Monday, October 04, 2010

A Cut Which Surely Even Labour Can Support

Can anyone seriously doubt that in these economic times it is right to withdraw Child Benefit from people who pay tax in the 40% and 50% bracket? Like most people, I believe benefits should go to people who really need them, not people earning £44,000 and above.

It will be interesting to see how Labour respond. Will they accept that this is the sort of cut which has to be made, or will they play to the crowd? I wonder...

Dizzy is less than impressed, however. He makes the point that while the principle is right, the implentation is not. He says that two people earning £43k each would still get Child Benefit, while a family with one earner on £44k wouldn't. If true, that is idiotic, but I trust it will be sorted out.

79 comments:

Lord Blagger said...

Is it right? No its not.

For an example its not even fair.

Why should a couple both earning just under the tax threshold get the benefit, worth about 1,000 before tax, but a couple where just one earns over the threshold gets nothing, equivalent to that 1,000 cut in pay?

Why should the middle class and above pay tax and get nothing in return? That's not fair either.

Why should the middle class pay for politicians failures?

What's next? I can tell you. The state pension will be means tested. The reason is that politicians have been running a fraud on the state pension. Where is it in the government books? It's not. 1,600 billion of extra debt?

Civil service pension. Not on the books too. 1,200 billion.

PFI. 350 billion. Not on the books.

Nuclear decommisioning. 100 billion. Not on the books.

Bank bail out. 22 billion. Not on the books.

No surprise there that politicians want to blame the banks for their own failures.

However, they are all right. They can commit fraud, and not get prosecuted when it comes to expenses. They have nice guaranteed pensions. They can vote themselves extra cash when it comes to a failure to invest.

As for investment. Labour invested vast sums in the poor. Isn't it time the poor started repaying that investment?

Caron said...

I make exactly the same point, but conditional to that being sorted out, I am prepared to support this.

http://carons-musings.blogspot.com/2010/10/child-benefit-shock-my-first-reaction.html

This Government does seem hellbent on mucking around with our financial planning. My poor husband will have to wait an extra year for his pension as he turns 65 in 2016, and now we will lose our Child Benefit.

Truth is, we don't need it to the point that it pays for necessities, which is what it should do.

Julian said...

I agree, if true, that's idiotic. I also think £40K is still too high a salary for someone to be receiving benefit, and why wait until 2013 to implement it?

Sunder Katwala said...

Iain,

I'm afraid you owe Ed Balls an apology. You spoke about this subject at the Labour conference fringe just a year ago, and told us it was "tripe" that the Conservatives would do this.

I quote your own blog post about the event:

"The discussion then moved on to a question on whether taxes should go up. Ed Balls tried to create some more of his artificial dividing lines by asserting that the Tories would abolish universal child benefit. I responded that this was utter tripe. Balls had tried to imply that the Taxpayers' Alliance and the IOD were Tory Party stooges and they were setting policy for the Tories".

As I recall, your view was that it was "absurd" for tax credits to go up to £55,000. When both Balls and myself said the argument surely logically applied to child benefit as well as to tax credits, you were adamant that it did not.

I didn't understand the difference, but perhaps you'll know want to say there is a logical connection.

jenmum said...

This may hit single earner households even more unfairly than Dizzy states. At the moment claiming child benefit also gives you an automatic top up to your National Insurance whilst your child is small. Take that away from the partners of those earning around £45k and they are even worse off. Not much of a reward to those doing what the Tories claim to want and ensuring one partner looks after the kids.

dazmando said...

Yes I this is the right thing to do. The policy is not perfect but the principal is right. I also wondered how labour will react to this http://liberalconspiracy.org/2010/09/27/tory-poll-swing-voters-back-red-ed-miliband/

Delbert said...

It is true. Osborne confirmed it on Today.

Newmania said...

Its not hard to see why you applaud the Herod tax Iain but the fact is you DO NOT GET IT .You are not going to have any children so you are free to pontificate at families like mine who work like slaves and have paid for everyone else`s child benefit in a lifetime of taxes.

Allow me to educate you as to what a universal benefit is. The state takes your money away during your life ,when you are young and get virtually nothing back , and then, when you have responsibilities for others , when you have children, they let you have that portion back .It is not free it was introduced in return for a tax break being withdrawn.

It is not a hand out it is our money and people like me are now in then position of having funded child benefit for everyone else but not getting it when it is our turn.

