Tuesday, October 05, 2010

Is the Prime Minister for Turning on Child Benefit?

I haven't spoken to a single representative here at the conference who has welcomed, without reservation, the child benefit announcement yesterday. To a man and a woman they all think the principle of taking benefits away from top rate taxpayers is correct, but like me, they all believe that the anomalies need to be sorted out - and sorted out quickly. It's no good Cabinet Ministers going on the airwaves pretending that everything is sorted and that all is sweetness and light. Any fool can see that there are issues to be resolved here. David Cameron has an acute pair of political nostrils. And if he is sniffing the wind this morning I think I know what he will smell.

Ignoring the detail for a moment, I think it is worth asking how we got to this point, because the whole thing has come as a very unpleasant surprise. The hallmark of the first six months of the coalition has been the rigour of the policy formation process. Policy is tested again and again between the coalition partners. You have to ask if that happened here, because it would appear not. Good policy is tested and tested and tested again - not just for the political consequences, but to see if it is fair and will work.

We all know there will always be winners and losers in any reform of the welfare state. It goes with the territory. But you have to be explain to losers why they are losing out and the reasons for it. Most people will understand, if they can see both a logic in the argument and an inherent fairness. What they won't understand is a policy which is transparently unfair and full of anomalies.

Another issue here is aspiration. Everyone on £35,000 wants to earn £44,000. But it will no longer be in their interests to do so. Indeed, they will be asking their employer not to give them a pay rise which takes them into the 40% tax bracket. Madness.

Finally, we must not lose sight of the real issue here. It is economic madness to give benefits to people who don't need them. I don't believe anyone capable of paying the 40% rate of tax should be entitled to claim ANY benefit at all. Remember, that's a takehome pay of £3,000 a month or not far off. Why on earth should a basic rate taxpayer on £20,000 a year contribute to benefits for someone earning more than £40,000? Indeed, why should a Mum earning £12,000 a year on a supermarket checkout contribute to it, either?

I don't think there are many defenders for universal child benefit any longer. And those that do defend it need to examine their motives for doing so. But that should not mean that the coalition should view this as an easy political hit. I agree they have the right policy, but they also need to get the detail of it right, and demonstrate a willingness to do so. At the moment, we are very far from that place.


Lady Finchley said...

Agree. Very sloppy indeed.

Of course my friends and relations in the States are aghast that this Government gives out money wily nily to all whether they need it or not. Universal child benefit is an anachronism and all the Boden wearing yummie mummies on mumsnet should be clever enough to know that. Why should my taxes go to their little darling's university fund/first home fund etc?

I am a basic rate taxpayer and except for the period where we lost our business, we never NEEDED the Child Benefit - it was just nice to have. I never took into account Child Benefit when I made the decision to have a child and it is ludicrous to think anyone has.

I have said it before and I will say it again - if you can't afford a child or more children, then don't have them - it is not a God given right.

In the States the tax system recognises children inasmuch as you can make a tax deduction for each dependent and you don't have to be married to do this. We need to think about something like this or transferring tax allowances between spouses.

But really, enough of this faux outrage from the middle classes and professional mummies.

Mostly Ordinary said...

I'm still extremely angry at the Tory Party for this and I'm pretty sure I'm just going to get angrier.

Firstly - the admission from them that the anomaly is too difficult to sort out so they took the path of least resistance - so much for a 'firm but fair' tax system. What they are actually just targeting easy marks.

Secondly - the family allowance was the only direct benefit my family got from the ever increasing tax burden we're facing. The money is actually irrelevant it's the principle that I got a token gesture of about a grand a year for the 30 plus grand they take in taxes.

I am one of the many people that earn enough to be taxed at the higher rate but whose standard of living it being consistently eroded because we're simply the easiest people to target.

So much for David's promise to support the family through the tax system.

I'm a Tory Party member and I am fuming at this.

Mike said...

"Why on earth should a basic rate taxpayer on £20,000 a year contribute to benefits for someone earning more than £40,000?"

