Forget family values - at this rate we’ll have no families
Noa Cohen - Director, Next Gen Tories
The Conservative Party has always prided itself on being the party of family and community. Family has historically been the backbone of our social policies, advocating for familial autonomy, strong communities, equal marriage and equality of opportunity for children. However, starting a family has become increasingly difficult over the last few decades.
For the first time ever more than 50% of women born after 1990 do not have children. Approximately one in five women in the UK are now childless in midlife, and 90% of those are not by choice. But circumstances make it increasingly more challenging for generations born from 1975 onwards to start families in a timely manner – and time, especially for women, is important. Student debt, an inability to get on the housing ladder, high childcare costs and a need to focus on careers in order to tackle these financial barriers often means that family planning is left later.
Along with a massively declining birth rate – hovering between 1.51 and 1.61 children per woman – the UK has a rapidly ageing population, fuelling a tax, state aid, and pension cliff edge. We lack the people or resources to sustain ourselves without relying on significant immigration, and both major parties have been clear that this is not a viable solution.
The UK is not yet at the stage of Japan and Korea, where the government has had to introduce drastic measures to encourage couples to procreate, with limited success. Many people under the age of 40 say they do want to have children and families of their own, but don’t feel equipped to afford them in a timely manner. A Conservative government should be introducing policies that enable individuals to realise this aspiration. Supporting families is good for couples, society and our economy.
The Chancellor made significant strides at the Budget to address the cost of childcare, a move Next Gen Tories gladly welcomes. The UK had amongst the highest childcare costs in the world – at £16,000 per year, equivalent to sending a child to private school. The move to expand free childcare to under-2s will not only ease the financial burden on families but also enable greater workforce participation.
While this is an extremely positive step, it should be the first of many measures to address the numerous barriers faced by younger generations in starting their own families. Here are some suggestions for how the Conservative party could reframe regulations and policies to empower couples to make family planning decisions that work best for them.
Make Shared Parental Leave as accessible as Maternity and Paternity leave
The current shared parental leave system is complex, difficult to understand and access, and has a very low level of salience amongst the general public with the latest data suggesting that uptake is just 2%.
Shared parental leave is a genuinely conservative policy – it allows families to choose on the split of responsibilities that works best for them and takes the state out of decision-making, without increasing costs for the government or employers. It can alleviate the pressure and expectation that the mother should take the primary carer role, particularly in couples where she may be the higher earner, and has been shown to improve workforce participation and productivity in both men and women. This can also support meritocratic hiring and promotion practices in the workforce.
However, the current system is overly bureaucratic, complex and requires a mother to ‘sacrifice’ her right to maternity leave, rather than giving both parents their leave rights upfront and allowing them to apportion them as they wish. We recommend that the government makes the scheme the default option while still allowing parents to opt for maternity/paternity leave should they so wish. It would create a less complex system and remove the exceptions which disincentivise higher earning fathers from using the system.
Regulatory reform to alleviate supply-side pressures on childcare
While the increase in free hours will make a meaningful difference to families in alleviating some of the costs associated with childcare, the UK still suffers from a significant shortage of childminders and carers and the measures do not go far enough to address the supply side issues.
In a recent report for Policy Exchange, Next Gen Tories’ Dr James Vitali identified a myriad of ways regulation is holding back growth – including the shortage of childminders. As he explains:
A childminder must go onto three separate registers to offer care, many with overlapping requirements, such as on safeguarding and places to prepare food for children. Childminders receive inspections on both the compulsory childcare and early years registers with little variation across the regimes. This is disincentivising new applicants and contributing to carer shortages; the number of childminders registered in the UK is estimated to have decreased by half in the last ten years.
In order to address some of these supply-side issues he suggests:
All childminders should be included on a new Childminder Register with a streamlined inspection regime. Settings rated Good or Outstanding by Ofsted should be able to increase their childminder ratios beyond the 1:5 ratio proposed in the Budget.
Tax families as households, rather than individuals
If the UK really wants to make the country a welcoming place to raise a family, it should move away from taxing families as individuals, and tax them as households.
Household taxation allows parents to keep more of the money that they actually earn and spend it as they see fit on their own families, whether both parents would like to work or one would prefer to stay home with the children.
This would require wholesale, fundamental reform of much of the tax system. It’s a hard policy to sell to the Treasury - it’s expensive, requires a significant change and may disincentivise work for lower-income roles.
However, this approach has been adopted across Europe, including in France, Germany and Belgium. In France, an individual hits a 41% tax rate on income from €78,550, but a household with 2 children wouldn’t hit the threshold until they earn €235,710 and with three children, until over €314,000. Conversely, in the UK, families where an individual earns over £50,000 end up paying a higher marginal tax rate with each child they have thanks to the complex and messy child benefit tapering system. Families where the higher earner earns between £50,270 and £60,000 can face marginal deduction rates of 55% for one child, 63% for two children and 71% for 3 children. In this way, our tax system is actively disincentivising having children and working.
If the party wants to be serious about changing lives for the better and making family life not only possible but attractive, a Conservative government should be prepared to seriously consider household taxation. It’s pro-family, pro-work and pro-autonomy.
Undoubtedly, there are many other options omitted (bonk for Britain, perhaps?). Next Gen Tories wants to encourage discussion within the party, within the membership, and amongst those that the party has lost. Pro-family policies are important to everyone and are an investment in our future. Right now the under-45s are set to miss out the most – unable to start their own families, an ever-increasing tax burden to pay the pensions of the older generations, and with an ever-shrinking pool of children who will do the same for them. If the Conservative Party cares about its future, and a more vibrant, healthy society, then making it easier to have a family should be a central pillar of its policy offering.