Have a look at the effect of this. If you have three children, not untypical, you receive £2392 pa in order to make this up you allow to earn let us say at least £3500
The top rate is due to come down to £42,000 appx at the budget so there is double whammy effect .
The average household income in the South is not far form this and it is going to catch many many ordinary families with its full vicious effect. This is a betrayal of Conservatives , the hard working,the aspirational and worse still directed at those with children to worry about .
Many of us in the private sector have already seen wage cuts and now all hope of progress is cut off for families , the marginal rate between £40,000 and say £47,000 is ...well you work it out 90% ...100%? In effect
What is the point of the Conservative Party if it turns on families , the South and Conservatives just because they cannot go on strike.
Fields idea of an end to it at thirteen is hugely better because by that time your child care bills are starting to come down . Perhaps you were not aware Iain that even to provide care to wrap around school days for a second earner you are looking at least £8,000 per annum

Traitors liars ,pointless wind sock zeros ! No words are to strong for this smooth collection of self serving principle free salesmen. They have lost my support, a life time passionate Conservative and whilst they may calculate...
( calculate... that about right for them) there is nowhere to go it is now a matter of indifference who is in power Both Parties predate on those who cannot get out of the way and this HEROD TAX is immoral poorly thought through and about as un conservative as I can imagine.


Who is going to stand up for us ?

Unsworth said...

"I trust it will be sorted out"

Let's hope so - and very soon. But what this comes down to is large-scale means testing. Are the mechanisms in place to do that?

Grand_Inquisitor said...

An article in the on-line Torygraph has also pointed out this 'side effect'. So much for having the wife at home to bring up the children.

This coalition government is in a bubble all of its own. It does not respond to its Lib-Dem Party members, nor the Tory Party members. It'll be thinking it can walk on water next...

Tim said...

Since we don't file joint tax returns it is hard to sort out the 2x£40k earner issue. But I am happy to be losing £1000 a year in child benefit.

Still, if you have one earner on £45k, with three kids, that will cost you £2400 a year, which in terms of your final income is the same as a 6% rise in income tax. I imagine not everyone will be happy.

hatfield girl said...

The child allowance and the state old age pension should be universal, not means tested. Means testing is for claimants who are unable to support themselves. Universal benefits are a return to the young and the old for their contribution to supporting the unfortunate, and the young and the old, through their taxes paid during their working lives.

We are all young and we are all old; but we are not all poor, or always poor. To means test for a universal condition is plainly wrong, and attacks the social solidarity we all feel towards those temporarily in need of assistance.

Huub said...

So the way to save a few quid is to penalise professional single mothers, who might want to spend a bit of time bringing up baby.

Did someone mention Milk Snatcher? Classy

starfish said...

Before everyone starts moaning about marginal tax rates and the iniquities of two lower paid parents vs one relatively well paid one let's just remember a few things

Anyone on these incomes is not 'poor' so why on earth are they getting child benefit?

Two incomes means both parents going out to work which probably means higher childcare costs anyway so the apparent unfairness is probably relatively limited

Does anyone seriously want to impose any sort of 'fairness' regime when it will cost a fortune in administration (means testing tapering etc)? This is straightforward

The money to pay this benefit does not exist - ending the payment of a universal benefit to people who don't need it is so obviously common sense - the real issue should be why do we pay these in the ifrst place.

Next stage is limiting it to two children....

Peter said...

I know it would be very difficult politically but in truth child benefits should be abolished.
It would help reduce the deficit in the short term allow tax cuts in the longer term.

................................. said...

Is there any particular reason why the gays have to pay higher taxes to pay benefits to straight people who choose to have children?

Newmania said...

IS THIS BLOG ON ?

'Its not hard to see why you applaud the Herod tax Iain but the fact is you DO NOT GET IT .You are not going to have any children so you are free to pontificate at families like mine who work like slaves and have paid for everyone else`s child benefit in a lifetime of taxes.
Allow me to educate you as to what a universal benefit is. The state takes your money away during your life ,when you are young and get virtually nothing back , and then, when you have responsibilities for others , when you have children, they let you have that portion back .It is not free it was introduced in return for a tax break being withdrawn.
It is not a hand out it is our money and people like me are now in then position of having funded child benefit for everyone else but not getting it when it is our turn.
Have a look at the effect of this. If you have three children, not untypical, you receive £2392 pa in order to make this up you allow to earn let us say at least £3500The top rate is due to come down to £42,000 appx at the budget so there is double whammy effect .The average household income in the South is not far form this and it is going to catch many many ordinary families with its full vicious effect.