I've heard this a lot - and its total rubbish..

Someone paying higher rate tax is paying *their own*...

AVI said...

Iain, you indulge in two misconceptions, IMHO.
A Mum on £12k isn't subsidising anyone's child benefit; her taxes barely pay that which she herself receives.
Those earning towards the 40% tax bracket are more likely subsidising the low-earners as well as paying their own. Those earning above the 40% threshold are not only paying their own, they are certainly subsidising everyone else. Anyone receiving child benefit who earns enough to place them in the 40% bracket isn't really receiving a benefit at all - it's just the same, overall, as a small tax allowance, leaving the overall rate still approaching 40%. No-one else is subsidising this at all.

On from that, it is far preferable, as a rule, to make benefits universal. It removes likely cheating and colluding from those around the threshold of means testing, it removes vast layers of testing and bureaucracy (which as we know, with time, only increase and increase), removes ever-increasing swathes of personal data being held by the state... Universality in benefits is a fine idea.
I seem to recall some statistic from the early days of Blair when some new allowance was introduced for the worst off pensioners which showed that for every Xpence paid out to a pensioner, it cost £3-odd to administer. It would have cot the government less to have paid the same Xpence - or even fractionally more - to all pensioners. That's the best way to do it.

(As an extension of that, the concept of a Citizen's Income is rather appealing, where everybody receives a "benefit", but for most it is imply in lieu of the non-taxable first £Z of earnings we currently have. It would make little difference to anyone in a job, and little difference to the amount received by those out of work. I would remove layers of form filling and time-consuming red tape, however, and that would be "A Good Thing")

FF said...

There is a logical, fair and straightforward way of dealing with the anomalies. Which is to say families rich and poor have expenses in bringing up children and this should be recognised in the combined tax and benefits system. The poor get more in benefits than they pay in tax and the rich pay more in tax than the nominal value of their benefit. But in either case families get more benefits or pay less tax than singles. If you need to raise more tax to pay off the debt, you increase the tax rates rather than cut the allowances for families.

But I realise this idea has perception problems of its own. Many people maintain a moral difference between benefit payments and cuts on the one hand and tax cuts and rises on the other. They don't want the two things muddled up.

strapworld said...

Perhaps the only fair solution on child benefits would be to abolish them completely! Why should the State pay for couples to have children? If they cannot afford them, then the State should take those children into care, and offered for adoption.

The absolute nonsense coming out of the mouths of, supposedly,educated people,also from newspapers and television/radio commentators makes one wonder if they are aware of the drastic economic situation this country is in!

If this critical crying over those on £40+ not getting child allowance, when in parts of this country 15-18K is the average wage makes me believe the whole country is MAD.

So, when the full announcement of cuts is made I expect the media and everyone crying their eyes out demanding special treatment for this or for that.

The bully boys of the unions will try their hardest to create havoc. The lefties and their rent a mob crowd will assist them as much as they can.

The BBC will do their best to destabalise the government. Neil on the Politics Show, this morning, was quite disgraceful. Even complaining about 'brassed bands' and 'modern dancing' just when will Cameron and his ultra weak mates take on the BBC and kick them up their backsides?

I am now of the view that the pressure will be so strong that the coalition could break up bringing a general election and this country getting the Labour Government to continue their work in completely ruining this country and delivering us into the hands of the EU totally.

Once a Nation of heroes this country is now a land of wimps. The rise and fall of the British peoples.

For goodness sake it is time people acted their age and with responsibility. Asking themselves What can we do for our Country NOT as it appears What can the Country do for me.

BlackDog said...

Well said Ian. Could not agree more with your analysis.

notayesmanseconomics said...

I agree that this policy needs some revision to say the least Iain.
It is unfair on those who are either single parent families or have only one parent working. More thought should have gone into this area.
However as an economist my challenge to it is more fundamental. If Ian Duncan Smith wishes to improve our benefits system as I believe he does then he will have to work at eliminating the so-called poverty traps which bedevile our system.
As this leads what is in principle the same the problem albeit at higher incomes it is a bad move.
For those unaware of the problem I wrote this on my blog yesterday.

