Mothers' tax break leaked then attacked

Click to follow
Plans to give tax relief to women who choose to stay at home to look after children, drawn up by the Prime Minister's policy unit and leaked yesterday, were attacked as the latest in a series of "uncosted and unfinanced spending pledges" by Gordon Brown, the shadow Chancellor.

A number of schemes have been floated since the new head of the No 10 policy unit, Norman Blackwell, took over in February, although none have been proposed formally, and most are believed to be opposed by the Treasury.

In recent months Mr Blackwell has been reported to be "looking at" schemes to deal with political pressures being felt by Conservative MPs from their constituents, including the problems of the weak housing market and the high cost of nursing care for the elderly.

The idea of reversing the shift in the tax system in favour of two-earner couples is a response to Tory concerns that tax policy undermines the family. The main cause of the tilt in the balance was the move to independent taxation for women in 1990, when Mr Major was Chancellor. The change was made because it was argued that wives should not be required to disclose their earnings to their husbands.

The plan floated yesterday would reverse this decision, allowing unused personal tax allowances to be transferred to an earning spouse, usually the man. Treasury sources have expressed scepticism about the plan, which would cost about pounds 5bn a year.

Tax analysts yesterday described the plan as "illogical", saying it ran counter to measures in the last Budget to give mothers help with child care in order to give them an incentive to go to work. "We also think it is unlikely that such a scheme would have much effect on the labour market," Julian McCrae, at the Institute for Fiscal Studies, said.

Mr Brown's office yesterday produced a costing of Mr Major's recent "pledges", adding tax relief for non-earning women to the plans set out by the PM in his unofficial manifesto for the Conservative leadership campaign. The total cost is claimed to be over pounds 11bn a year.