This is a betrayal of Conservatives , the hard working,the aspirational and worse still directed at those with children to worry about .Many of us in the private sector have already seen wage cuts and now all hope of progress is cut off for families , the marginal rate between £40,000 and say £47,000 is ...well you work it out 90% ...100%? In effect

What is the point of the Conservative Party if it turns on families , the South and Conservatives just because they cannot go on strike. Fields idea of an end to it at thirteen is hugely better because by that time your child care bills are starting to come down . Perhaps you were not aware Iain that even to provide care to wrap around school days for a second earner you are looking at least £8,000 per annum

Traitors liars ,pointless wind sock zeros ! No words are to strong for this smooth collection of self serving principle free salesmen. They have lost my support, a life time passionate Conservative and whilst they may calculate...( calculate... that about right for them) there is nowhere to go it is now a matter of indifference who is in power Both Parties predate on those who cannot get out of the way and this HEROD TAX is immoral poorly thought through and about as un conservative as I can imagine.

Who is going to stand up for us ? Its not Cameron that much we know

Mostly Ordinary said...

I'm so annoyed by this measure it's not even funny.

I pay a phenomenal amount of tax which just goes up and up and up. The only direct benefit I got from the tax system was the child benefit. It wasn't much but it was a token payment at middle income earners that it wasn't all take take.I save it for my children to hopefully help fund their education if they go to Uni.

I just love the fact people seem to think that if you pay 40% tax your living in the lap of luxury.

Once again it's the people in the goldilocks zone where they don't earn too much or too little who are getting fucked over.

My pension, health insurance, even holidays are taxed. I can't use my wife's tax allowance (who stopped work to support the kids as this Government would like) unless I've got a lot more money than I have. I'm at a lost to understand who is looking out for me in the tax system.

I am very very angry.

Twig said...

Forgive me if I've misunderstood, but
if an employee received a small pay increase that took them just into the higher rate band, they could loses thousands in child allowances thereby making them much worse off than before the pay rise?

Bill Quango MP said...

Tories steal the money for children from hard working middle class parents that labour needs to win?

No Iain, I suspect Labour will be even more outraged, if it were possible, for their already shrieking red faces to get any more puffed up.

Clive said...

I'm with Dizzy on this one. By all means link child benefit to income, but the proposed implementation is unfair and, in your own words, idiotic. And I find your trust in Osborne and the coalition to "sort it out" naive in the extreme.

Osama the Nazarene said...

What Dizzy says is true furthermore it is what Al Jabeeba has latched onto with liebor on their coat tails.

Indeed it is not "fair" however it is liebor who are making a fetish out of fairness.

This affects relatively few people and there would be horrendous costs in introducing a means testing bureaucracy to cover this minor "unfairness". Introducing means testing would also affect those on much lower wages who might miss out.

So all in all a sensible policy forced upon the coalition government by liebor's profligacy.

Unsworth said...

Slightly pedantic point:

It's not 'economic times' - as Labour so very often referred to it. It's 'difficult (or any other adjective) economic times', surely?

Michael Heaver said...

Agree, agree, agree, agree, agree! Labour need to get real!

Dick the Prick said...

It's just expedience, really. As everyone has an individual tax code it's easy (in err..principle) for HMRC to just cross reference kiddy benefit with salary.

To means test everyone would cost more than potential savings.

OT - but how many Tories or Libbers were on the BBC when the Labour conference was on? We've had Anne Begg, Yvette Cooper, Derek Simpson already. Blatant bias.

notayesmanseconomics said...

Hi Iain

I think that Dizzy has a point and I would like to make my own point on this move. As I wrote today.

"I have written before about the dangers of high marginal tax rates and their effects on economic efficiency. Well at an income level of £44,001 we in effect have an incredible marginal tax rate of well over 100% as the whole benefit is withdrawn. The exact rate depends on how may children someone has for example for someone with four children it looks as though an extra £1 in earned income could cost them around £3100 in lost benefits for an extraordinarily high marginal income tax rate."

It might be good politics and for some it might look fair but for some of those affected it is going to look very unfair.

DiscoveredJoys said...

I'm not much bothered by the case of two people earning just under the 'limit' retaining child benefit.

For a start they may have higher child care costs if both are in full time work (as suggested by both earning 'respectable' salaries).

Secondly if both are being paid respectable salaries, they will be paying more tax than less well off people.

So I can accept some 'weird borderline scenarios' for the sake of ease (and lower cost) of administration.

I also suspect that those who gleefully complain about this issue are not so worried about the relatively few cases likely to be affected as much as they wish to challenge the Coalition Government on any basis...

tory boys never grow up said...

