William Hague, the British foreign secretary and known as a Euro-sceptic, should still have been able to have shown more confidence on behalf of the UK in the future of the Euro-zone, when interviewed recently on the BBC Radio 4 Today programme. Speaking from Lisbon during a NATO summit, he saw it as very much in the British national interest for the Euro-zone to be stable (some 60% of British exports are towards Euro-zone markets). There was also a specific although separate (from the Euro-zone) case for assisting Ireland with its current financial problems (British and German banks are amongst its biggest creditors). However, he failed to reject the suggestion that the Euro-zone was in danger of imminent collapse, pointing out instead his own view over the years of the inherent tensions in having a Euro currency zone which essentially locks together the exchange rates and interest rates of countries with very differently functioning economies.
The problem for the UK is perhaps encapsulated in the opinion of Dominique Strauss-Kahn, at the head of the International Monetary Fund (IMF) and a potential challenger to Nicolas Sarkozy for the French presidency, who considers the only solution to the financial crises now facing Ireland and impacting Greece, Portugal and Spain, is for more centralisation within the European Union, especially in financial, economic and social policy.
However, the German chancellor Angela Merkel also did not build confidence in the financial markets when, in response to political pressure from voters opposed to bailing out weaker countries, she increased nervousness amongst lenders by suggesting that banks and investors should in future not just be bailed out by taxpayers but take some of the losses themselves. This drove lenders to charge more for their loans to reflect their perception of added risk and increased the pressure on Ireland, where a run on its crisis-hit banks was essentially already underway as companies quietly withdrew their deposits.
Being outside the Euro-zone has allowed the UK the same flexibility in monetary policy it has used in the past to allow the pound sterling to depreciate against the Euro and other trading currencies in an effort to stimulate growth in the economy particularly from exports. However, a break-up of the Euro-zone would hurt not only the UK but also seriously undermine the current global recovery, given the major trade imbalances and talk of currency wars between the major trading nations.
Within the Euro-zone, Germany has followed through with its normal, correct economic discipline and maintained its competitiveness by only allowing its unit labour costs and pay per employee to rise by 10% or less from 2000 to 2009. Today, therefore, it is showing a healthy trade surplus as customers have continued to buy the German-made quality goods they value, despite the appreciation of the Euro. Over the same period, however, most of the problem-hit economies such as Greece, Spain & Ireland have allowed labour costs to rise by 20- 30% compared with Germany and are now suffering the consequences. Other European countries such as Italy and France have also lost significant competitiveness compared with Germany over the 11 year existence of the Euro. There is a need, therefore, for greater economic discipline by the weaker members of the Euro-zone.
If we consider the options, one view is that Germany cannot expect these very different but weaker economies to be able to emulate its own very low inflation, weak domestic demand and export driven model for the Euro, based on the Deutschmark experience. Germany, therefore, has to find a more middle way with its Euro-zone partners by reducing its current account surplus and stimulating its own domestic demand for imports, in an effort to generate more stability in the Euro-zone. Otherwise the only other solution would appear to be that proposed by Dominique Strauss-Kahn for more centralisation and fiscal consolidation within a viable single currency union, backed by a European federal budget to enable e.g. the poorer, less competitive regions to be supported by the richer ones, an option not likely to be popular with German voters (see Categories/Chairman?s Blog/Federal EU? In the right hand index column) or indeed the UK.
In the meantime, a monthly Reuters poll has 34 out of 50 economists questioned, predicting that Portugal will likely follow Greece and Ireland in requiring bailout funds. Already 10-year bond yields in Portugal and Spain are increasing rapidly, with Spanish banks also major holders of Portuguese bonds. The tension between the Euro-zone periphery and the core is then demonstrably clear with the German and French economies having been performing well, now indicating the case eventually for higher interest rates.
