax credit) is the Chancellor's love child - so much so that he has boasted about its arrival in two previous Budgets and the pre-Budget report. It finally comes into effect next month, only to be replaced by an integrated tax credit in two years' time, so if voters have an eerie feeling they have heard it all before, that is probably because they have.

The tax credit rises to more than £10 a week for families on average earnings, rising next year to £20 for families with children born from next year. It is sharply tapered to benefit poorer families, so the headline figures look more generous than they are for all but low earners.

Since last year, Mr Brown has married. Whether as a sign of nuptial softening or as a shift in his personal political image from Iron Chancellor and unyielding guardian of prudence to a more rounded one, he has begun to adapt a more caring budget rhetoric when it comes to families, an area where he has exhibited something of a tin ear. When children arrive, he told us yesterday as if discovering a bold new truth, "family income falls as costs rise". He also conceded for the first time the principle that many women want to stay at home for some time after the birth of a baby.

The announcements on maternity provision did not, however, match Mr Brown's generous tone. Increasing flat rate maternity benefit from £60 first to £75 and £100 and increasing the statutory time off from 18 to 26 weeks is better than nothing, but it does not make it materially easier for women to stay at home for any substantial period. It is a half-way compromise with the lobbying led by Harriet Harman, for a more sweeping recognition of the importance of the first year for mothers with babies. Her call for a baby tax credit for women who stay at home for this period remains, yet again, unheeded.

Help with childcare costs rises in value from £70 up to £135 up to two or more children, a signal that the Chancellor has accepted some of the lobbying from the Childcare Commission and the Women's Unit, that the Government needs to acknowledge the costs of quality child care if it is to persist with its strategy of maximising the amount of women who work without endangering the welfare of children - and creating extra rods for the backs of primary schools in sending children without the benefit of solid early years into their classes.

Mr Brown boasted that the UK now has the highest proportion of working women in Europe. But work, for men and women alike, remains Mr Brown's real focus as he drives forward his crusade for poverty alleviation. Given this priority, he will always be reluctant to admit the countervailing interests of women who are forced by circumstance to return to work when their children are very small but are not happy with the choice.

How will it fair in comparison with the Tories' pledges to put the family first? The Opposition's proposed introduction of a transferable tax allowance between married couples with children under 11 would be of higher value to middle and lower income families where the parents are married. As such, it is intended to ease the position of women who wish to stay at home when their children are small and to identify the Conservatives as the party that restored recognition of marriage to the tax system.

The Chancellor has different priorities - namely affording relief to poorer households, who profit most from the children's tax credit and associated boons. His flagship tax credit is no great giveaway for middle-income households and is not available to higher earners at all. Mr Brown is not the Sir Galahad to the women and children of middle England. He believes that they are already well served by low interest rates on mortgages and general financial stability. His sights are elsewhere.

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