I'm all in favour of making the better off bear the burden. My worry is that this measure doesn't share the burden fairly among the well off. As well as the anomaly pointed out by Dizzy this measure does nothing to make the well off childless to contribute their share. Given that they often use high value cars as a child substitute - how about doubling the rate of VAT on cars with a retail value greater than £20000?

As for Osborne announcing this major policy change on Breakfast TV - I trust this will get the due comments from Mr Dale about contempt for our Parliament in due course. Was little George on a warning for this already from Bercow??

Still nothing on William Hague wanting to business with the Sudanese government.

Mungojerry said...

As Ed Milliband is not married to his partner the child benefit for his children will depend on his partner's income and not their joint incomes!

Malcolm Redfellow said...

Isn't there a disconnect between the headline and the first sentence here?

There may well be agreement that in these economic times it is right to withdraw Child Benefit from people who pay tax in the 40% and 50% bracket. If so, the ConDem government should have the courage of its convictions. Even if, as Benedict Brogan and others have already shown, what is being proposed builds yet more inconsistencies into the tax/benefits system.

What does not make any sense is to tout it, however vaguely, as a bit of Labour-baiting. Quite how any opposition party reacts is irrelevant.

DeceptivelySlow13 said...

Thanks in the main to your generation, younger generations are faced with huge debts (if you go to university), higher taxes, cuts to services, pensions that won't support us, and housing that is unaffordable.

How about making things really fair. Anyone still working who is a graduate, make them pay a higher tax as well as new graduates. Tax the over 50s at a higher rate, to pay back some of the borrowing that had to take place to meet their demands for more public services, and to fill some of the state pension hole. Introduce a housing tax on all home owners over 50 to encourage house prices to come down so some of us can then afford a house.

Failing that, cull all over 60s, and let the young start again!

Ian said...

If child benefit is no longer universal it should be scrapped. Child tax credit gives money to the lower paid for having as many children as they like - child benefit should be incorporated into this. It is nonsense having two benefits for the same purpose.

bunnco said...

Isn't the solution to recognise marriage in the tax system.

javelin said...

Stop calling the cuts - and call them smoething like re-rebalancing or debt reduction.

bob said...

I don't see how you can sort that out without means testing, which is always fraught with error and waste.

We need this whole "benifits reform" properly done, not just nibbled at the edges.

anne riddle said...

Iain - Everyone has jumped on this,including your collegues on lbc!I trust it will be clarified in the near future. Surely it should be calculated on household income?

Goodwin said...

Ignoring the fact that the previous Government left us bankrupt and are in no position to preach, I see no reason at all why any state benefit should not be means-tested. And quite honestly, a household income of £30k is a quite adequate cut-off point rather than £44k per earner even if it means the 50" flat screen TV, the Playstation and the subscription to Sky have to go. Let's hope that other hand-outs eg for housing will be looked at next with a view to encouraging people to get off their backsides and go to work. Last time I looked my road needed sweeping!

mark said...

Your analysis and Dizzy's are correct - my wife and I will be much better off going part-time (she can go to 90 per cent as an academic) so we will both be below the £44k. For neighbours with more than one young kid who (mostly) commute it's going to be a massive hit.

mark said...

So we will be better off as parents of a two-year-old if my wife goes to 90 per cent rather than full-time (she's an academic and can do this). Pity the poor one breadwinner who commutes with more than one child.

Country Boy said...

The other slightly bonkers bit is the apparent marginal tax rate for those who go over the threshold for higher rate.

Say my threshold is at £44k, I'm currently on £43.5k and my boss offers me a £500 raise. Presumably I immediately lose £2.5k a year from my three kids' child benefit.

It's a long time since my economics A level, but isn't that a marginal tax rate way in excess of something like 500pc? That must sit uncomfortably with Tory ideas of bettering oneself.

I can see why George Osborne wants to do it this way for simplicity's sake (the alternative would presumably be a massive CTC-like administration).. but this is another way in which the implementation needs looking at.

Phil said...

What do you mean. 'I trust it will be sorted out'?

If the tosspots IDS and GO use for researchers had done their job properly there would be no embarrassment about the fact that CB is still paid to dual-income households of 43k each, yet would be dropped from single-income households of 44k+. Even the morons in Labour and the Daily Mirror could see this. Why couldn't the Tory/Liberal coalition???? FFS!!! IDIOTS!!

Furthermore, don't cap benefits at average wage, cap it at the average wage that the claimant is qualified to earn!! Not many street-sweepers and bin-men on 24k a year, I'll bet.

Phil said...

No wonder there are no comments...the script fails.

Phil said...

OK....once more...