Archive for the ‘Chairman »s blog’ Category
Euro-Zone Tensions
jeudi, novembre 25th, 2010Jobs in Biotech and R&D.
mardi, novembre 16th, 2010Continuing with the themes of job creation together with creative financing & where Britain has a competitive edge (see Categories/Chairman?s Blog/Fairness/ Job Creation & Creative Financing in the right hand column index), there are major players in the pharmaceutical industry with important Research & Development (R & D) facilities in the UK, such as GlaxoSmithKline (GSK), its biggest drugs company and the Swedish-British merger of AstraZeneca. However, job redundancies result when local research budget funds are diverted to other lower cost parts of the world e.g. GSK has now opened a research facility in Shanghai, China where there is then the additional prospect of major higher-value sales. The industry is also under financial pressure when governments worldwide are expecting to pay less for medicines to cut their health budgets and lucrative drug patents are expiring allowing competition to sell cheaper, so-called generic copies. Pfizer,the largest pharmaceutical company in the world, will now work with Biocon, the largest biotech company in India, to market « biosimilar » (i.e. genetic impersonations but not identical generic copies) insulin treatments designed and manufactured by Biocon. Here in France, Sanofi-Aventis announced the closure of four research facilities last year. The problem is global for the industry with the financial hurdles to successful medical drug innovation becoming ever higher and then the regulators to convince before final launch.
The UK is said to be one of the most conservative countries in Europe when regulating clinical drug trials and, with a separate body NICE – the National Institute for Health & Clinical Excellence ? responsible for advising the NHS on drug supplies, considered one of the slowest adopters of new medicines. There is also not the final prospect of major sales in the local market. Indeed, GSK spent 39% of its R & D budget in the UK last year but the country only represents 5% of its worldwide sales. However, in an effort to become more efficient the industry is looking to focus internally on fewer areas and to also buy in other work from an increasing number of smaller Biotech companies, often backed by the big drugs companies themselves e.g. GSK with its 18% participation in Convergence Pharmaceuticals, a Cambridge Science Park start-up. This offers a potential source of financial backing for R & D scientists looking to launch new businesses in the field of biotechnology.
There is seemingly room for improvement in Britain which to date has been nowhere near as successful as e.g. the US in producing successful biotech companies. However, there is a market there in the major pharmaceutical companies for such products and the opportunity to exploit the innovative benefits of spreading such creative work over a much larger number of smaller laboratories, when the likelihood of coming up with something new could be enhanced. This is why it is important that the government is considering a so-called patent box to foster R & D in the UK. If introduced the system would provide tax breaks for revenues from ideas patented in Britain and, together with the right regulatory and economic environment, provide a boost for the development of more innovative companies and their associated jobs.
Creative Financing
mardi, novembre 9th, 2010Following on from the article on Job Creation & Fairness (see Categories/Chairman?s Blog/Fairness/Job Creation in the right-hand index column of the opening blog page), something further on the related development of the necessary private sector financing of job-creating projects for public services seems appropriate, when government funds are severely limited as in the austerity climate of today.
One method has been via the so-called Private Finance Initiatives (PFIs), when sources of finance such as banks & investment companies have got together with the required project management, planning, engineering, implementation and operating companies in consortia, and been contracted to Build, Operate and ultimately Transfer (BOT) back into full public ownership, key capital assets such as schools and hospitals. The private consortia are paid back over the operating life of the contract through interest on the investment capital and service charges on the operation; the benefit for the government is to reduce its front-end capital expenditure by spreading the payback over a number of years e.g. until 2041 in the case of the Coventry University hospital PFI. Indeed, by 2041 this hospital will have cost the taxpayer £3.3 billion in interest and service charges, according to Treasury figures, some 8 times its value today (as quoted in the Times of last Sunday).
Many of the over 650 of such PFIs in the UK were set up under Labour to fund the building of new schools and hospitals, using private sector money, to thereby reduce government capital spending at the time by diverting it to future generations of taxpayers, even in the then period of relative prosperity compared with today. It raises questions on the political motives of the government behind such building programmes, as well as their number and necessity during this period.
As Sir Philip Green suggested in his recent Efficiency Review (see Categories/Chairman?s Blog/Sir Philip Green/Efficiency Review in the right-hand column index of the opening blog page), the government needs to improve in its negotiations with the private sector. This can be particularly so in the case of such long-running contracts when e.g. the escalation clauses associated with the on-going service charges for operating a hospital complex, can sometimes lead to levels considered exorbitant over the long term. MPs have apparently, therefore, now formed a 50-strong cross-party group to try and renegotiate PFI contracts because of their total accumulating costs to try and secure taxpayers a rebate which could save up to an estimated £500 million. Although it is said that at the moment PFIs are contractually protected from government cutbacks, there is often the case of major companies in the private sector calling on their suppliers to reduce their contracted supply prices to them, when times are tough. Today there is even a secondary market trading in PFI equities with school and hospital ownership passing from one company to another and e.g. Innisfree the contractor for the Coventry University hospital is now the biggest owner of British schools after the government!