"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."

John Hayward said...

As I noted yesterday, it is also madness because, as with current tax credits, the proposal would reward couples who separate. The last thing the welfare system needs is another change that encourages parents to 'live apart together'. This is hardly the way to build a Big Society!

Newmania said...

Why on earth should a basic rate taxpayer on £20,000 a year contribute to benefits for someone earning more than £40,000?

Jesus Iain you have such a tin ear on this ,its driving me crackers

1- This basic tax rate payer DOES NOT pay for me .WE PAY FOR OUR CHILD BENEFIT ...US.... OUR MONEY... .The state took it on the understanding it would be given back when we needed it Now it is keeping it and that was not the deal ! You will recall how the deal was still on prior to the election.

2 It has nothing to do with redistributing from one adult to another it redistributes from all adults to children. Perhaps you do not think we ought not to after all it is only 50 years old .What Conservative would when he got stick his head up his year zero ideological arse instead ...?

Then who will be paying for the pensions and who will be buying your books and who will be keeping the place afloat fighting its wars, earning its money .It is already so appallingly expensive to have children that our birth rate is imploding What’s the answer Iain, more immigration ? Great you are a Conservative that does not care about either families children or the future ? Perhaps you have a point . OK then seek election on that basis or sod off so we can have real Conservative back.....now would be good for me !

3 If you do not agree with the 50 year old concept of Universal child benefit then can those of is who have paid for the benefits other parents enjoyed please have our money back ? The deal has changed and it is not going to be just my bit of it
Why is the wasteful NHS ring fenced
Why are we actually increasing International AID
Why are Public Sector wages not cut Private Sector ones have been
Why are we paying benefit to Polish children in Warsaw ?
Trident stuff it I do not want to pay
Afghanistan.. not with my money

3 £44,000 will be £42,000 next year that’s a nice slap in the face for anyone trying to get on and by 2013 that will be worth £40,000....

Iain that is about the median wage for a 35-50 year old man with dependents in full time employment in the South . We are not rich people we are ordinary people with old cars no holidays. People who work , who have tried to get on people who vote Conservative in their millions ,people who trusted the Conservative Party PEOPLE WHO HAVE BEEEN LIED TO

Does it mean nothing that we have been repeatedly assured this would not happen right up to last weekend .A foot on our necks for ten years of New Labour and the first thing those smarmy lying bastards do is exactly the same thing.

What is the point Iain , what was the point of all those leaflets , you tell me ? To keep two invertebrate public school prats in a job?

Newmania said...
This comment has been removed by the author.
Disquieted said...

I'm fuming about this. Doesn't the party support the nuclear family any longer?
My wife is at home looking after our children and I earn 44K so just get pulled in to this. My wife's tax allowance has not been transferred to me, we don't get any state support for childcare, yet our friends (both working, both earning around 30K) get TWO tax allowances AND state support for childcare AND will continue to get the child benefit.
If this goes through as it stands, the Conservative Party can have my membership card back in the post.

Newmania said...
This comment has been removed by the author.
Newmania said...

And those that do defend it need to examine their motives for doing so.

..and those who want to dump people with responsibilties in the shit to make a stupid point should exmaine their own selfish lives and give us a Party that supports us .

starfish said...

This is an inevitable consequence of a ludicrously complicated tax and benefits sytem

Instead of tinkering with it why not start with a clean sheet of paper?

BTW I still don't know why anyone with a combined/single income of £40k plus needs child benefit

What a sorry mess this country is in

IvorBiggun said...

"Why on earth should a basic rate taxpayer on £20,000 a year contribute to benefits for someone earning more than £40,000?"

Perhaps because one has dependent children and the other doesn't - our country needs British children to maintain its population - unless we want to go on importing immigrants, their children, their culture and so on.

Also, what Mike said.