WTF are IDS and GO paying researchers for if they haven't seen that dual-income households (43k each) would retain CB while single-income households at 44k+ would lose out? Even the morons at the Mirror sptted that one. Sheesh!!!

smileyman said...

Iain, the sentiment that benefits should be cut to the wealthy is perfectly sound.

The problem with this policy is that it panders to the socialist lie that high income is the same as material wealth. It would actually make more sense to withdraw benefits based on postcode...

Whatever the merits of the policy as it finally ends up, it was a political mistake to bring it up in a Conference speech without the details of how it will be applied.

johnbartholomew1 said...

No Iain, this appears to be the intent. Osborne made it clear that the cap is based on EIHER partner earning more than £44k - NOT household income. In a household with two kids, one partner staying at home and the other working on £44k then they will LOSE their benefit.

A couple with two kids with both partners working earning £43k each will have a household income of £86k and KEEP their child benefit.

And this is supposed to be the party of fairness?

Beggars belief (and my kids have long outgrown child benefit - so no axe to grind)

johnbartholomew1 said...

No Iain, this appears to be the intent. Osborne made it clear that the cap is based on EIHER partner earning more than £44k - NOT household income. In a household with two kids, one partner staying at home and the other working on £44k then they will LOSE their benefit.

A couple with two kids with both partners working earning £43k each will have a household income of £86k and KEEP their child benefit.

And this is supposed to be the party of fairness?

Beggars belief (and my kids have long outgrown child benefit - so no axe to grind)

Plaid Whitegate said...

Dizzy is right and it is idiotic. It punishes single-parent households.

John Wilkes said...

Whilst I am not particularly in favour of non means tested benefits from a selfish point of view (and as a Conservative voter) I regard it as a tax concession the loss of which will be expensive to me. I am a higher rate tax payer, my wife is not. Our aggregate income may exceed £86K but not by much. We have 4 children who are the tax payers of the futures (and so our pension providers in part). The loss of child benefit will cost us about £2500 per annum and as we have tried to put it aside to pay for University in the future (which is also going to be more expensive I expect) I do regard myself as being hit by the change. The problem is that whilst the tax burden is going up I will resent this loss as I will be worse off and will still have to bear the burden of bringing up our children. Whilst I fully accept the "it's your choice" argument if no one had children who is going to provide the taxation to pay for all our upkeep in old age. I don't know whether or not the French (for example) have an equivalent benefit to Child Benefit but I know there are tax advantages the more children you have. So, Iain, it is not necessarily a cut that all Conservatives agree with.

Thorpe said...

My wife and I are separated and our 2 children live with her most days - they stay with me mostly at weekends. I'm a higher rate taxpayer, she's a lower rate taxpayer. My wife claims the child benefit - I think it's about £170 a month.

So, are we affected? Tricky area. If we are (ie my wife loses the CB) then I'll have to top up her maintenance by £170 a month: in effect a tax rise for me (that'll be nearly £300 a month from gross income) while not actually having the pleasure of seeing my children for more than 2 days a week. If we are not, then there is effectively an encouragement for all co-habiting couples (married / not makes no difference) in our position to split up for tax purposes, thus retaining the £2000 annual CB. Hardly Tory behaviour to encourage separations through a tax loophole.

John said...

George Osborne (via BBC Web Site):

Coalition government are to limit total benefits for a single household.

He told the Conservative conference the cap would be set at the amount "the average family gets for going out to work", which is about £26,000 a year.

The cap will apply to the combined income from benefits including things like jobseekers (sic) allowance, housing benefit and council tax benefit.

An estimated 50,000 households may be affected by the cap, planned for 2013.

Mr Osborne said there would be "no more open chequebook" for out-of-work families.


Finally - a government are sorting this out.

Tony Blair asked Frank Field to think the unthinkable then sacked him one year later and never did any meaningful reform.

This is not an attack on Labour voters from the Tories.

Labour voters hate the scroungers more than anyone as they are usually on low wages and see people on benefits living as well as they do. How can you afford Sky TV on benefits?

I think this will be an extremely popular policy. Since the recession I've never heard so many people complaining about people on benefits (NOT those they think are genuine).

The Tories do more for your genuine working class person who obeys the rules.

Labour would never have allowed council tenants to buy their houses at a discount and allow them to build up a bit of capital. My sister and brother in-law took advantage of this and, when she died, he sold the house an d had £120K in the bank.

This coalition government are getting more impressive by the day.

Osama the Nazarene said...

This certainly penalises those households where one partner stays at home to bring up the kids.

@jenmum is also possibly correct in that stay at home partners might lose out the "bringing up the kids benefit" which adds years to the stay at home partner for pension purposes IF THE TWO ARE LINKED.