The above is not to say that the private sector should not make a decent profit; profitable companies are key for growth and job creation. It is also all too easy for the media to pick up and colourfully quote things the general public can relate to such as seemingly excessive service charges for items such as car parking for hospital staff, patients and visitors, hanging pictures and installing TVs, school computer equipment and desks etc. This can tend to trivialise the matter somewhat and cloud the overall issue. The government might also find this the case with its plan to put on-line for the general public, the annual budgetary spending details and progress against associated milestones (instead of the previous and so-called Labour targets) of its various departments, in order to reduce the role of central government and quangos. The announcement of the release of such a mass of detail to the media and an anxious, unhappy public (without sufficient selling of the idea in advance and rather akin to the approach for the Big Society – see Categories/Chairman »s Blog/Big Society in the right-hand column index on the opening blog page), cannot be considered democratic management or a suitable substitute for the management responsibility of representative government.
Job Creation & Hope
mardi, novembre 2nd, 2010The Coalition government justifies its claim to fairness with respect to the effects of its overall cuts and tax rises (when also adding in the 50% upper tax rate of Labour) and it could also be said that progressively the top 2% of earners lose out most of all. Certainly there has to be a limit on how much the top earners are taxed before it becomes too much of a disincentive for both companies and individuals, effectively reducing overall tax take by perversely encouraging further tax avoidance schemes and relocation to more favourable tax regimes such as in Switzerland. Already the top 1% of earners in the UK contributes over 24% of total income tax paid, the top 5% over 43% and the top 10% over 53%.
The greater emphasis on cuts by the government (70%) compared with Labour (60%) has the opposition claiming a fairer approach to the public sector where the cuts will be felt in terms of job losses (although the planned increase in VAT will also hit private sector jobs if consumers reduce spending as a result). It is then all too easy for an opposition to say let us wait (until we are sure a fragile economy is really recovering), instead of facing up to the need for austerity to give the global financial markets confidence in UK government borrowing and its support for the critically important (to the economy) financial sector in the City of London. There is a corresponding human need to offer hope to those facing the prospect of unemployment by also growing the economy together with the accompanying job creation, noting that the wealth created by the private sector in a healthy economy is considered by economists as better able to support a public sector representing 40% or less of the total.
As a kick-start to growth David Cameron, in his speech last week to the Confederation of British Industry (CBI), has promised a £200 billion revitalisation of the road, rail, power and telecommunications networks in the UK. This also addressed the long standing complaints from the business community about the negative effects of such poor infrastructure on their operations. Since there is not much government money available for such grand projects, there is an associated plan to identify and overcome the obstacles to private investment to attract e.g. major sovereign wealth and infrastructure funds from the Middle East and Asia. Such funds, however, are wary of risk and the sale of the high-speed rail link between London and the Channel Tunnel provides a good example. Indeed the private sector consortium that started to build the link had finally to be rescued by British government funds in order to complete the project. Now the rail link is successfully up and running, pension and sovereign funds from around the world are bidding to buy it up.
Britain also needs to raise some £200 billion to spend on energy infrastructure just to meet its obligations under the Kyoto Climate Change Agreement and which would again create jobs. However, currently the initial £1 billion proposed by the government for the Green Investment Bank (to be established in 2013), to raise debt from the private sector by leveraging this taxpayer money when invested in green energy projects, is considered by experts as too small (in terms of mutual risk sharing when trying to attract private investment) and too late (by 2013) to make much of a difference. In addition, the Office for National Statistics (ONS) is concerned that such debt would have to be added to the National Debt. It has again been suggested that the renewable obligation tariff scheme for low-carbon technologies such as wind should alternatively be transformed into a low-carbon obligation instead. This would then provide for example the same support for private investment in nuclear power stations, where apparently there is still confusion in the industry over government policy. It seems though that the latest changes to the Carbon Reduction Commitment mean that the levies raised from big polluters will now go straight to the Treasury instead of funding bonuses to the better-performing companies, again not encouraging for the private sector.