As usual Strapworld has more than a few buckles loose... :-)

tory boys never grow up said...

"The hallmark of the first six months of the coalition has been the rigour of the policy formation process."

You are really fooling yourself if you believe this e.g.

This current mess.
The abolition of the Audit Commission and other quangoes without thinking through how their future roles would be performed
The announcement of changes to NHS funding arrangements.
Changes to the arrangements for fixed term parliaments.

tory boys never grow up said...

"I don't think there are many defenders for universal child benefit any longer."

Yet again you are fooling yourself.

Given that you don't think that there is an argument for universal benefits can we presume that you will be arguing for the withdrawal of the state pension and the additional personal tax allowance from those OAPs paying higher tax rates? Or do you believe that OAPs are somewhat more deserving of such support than children?

You appear to be falling into the old Thatcherite trap of beliveing something is true just because you say it is. There is always an alternative.

Newmania said...

Is there anyone else here commenting who actually has young children by the way. Who knows what child care costs, who is paying a mortgage in the South of England who runs a tight family budget?

Am I the only one who knows what this means ?It sounds like it we are usually too busy for blogging but not too busy to vote..or in this case abstain and withhold support

tory boys never grow up said...

"Why on earth should a basic rate taxpayer on £20,000 a year contribute to benefits for someone earning more than £40,000?"

He/she shouldn't - the £1bn required could easily be obtained by taxing those on even higher salaries.

Why is the additional tax from higher earners being raised by waht amounts to a poll tax on those with children, or doesn't the concept of fairness apply among higher rate tax payers. Remember what Adam Smith said about the tenets of taxation?

Lady Finchley said...

Lucky old you, Disquieted, that your wife gets to stay home with your children. Most women nowadays don't have that luxury. Why should I pay for your choice?

If things are tight perhaps she can get a part time job. Having children or indeed staying at home with them is not a divine right. We limited ourselves to one child because we did not feel society owed us anything.

As for our children buying Iain's books, paying our pensions etc etc, isn't their education already subsidised by all taxpayers - whether they have children or not, or whether their children are in State education or not?

Fishter said...

I feel I need to correct Iain on his maths. An adult with the standard tax allowance, putting 6% into a pension, will have to earn £46675 gross. This is £2680 a month. Not the "takehome pay of £3,000 a month or not far off" that Iain has in his article.

http://listentotaxman.com has a useful calculator

Jimmy said...

"Why on earth should a basic rate taxpayer on £20,000 a year contribute to benefits for someone earning more than £40,000?"

You think the basic rate payer is a net contributor to the higher?

I'm beginning to understand where Gideonomics comes from.

Lady Finchley said...

Yes, Newmania. My son is 20 now and in university and I am only too aware of the cost of bringing up a child and it seems we are still paying!

Both my husband and I were/are basic rate tax payers and I had no choice except to work. We made the choice to send our son to private school until he 13 and we could no longer afford it, due to losing our business. Until that time we still were able to do this and have a foreign holiday a year and we live in London with London prices. We made certain choices - we knew that if we wanted to have this kind of life we could only afford one child. In other words, we cut our cloth according to what we had. I always felt embarrassed about Child Benefit despite being FAR from well-off. It irks me no end that the spoilt darlings on mumsnet are outraged. Perhaps they can do one week in Tuscany instead of two or don't buy so much at Boden.

starfish said...

@ tbngu
'He/she shouldn't - the £1bn required could easily be obtained by taxing those on even higher salaries.'

And that is the esential difference between us

Why on earth should someone have to pay half, yes half, of his income to the state before he can support his family?

How can we have got ourselves into a situation when ANYONE can think this is morally defensible just so that other people can sit around on benefits?

It is a ludicrous stae of affairs - the whole tax and benefits syem needs completely dismantling and rebuilding from the bottom up

Income is OURS not the state's

Disquieted said...

Why should the government stop with this?
Despite the fact that those earning 44K have supported all of our children by paying for OUR child benefit and OUR kid's education over the years, let's screw them down a bit more. Make them pay for private education!
After all, why should lower rate taxpayers fund the education of the children of wealthy higher rate taxpayers?