All in all an anti family measure rather than this nonsensical unfairness raised by liebor and Al Jabeeba.

Anoneumouse said...

Married tax allowance.........Simples.

ok their are a lot of simples who come here.

You register for married tax means you are coupled on the BIG STATE COMPUTER over 45k between the two your buggered.

Failing that Compare the Simpletons dot com

norman said...

I am a father, and when my son was young, we did not collect child benefit for 4 years and then one day a health visitor materialised and lectured us to support the benefit as she said,otherwise if enough people do not collect it, the benefit may be abolished. We did not claim it.

Child benfit is ridiculous as it links to every thing else. I can see in post offices women with burkhas and prams, very young brown and white women collecting it for their children. It is an income for them. My line of argument is, if you cannot support children why breed?

Abolish this benefit. There will be yelling about child poverty. So be it.

TT said...

Hmmmm....if Osbourne was interested in making "A Cut Which Surely Even Labour Can Support" he would have done this after the spending review.

Many middle class parents have just gone through 13 years of being treated like an ATM by the Labour government. Child Benefit was just about the only benefit they received from the State. To take it away before making serious cuts to all that wasteful spending is pretty cynical. Sharing the pain, my a***! So far the main groups to have lost out under this government have been new born babies (abolition of the Child Trust Fund) and mothers receiving Child Benefit. And you just know they're not going to stop there. Osbourne is preparing the ground for stopping Child Benefit at 16 and then rolling it into the Universal Tax Credit in the next parliament.

Meanwhile the government continues to squander billions on subsidies to French farmers, early retirement for civil servants and aircraft carriers that are never going to be used in anger.

If the government expects the over taxed middle classes to back this as a necessary step in order to get the defecit under control it needs to show that it is forcing down spending just as hard. Otherwise it is just another tax on parents.

David Lindsay said...

Congratulations to George Osborne on having just lost his party the 2015 Election. Means-testing Child Benefit? Never mind the Election; Osborne has lost the plot. Those who are going to lose out are very, very likely to vote. And these days, they cannot protest by voting Lib Dem. Think on.

Middle-class benefits are right, just and necessary. The median household income in this country is £21,320. That is the middle. Ninety-three per cent of children attend state schools. Every business is dependent on them, as it is on public transport, on the road network maintained at public expense, and the National Health Service. Indeed, hardly anyone has private health insurance, and a large proportion of those who do, have it through their trade unions. And so on.

In the present state of affairs, extremely few are those who could do without their Child Benefit, or their tax credits, or their state pensions, or their winter fuel payments, or their free bus travel, or their free prescriptions, or their free eye and dental treatment, or their free television licenses. Taking away consumer spending power is hardly the way to aid economic recovery.

Paid for by what? Not by any private sector, as that term is ordinarily used. Thus defined, there is no private sector. Not in any advanced country, and not since the War at the latest. Take out bailouts or the permanent promise of them, take out central and local government contracts, take out planning deals and other sweeteners, and take out the guarantee of customer bases by means of public sector pay and the benefits system, and what is there left? They are all as dependent on public money as any teacher, nurse or road sweeper. Everyone is. With public money come public responsibilities, including public accountability for how those responsibilities are or are not being met.

Alex said...

"Can anyone seriously doubt that in these economic times it is right to withdraw Child Benefit from people who pay tax in the 40% and 50% bracket?"

For a family with 3 children and an income of £44,000, the loss of child benefit amounts to £46 per week or about £2,400 a year. For someone at a marginal rate of 40% + 2%NI, that is equivalent to a loss of £4,132 of gross income, or about 9% of their taxble income. Quite a lot.

Why should they get it? because originally parents were given a separate tax allowance for their children, so that they were effectively treated as being jointly taxed, giving them an allowance not as large as the personal allowance available to an adult. That was changed toa benefit rather than a tax allowance to take account of families with no income.

tory boys never grow up said...

Why is this fairer than raising the additional revenue from taxes that apply apply to all well people rather than just those with families.

The Tories quite clearly lied to the electorate what they said they would protect universal benefits and that they were the party of the family.

The LibDems lied to the electorate when they said the deficit should not be cut until growth was established and over a longer period. They also lied lied when they claimed to be the party of Keynes and Beveridge.

I leave others to reach their own conclusions about the moral legitimacy of this government.

David Anthony said...

When people begin to see benefits as a last-resort, safety net and not as an entitlement and luxury, then maybe we'll all begin to grow wealthier.

tory boys never grow up said...

@Goodwin

"I see no reason at all why any state benefit should not be means-tested."

