A true Budget for women would be much more radical

Diane Coyle the value of unpaid work
Click to follow
HAVE Gordon Brown and his all-male team of advisers at the Treasury come up trumps with his Budget for women? Not really, despite the increase in child benefit and the new work and childcare credits for the low paid.

The Budget did mark, as Harriet Harman emphasised in a speech last night, the end of the assumption that families consist of a male breadwinner and a female helpmate in the home. The welfare state has been built on this tradition of unpaid female labour, whereas the new measures recognise that very many women are in paid work and need help with childcare.

There was other good news in the Chancellor's speech too. Apart from the large financial gains for children, we females of the species must breathe a sigh of relief that two potential catastrophes, which would have cost women billions of pounds, have been averted, at least for now. After a huge amount of lobbying and ear-bending, the Chancellor accepted that the new Working Families Tax Credit must guard against switching money within households from men to women.

Yet the fact that both these financial disasters looked at one stage as though they might happen demonstrates how important it is to keep the Boy's Own Treasury on its guard. The lads simply do not have the gender impact of their proposals at the forefront of their minds.

Take the narrow escape from a men-to-women redistribution in the new Working Families Tax Credit, the replacement for Family Credit. The initial plans would have involved a "purse to wallet" transfer of up to pounds 40 a week. Family Credit is paid direct to mothers whether they are the main earner or not. The new tax credit will go through the pay packet as a tax refund, and could have ended up going to men in many of the cases where it is claimed by couples rather than lone parents. When it is introduced, couples will be able to nominate which of them should receive the money; but campaigners are still concerned about whether the practical details will make this a genuine choice in practice.

The other big threat to purses is one that might loom again in a future Budget. That is a return to joint taxation. Although Mr Brown says he does not plan to abandon the independent taxation of husbands and wives, a reform introduced by Nigel Lawson, the question will inevitably arise when he gets around to taxing child benefit - an intention he signalled yesterday.

On the face of it, it is entirely unobjectionable to guarantee that child benefit will remain universal but tax it for high earners. And when you accept that, it seems to make sense to take into account the joint family income for tax purposes - after all, both incomes go to support the children, so why should non-earning wives of rich men get a higher level of child benefit than the low-earning wife of a middle-income man?

The trouble with this reasonable view, which the Chancellor certainly holds, is that defending the principle of independent taxation is absolutely crucial to women. Any retreat from it will introduce a big tax rise - for women. At the extreme, a reversion to joint taxation would be equivalent to a 6 pence increase in the basic rate of income tax for working women.

The explanation is simple. If income tax is assessed on both incomes, the second earner starts to pay income tax on her first pound - and at the higher rate if her husband is in the 40 per cent tax band. If she is taxed separately, she gets her own personal allowance so the first slice of income is tax free.

And quite apart from the money, there are other problems. What would the position of cohabiting couples be? The Inland Revenue knows if you are married. It does not know whether you live with someone - or, if you do, whether they are the father of your children or just a good friend. Do we really want the tax inspectors to know the answer to these questions? You only have to look at the troubled history of the Child Support Agency to realise how disastrous it can be when officials start to probe into the details of people's personal lives.

These points raise broader questions about Mr Brown's intentions towards women. Does he care about the distribution of income within families as well as between them? And does he value unpaid work in the home as much as paid work outside it? The answer to both appears to be no, whereas for women it needs to be yes. The first yes is why independent taxation matters, and the second explains why it is important for benefits to be paid to the woman of the house rather than the man.

A true Budget for women would accept that there has to be some unfairness between households in order for there to be fairness within them. The Chancellor has to forget about taxing wives for having well-off husbands.

Any genuine reform of the tax and benefits system would acknowledge the value of unpaid domestic work. Although, as Ms Harman acknowledged, the traditional family of male earner and female housekeeper is a thing of the past, that unpaid work still needs to be done and be valued. After all, domestic effort amounts to at least half of total measured national income on the most cautious official estimate and more likely matches the money economy in size. Women do twice as much of this unpaid work as men - an average of nearly 300 minutes a day versus men's 150 minutes. But although we must wholeheartedly welcome the extra money he found to give to mothers and carers, by incentives to work Mr Brown means incentives for paid work.

My proposal for a Budget for Women would be higher taxes on rich men to pay for a far bigger increase in resources for childcare both in and out of the home. While generous child benefit is a lot tamer than the old feminist demand of wages for housework, it is better than peanuts for housework.

A rise in the top rate of income tax would have the perfect gender profile. Sadly, some redistributive measures have been struck off the agenda, even for a Labour Chancellor who has turned out, against the odds, to be willing to take money from the rich and give it to the poor. Taking it from men to give to women is obviously a bit too radical.