The Prime Minister has also appointed Lord Young, the former Trade & Industry Secretary, to look into the problems facing smaller companies (Small & Medium Enterprises or SMEs) and e.g. how to make it easier for them to win government business or have more flexibility (compared with large companies) in not only hiring staff but also in reducing the number on the payroll when the level of business is down. Responding on BBC Radio to a question concerning the Efficiency Report on central government by Sir Philip Green (see Categories/Chairman?s Blog/Sir Philip Green/Efficiency Report in the right-hand index column), where Sir Philip is concerned that the government is not fully leveraging its purchasing muscle in offering its suppliers payment within 5 days when the commercial norm is 30 days or more, Lord Young considered government different from big business. This questions somewhat the overall purpose of the Efficiency Report. In this radio interview Lord Young did make the suggestion when asked about his ideas that e.g. for small businesses a single prequalification for a Local Authority could serve as a prequalification for all such entities across the country. In France there is a plan for the growth of employment in SMEs based on the American Small Business Act, in which regional government authorities would restructure their purchasing into separate types of business/industry lines, to allow SMEs to compete better with larger companies which have more resources. SMEs will also be supported when prospecting for export business in international markets.
Export markets provide opportunities for job creation in sectors where the UK has a competitive edge such as in financial services, advanced defence equipment, the creative industries, pharmaceuticals, design & engineering, fashion, comedy, the environment and the cream of its universities. Emerging markets offer the best prospects, accounting for one-third of the world economy but two-thirds of its growth. There is certainly room to grow business, the UK having exported in 2009 more to Ireland (£15.9 billion) than to China, India, South Africa, Russia and Brazil combined (£14.8 billion). One very visible and successful example of such a British company is Dyson with its efficient, modern and pleasing designs of top-of-the-range, bag-less vacuum cleaners, public hand-dryers and Air Multiplier fans. Dyson manufactures the products in Malaysia but is actively recruiting some 350 plus engineers for its design centre in the UK. In advanced semi-conductor technology there is also ARM an original start-up from the Cambridge University Science Park and still headquartered in Cambridge. ARM is now the leader in the design and licensing (but not the manufacturing) through a network of independent partners, of application processors for the fast growing market in mobile devices such as advanced smart phones and handheld/ pocket computers. It has 1700 employees, design centres also in France, India, Sweden and the US and makes its money from the licence for the original intellectual property, together with the royalties on every semi-conductor chip and wafer produced by its licensees.
Spending Review – Fairness & Hope
lundi, octobre 25th, 2010Nick Clegg, the deputy prime minister, should have done better than just airily dismissing as nonsense, the conclusion of the independent Institute for Fiscal Studies (IFS) which contradicts the claim of the Treasury that overall the tax and benefit measures in the October Spending Review are progressive.
The first IFS analysis in August which took account of a wide set of benefit reforms already announced by the Coalition Government, concluded that the impact of all tax and benefit measures yet to come would reduce the incomes of lower income households more than that of higher income households, except for the richest 2% (see also Categories/Chairman?s Blog/Fairness in the right hand index column). Therefore, these tax and benefit changes were considered regressive rather than progressive across most of the income distribution.
Now, when the new measures announced in the October Spending Review are added to the original IFS study, its original finding is said to be reinforced. Its analysis continues to show that, with the notable exception of the richest 2%, the tax and benefit components of the fiscal consolidation are, overall, being implemented in a regressive way. The IFS considers this as not necessarily unfair as the perception of fairness depends on the individual concerned and their personal circumstances e.g. the level of income, whether in work or on benefits etc. However, there are already a lot of people, some seemingly desperate and at the bottom end of the income scale, who are already protesting via comments to blogs on the Internet in an ugly and often semi-literate, class war-orientated and confrontational manner.
There is a need for the prime minister and his deputy with their otherwise considerable communications skills, to move this debate on from the no-win Regressive versus Progressive stage towards how they will promote future growth in the economy, together with the associated development of the hoped for work opportunities, particularly in the poorest, de-industrialised and jobless regions.
There will be some mismatches between the skills of such job seekers and those required for new jobs e.g. in the Green energy sector which is being provided with extra development funds. The key technologies for e.g. wind, solar and nuclear power do not even create manufacturing jobs in the UK but currently have to be imported from the European Continent. (Although Siemens are said to be going to approve this week a plan to build a British factory for a new generation of offshore wind turbines after receiving government assurances on £60 million for port development. The factory will employ 700 workers.) Any job creation from exports requires products and services with a competitive edge with major deficit countries such as the US and the UK wanting to export to counter weak demand from their own consumers, in common with e.g. Germany and Japan (both with home consumers unwilling to spend), all addressing the same fast growing emerging economies such as China. In addition, there will be competition from sometimes better educated and /or skilled job seekers from the more eastern parts of the European Union and outside. Ex-public sector workers are also not necessarily a natural fit to the private sector unless e.g. they are included as an integral part of the private outsourcing of former public services. There is a need for an overhaul of training schemes to help reduce long-term joblessness.