How about it wasn't what was said to the electorate - when the deficit was the same size as that susequently reported by the OBR.

David Anthony said...

...and it doesn't punish anyone. It just rewards some people over others until a better system is found.

adamcollyer said...

It's a complete lash-up.

Someone just under the threshold will lose thousands in benefit if they earn just a little bit more.

George reckons you'll tick a box on your tax return if you (or your partner) are a higher rate taxpayer. Great - except that you don't necessarily know whether you (or your partner) are a higher rate taxpayer until the tax return is processed!

That's if you fill in a tax return of course - most taxpayers don't. Is George going to make us all do that?

The whole proposal bears all the hallmarks of having been dreamed up on the train on the way to conference. Or maybe of Treasury civil servants deliberately sabotaging the Chancellor with a cock-eyed proposal - or am I being too cynical?

HarveyR said...

Plaid Whitegate.

"It punishes single-parent households."

No, it punishes single *earner* households.

The Mail headline has got it: "Fury of stay-at-home mums".

It's still a universal benefit, but in future it will be "targeted". Neat.

longrun2 said...

Maybe this time the computer will register my views...
It is ridiculous for a government to simultaneously say to a citizen "you are so poor that we will give you a cash benefit in order that you and your family can survive" and "we are taxing your income as you have more than you need". It is doubly ridiculous for the government to hand out cash to those paying higher rate tax.
OK, the cut-off may be clumsy because HMRC is incompetent but why should we feel that those liable to higher rate tax (after deducting pensions, gift aid etc) are oppressed? You whingers are an embarrassment and look like a New Labour caricature of Conservatives.

Treacle said...

Just abolish child benefit. If people can't afford children they shouldn't have them. I've paid tax for 30 years but have never received so much as a penny from the state. Why should I shell out money year after year so that those who have children can have some free money to spend on what they like? I am already paying for your children's education: why should I supply you with spending money on top?

Unsworth said...

A small point - why should those without children be obliged to pay through their taxes for those who choose to start families and, in some cases, choose stay at home to look after them?

Children do not just 'happen', parents make the choice. I'm afraid that all the Mumsnet outrage is missing the point entirely. You want children? Do the sums beforehand - and also realise that you'll be paying for them long after they have reached 18. Why do these people believe it fair to sponge off the childless?

Unsworth said...

@ Sunder Katwala

Nobody owes Balls an apology for anything at all.

Newmania said...

The Tories quite clearly lied to the electorate what they said they would protect universal benefits and that they were the party of the family.

The fact they were competing in game of lies started by New Labour does not make me feel better about it.The fact that Red Ed leaves nowhere to go shows how badly Labour got that wrong.
The reason why you should get it ,aside from the vast distortions, is that we paid for it!This is a universal benefit!

We pay the state our money as tax payers though our lives and at the time of having children they give some of it back
By removing it with this arbitrary brutality they have obliged people who are not far of median (for 35-50 year old men in full time employment )to pay for everyone else’s but not get ours. It is a tax rise in disguise and yet another attack on families. It is nothing to do with redistribution except to children from adults.

Above all when ordinary Conservative families are being kicked in the teeth why the hell are they taking our money and wasting it on their posh boy hobbies like INTERNATIONAL AID, still less Child Benefit for Polish Children.

I expect that smarmy prat is still 'blown away' by their work , the smug tit.

Newmania said...

A Cut Which Surely Even Labour Can Support

The mysterious case of George Osborne and the missing consonant has just been solved

Newmania said...

Children do not just 'happen', parents make the choice. I'm afraid that all the Mumsnet outrage is missing the point entirely. You want children? Do the sums beforehand - and also realise that you'll be paying for them long after they have reached 18. Why do these people believe it fair to sponge off the childless?



But I have been financing the child benefit paid to everyone else for my whole tax paying life.Then when it gets to my turn I get nothing. With three children the £2500 pa you get does form part of your caculations and its removal is a savage blow.
You try doing the sums when you are lied to quite explicity as late as this weekend and throughout the election campaign

You think redistributing from adults to children is wrong ok,I don`t agree but let`s say you are right. Can I please have a cheque for all the money that I have been taxed which has been spent on child benefit for other people .
We`ll call it quits, you can all sod off, and I`m happy Oh but my children are not contributing to your pension so make your own arangements and I will be voting for the Party that really does support the family whoever it is next time ,not this lying bunch of CU-TS

Why are we still expanding international AID
Why , in god`s name is the NHS ring ringfenced
Why is IDS on some egomanical idiot trip for us to pay for
Why are we Polish children in Warsaw a king`s ransom
Why are we still in Afghanistan ?

