A Conservative Government will introduce a recognition of marriage and civil partnerships in the tax system.

“This is sending a signal that we understanding the value of commitment”, said David Willetts.

“Britain is unique in the raw deal one earner couples get”, he added. Most European countries recognise marriage in the tax system.

The proposed recognition will take the form of a partially transferable personal allowance for all married couples and civil partnerships.

• One member of an eligible couple will be able to transfer £750 of their tax free personal allowance to their partner in order to reduce their partner’s income tax bill. This will be limited to basic rate taxpayers and is therefore worth up to £150 a year per couple at the 20% rate of tax. In 1999, its final year before it was abolished for all but pensioner couples, the Married Couples Allowance was worth £197 per couple per year.
• The additional transferable allowance will be tapered away at incomes above £42,500 so that no higher rate taxpayer earning £44,000 or more will benefit.
• Eligible couples where one partner is not using all of their tax free personal allowance and the other earns between £6,600 and £44,000 will be up to £150 a year better off.
• The full benefit of £150 goes to eligible couples where the main earner earns between £7,300 and £42,500.

The independent Institute for Fiscal Studies estimate that this will cost about £550 million. This will be paid for using some of the revenues from a levy on banks that will raise more than £1 billion. The remaining revenues will be used to reduce the deficit.

This is a progressive tax measure, with two thirds of the benefits going to families in the lower half of the income distribution. The biggest gains as a percentage of income go to households in the third decile of the income distribution. 4 million out of a total 12.3 million married couples will benefit.

Shadow Work and Pensions Secretary Theresa May has announced a new ‘three strikes’ policy to crack down on those who repeatedly defraud the benefits system.

This comes as new analysis reveals that under Labour benefit overpayments due to fraud and error have cost £80 a second since 1997.

“For too long Labour have let benefit cheats play the system, costing the taxpayer millions”, May said.

“It is astounding that since 1997 welfare waste has cost the public £80 every second”.

• In total, Labour have wasted over £30 billion on fraud and error between 1997-98 and 2008-09. £14 billion of that has been wasted on benefit fraud.
• The Department for Work and Pensions has had its accounts qualified for the last 20 years due to the high level of fraud and error in the benefits system
• Between 2004-05 and 2008-09, only 143,838 people have been sanctioned for benefit fraud

The Conservatives have announced new plans to introduce tougher benefit sanctions for those found guilty of benefit fraud. This is about targeting the minority of those who are undermining the integrity of the benefits system.

Those who commit benefit fraud once will lose their out-of-work benefits for three months, a second offence will attract a benefit sanction of six months, and if someone commits fraud three times they face losing their out-of-work benefits for up to three years.

This is a big increase in the penalty, from the current situation where fraudulent claimants lose a maximum of 13 weeks benefit entitlement.

May said the Conservatives will “send out a strong message to people who fleece the taxpayer- you could lose your out of work benefits for three years”.

“This is about fairness. While the whole country is tightening its belt it’s scandalous that thousands are managing to defraud the taxpayer out of billions.”