A key difference between the proposed Labour austerity programme of cuts versus tax rises in the ratio of 60/40 compared with the 70/30 of the Coalition, is that the latter considers the more you tax, the more this acts as a disincentive to new business start-ups, investment, growth and associated job creation in the private sector. There has to be a more positive vision than the mantra of Labour that cuts too soon and too deep will harm a fragile recovery. Indeed, whether the economy has recovered or fallen into recession again will not be officially apparent until sometime after the event, when the appropriate statistics for growth are made available.
Multiculturalism
mercredi, octobre 20th, 2010An anti-immigrant wind is also blowing in Germany it seems and Chancellor Merkel has had to modify her position somewhat after e.g. angrily rejecting the claim of French President Sarkozy that she was also thinking of (as in France) a similar return to Romania of problematic, Roma traveller families from their shantytown-type settlements (a sensitive issue given the still relatively recent German past). It was only this summer that the multicultural German football team which comprehensively defeated England in the World Cup in South Africa, was celebrated in Germany as emblematic of a young country enriched by decades of immigration, the latter encouraged particularly from Turkey to meet critical labour shortages following the Second World War.
Now, however, Germany is debating the role of its 4 million Muslims and a recent opinion poll had 55% of Germans considering Muslim immigrants a burden costing the country much more socially and financially than they have contributed economically. Another poll published in Bild the largest circulation tabloid, showed 66% of the public believing that Islam does not belong in Germany. It has not helped that there are reports of German Islamic militants, the children of first generation immigrants, receiving training as terrorists in Pakistan and Afghanistan with several also recently reported killed by American CIA-operated drones. Mrs Merkel has now, therefore, been moved to tell her Christian Democratic Union (CDU) members at a party conference that Islam in some of its forms is not compatible with German law and that tolerance must stop at e.g. forced marriages and honour killings, which are not considered part of basic German culture. Of course Germany is not alone in being caught up in a wave of anti-immigrant feeling that is developing across Europe, with far-right and /or anti-immigrant political parties now also in e.g. Holland, Austria, Norway, Sweden, Denmark, France and the UK.
Even on the religious front, the Catholic Church is concerned at the diaspora of some 27 million Christians (including 6 million Catholics) spread across the Middle East and which is moving to the West, reflecting the difficulties encountered in their daily lives from the rise of political Islam, as the influence of Islamic fundamentalists increases. They are also under pressure in the Philippines, India and Pakistan. Above all, such Christians are put into a rather precarious situation of being considered as non-citizens when Muslim extremists mix religion and politics and do not accept their right to freedom of religion and conscience. The Vatican trusts, however, that working together with what it sees as still a vast majority of more moderate Muslims to combat such religious extremism, the Christian faith can continue to prosper in the Holy Land at least.
Considering the rather lax attitude taken to controlling immigration to the UK in the most recent past, taken together with the promotion of Islamic Turkey for membership of the European Union (EU), the view from France is that the UK needs to reflect more on what sort of society it wants for the future and to reaffirm its common cultural heritage with Europe. Certainly the Coalition government has already set stricter limits on immigration from outside the EU and which in the current economic slowdown, can more easily inflame emotions in areas where immigrants are competing for limited low-cost housing and jobs.
Pupil Premium
dimanche, octobre 17th, 2010Ahead of the 20th October spending review and to protect politically sensitive parts of the total education budget, the government has responded to accusations of unfairness over their planned child benefit cuts by announcing a £7 billion Pupil Premium. This will be allocated over the same period as the spending review and aims to improve the educational prospects of the poorest children, supporting them up from the socially critical 2 years of age when they risk future exclusion and to the university stage. The total schools budget which normally represents some 50% of the total spend on education will also not be cut.
This pupil premium will target e.g. schools with the highest proportion of free school meals and, therefore, serving the most disadvantaged catchment areas. How the money is to be spent will be left to the discretion of individual school head teachers. Longer term savings in welfare spending are anticipated from enabling such disadvantaged children to catch up and maintain progress with their peers through extra tuition and other early support, thereby increasing their aspiration and hopefully reducing their otherwise over-reliance on state benefits in the future. Of course, with the total schools budget still limited by the restrictions on government spending, this could mean that schools in more affluent areas will get less.