There are a thousand better candidates that hard working familes for this vicious assault

bantambabe said...

This is a crazy idea and, if I were Cameron, I would very quickly pass it off as a Lib Dem one! So, although we have a tax system which sees people as individuals, in future the higher rate taxpayer will have to declare on the tax return if there is somebody in the household receiving child benefit, thereby declaring someone else's income! Beggars belief! Why can't the personal allowance of the lower rate taxpayer or non-taxpayer be set against the child benefit as is income from savings? There is also the little matter of NI credits, (formerly Home Responsibilities), which are allocated to the receiver of child benefit and count towards your state pension, presumably they will also be lost in future? Don't even get me started on a household with two incomes of £86,000, (£43,000 each) still receiving child benefit, or the aspiration to earn more, or even take an annual pay increase when your income is around this level! I've voted Tory all my life and now wonder why I should bother in the future. Anyone for a Tea Party?

Osama the Nazarene said...

@Unsworth

No children, no one to pay for your pension when you grow old or should we expect the pension to be cut next?

Unsworth said...

@ Newmania

"We pay the state our money as tax payers though our lives and at the time of having children they give some of it back"

Some of us pay, some of us do not have children. Where's the equity there?

Unsworth said...

@ Osama the Nazarene

Let me put this simply:

Having children is a personal choice, not a right.

Getting old is not a choice.

See the difference?

Newmania said...

Some of us pay, some of us do not have children. Where's the equity there?

Do you suggest society reflects a small minority or the vast majority?

Or just you

Unsworth said...

@ Newmania

Not too sure what you may mean by 'reflects' - care to elaborate that term? And I'd like to take a very close look at the demographics of your position.

However, what you seem to be saying is that there are inequities - but we should ignore them. Why?

As to 'or just you', well tant pis.

See, what gets me is that there are some in society who believe thay have greater rights than others - in other words they have the right to start families and in so doing oblige others to contribute to their coffers, their household budgets, their children's education and welfare.

As I said, where's the equity?

Osama the Nazarene said...

@Unsworth

This is not a matter of choice it is a fact of life. Today's youth, including my kids, will be paying for mine and your pensions. That is the way our society has organised pension provision since their introduction at the start of the last century.

Aside from any philosophical position on the maintenance and renewal of our society to which you appear indifferent there is this very practical point to consider. Hence my question "...or should we expect the pension to be cut next?

Unsworth said...

@ Osama the Nazarene,

Given that I have made enormous provision for my pension over the years your children will not be paying for it. Those contributions have been accruing interest of forty years in various markets. That payment of interest is more than adequate for what remains of my life. Indeed it is probable that my estate will be taxed at ferocious levels to pay for your children and their pensions. You see any State Pension - derisory though it may be - is a mere repayment of some of my contributions to society through the various taxes which successive governments have taken.

True, I am indifferent to the 'renewal' of 'our' society. Why should I be otherwise?

And I take it you do understand that contraception is now widely available - that's a 'Fact of Life'. Whether it is used is a matter of choice.

timbone said...

In 1944, plans were being made for a post war Britain, which included a welfare state. This was a socialist ideal, and the numerous benefits, for reasons both political and idealistic, were based on equality.

Times were different then. In a society not at war, on the whole, men worked and women kept house and raised a family. The working class male was a substantive part of the population, and was not terribly well off. Family Allowance as it was then called was benefit which ensured that the working class family had enough to feed and clothe their children adequately.

Let me jump forward to 1977 when my first child was born. For reasons beyond our control, both my wife and I were unemployed. When our second child was born in 1980, I was doing my PGCE and my wife was a Tupperware Agent. Child Benefit was both welcome and necessary. Jump forward another ten years. We were both now firmly established in the teaching profession, so our joint income was very healthy.

This is where I may not say what you want to hear. If in 1987 we had been told that because of our household income we would no longer receive child benefit, my reaction would have been, ‘that’s the end of some extra pocket money, but fair enough, we don’t need it now’.

1944 is a long time ago. There are still people who need and deserve child benefit, but there are also many who don’t. Notice that in my hypothesis, my own child benefit would have been stopped due to a comfortable household income. This is the bit Osbourne has not thought through.

Alex said...

More importantly is it fair that non-Labour voters should have to share the burden of the Labour debt? I think the labour-debt cuts should be targeted mainly at Labour voters as it is they after all who sanctioned and allowed Labour to run up the debts in the first place. Hence The Public Sector, the north of England and all of Scotland should bear the majority of the labour-debt cuts.