Sir Philip Green Efficiency Review
mercredi, octobre 13th, 2010The Coalition Government asked Sir Philip Green to examine and report back his findings and recommendations on how its central (Whitehall) departments spend money. His Efficiency Review has concluded in summary that the Government is failing to leverage both its credit rating and its purchasing and property (largest tenant/owner in the Country) scale to full advantage. This reflects inefficiency and waste, mainly due to very poor data (e.g. great difficulty in establishing actual transport costs) and process (e.g. lack of a centralised approach to purchasing, leading to significant price variations for common items across departments and multiple contracts with some major suppliers).
Implicitly acknowledging the political connotations of his report, Sir Philip has subsequently emphasised to the media that he was not looking for job cuts, just how the existing personnel in central government could work better with less. In addition, no total value has been placed on the actual amount of waste identified and/or the possible total saving, although practical examples sprinkle the report such as the 400,000 hotel nights spent in London for central government with a suggested 50% saving from video conferencing and other such solutions. He also questioned whether it made commercial sense to pay suppliers in 5 days (a relic from the last Labour government to help its suppliers through the recession), when the norm is 30 days or more in the private sector. Labour has already countered that government is complex and that more centralisation e.g. of government purchasing, will lead to more bureaucracy and expense and this also runs counter to the Big Society government idea of more decentralisation to local level to reduce cost.
Total central government spend in 2009/10 is put at £670 billion consisting of:
? Benefit & Grants???????????…………..270 (40.3%)
? Procurement (e.g. IT, Travel, Consulting)??166 (24.8%)
? Pay?????????????????……………..164 (24.5%)
? Property (including running costs)?????…..25 (3.7%)
? Other?????????????????…………….45 (6.7%)
Procurement at almost 25% of total spend in Whitehall is then identified as an area where the whole public sector would benefit from a centralised procurement process.
However, in asking the colourful Sir Philip to carry out this efficiency review the government has taken the risk that the media impact of his report will far outweigh the negative aspects of his personal tax affairs. That said, if it was his own business, Sir Philip would also have ensured that any such report by his own staff would not only have quantified the total waste and potential saving but also the required action plan and resources required to achieve an actual target amount.
Child Benefit Cuts
jeudi, octobre 7th, 2010The government has announced at the Conservative party conference that, as part of their fiscal austerity programme to eliminate the public spending deficit, it is only fair to cut child benefit for those parents considered better-off and, therefore, able to carry a heavier share of the tax burden i.e. those with annual earnings of £44,000 or more and in a higher tax bracket.
However, due to the perverse and socially engineered effects of the current UK tax system, where everyone (whether married or not) is taxed as a separate individual, this would seem to imply that a single mother earning more than £44,000 would lose her child tax credits whilst a household where both parents each earn less than £44,000 for a joint income of up to £88,000, could still retain their child benefits. It has as a result been quite roundly attacked as manifestly unfair although an opinion poll taken immediately after found 85% of respondents in favour and 15% against, roughly in the same proportions as those who would still retain child benefits versus those who would lose out!
Given that the Conservative party in common with its opponents must employ clever political thinkers and analysts, this begs the question that, if it is so easy to pick such obvious holes in this child benefit tax policy, why announce it now during the Conservative party conference and in advance of the detailed programme of cuts planned to be announced on 20th October? One would like to think that this is part of an overall policy to guide public opinion towards the benefits of a tax system which not only provides tax concessions for children but also for the supporting married couples, taxed on their joint income as per the French system for example.
The Conservative party has traditionally supported marriage as a source of stability in society and the prime minister in defending these proposed child benefit cuts has already suggested that married status should be recognised within the tax system. There are of course the arguments of those who say that this discriminates against single, childless individuals and that there is no evidence that homes with two committed but unmarried partners cannot provide as stable a family environment as a married couple. In albeit mainly Catholic but constitutionally secular France, the tax system favouring marriage and children can also be traced back to the need to rebuild the nation after two world wars fought over its soil. Indeed with the almost statutory three children the resulting low level of direct income tax paid is highly attractive to young parents, during their early and generally lower income married life.
With civil partnerships including same sex couples now recognised under UK law, why cannot the tax system recognise marriage and the added costs of raising children during the early, more financially-stretched years? Certainly, Ed.Milliband the recently elected new-generation leader of the Labour party, who has in the past been too busy to have his name on the birth certificate of his first child, has admitted to the press that he is considering marriage to his partner in the future.