Come on Mr Osbourne, you know it makes sense.

Lord Blagger said...

Finally, we must not lose sight of the real issue here. It is economic madness to give benefits to people who don't need them.


It's fraud to take money from people for a service and to not provide it.

ie. We will take your insurance money, but if you need to go into a care home, we won't supply it.

We will take money to pay for child benefit. However, if you have a child we won't pay out.

We will means test the state pension.

We will make you pay for politicians mistakes in running up debts, even though you weren't to blame.

We will make you pay through the nose for our pensions, our tax free expenses (tax evasion by MPs is legal - they voted themselves an exception).

What's fair about it? Nothing

Lord Blagger said...

The poor get more in benefits than they pay in tax and the rich pay more in tax than the nominal value of their benefit.


Except that the plan is that the middle class and above get nothing.

Why pay for a service that doesn't exist?

Torontory said...

Not only have I never understood the point of universal child benefit, I have never understood why there should be any child benefit at all. Parents - potential and actual - should exercise fiscal responsibility and only have children if they can afford them.

Clearly the state has a responsibility to alleviate the suffering of those in poverty and the number of children in the family will be an element in calculating the level of support required.

There is no rational argument for paying people to have children when there is already over-population. It is an historical anachronism from a bygone era and should be abolished; those needing support should get it from other (means-tested) benefits

Korenwolf said...

As others have mentioned the implementation is anything but fair. We are a single income house through because we have no choice, this change will hit us, while two income families on more will continue to claim.

So it's unfair for us to claim but fair for a household on a larger income taking advantage of both tax allowances.

I call unthinking bulls__t on this policy, and that someone wants to score a political point so the tories can point at this and say "See we're hitting the 40% tax band earners"

Peter said...

Why not get rid of the benefit altogether and give parents tax allowances in the same way as married persons tax allowance. Variations in tax codes could allow for parents on lower incomes to get more, gradually tapering off as income rose. Parents on benefits could also be compensated by increasing child tax credits.

ToryMum said...

As a stay at home mum to three young children, with a husband earning just over £44k, I will lose child benefit.

I understand the need for this, and accept it.

What I cannot accept is a party I voted for and campaigned hard for, making the cut in such a wholeheartedly unfair way. Please don't cop out by saying it is too expensive to means test the cut. This doesn't make the reality that a couple next door both earning £40k each will keep their child benefit, whilst someone in my position loses theirs.

And Lady Finchley, I do not expect society to pay for the children I have chosen to have. I agree with Disquietened, in that, given the amount my husband pays in tax, child benefit is really just a tax break.

We do not depend on child benefit - we have tried not to, as we knew it was something that could be cut.

And Lady Finchley needs to stop being so patronising and telling people like myself how lucky we are to be able to afford to stay at home with our children. Wrong. Yes I am incredibly lucky to have my children. But being in a financial position to give up my career to look after them has nothing to do with luck. For years beforehand, we saved, took careful financial decisions (including buying a smaller house in a cheaper area), and went without lots of foreign holidays, whilst plenty of friends without children were jetting off a every opportunity. Responsible planning. Its what intelligent grown ups do so that they have genuine freedoms about how they run their lives.

I annoyed by society and politicians sending out the message it values all other family choices and make ups over that of the traditional mum at home and dad at work set up. So let's cut child benefit to reduce the deficit - but apply it to everyone. And let's scrap all the subsidies for mums who choose to go out to work - starting with tax breaks over child care.

Mostly Ordinary said...

"Newmania said...

Is there anyone else here commenting who actually has young children by the way. Who knows what child care costs, who is paying a mortgage in the South of England who runs a tight family budget?"

Me, this is a £1000 tax increase in my book. It's also something they promised not to do.

As has been pointed out by lots of people finding a family where one person earns more than 45k isn't hard. In fact where I live in South London it isn't hard to find people fuming that they are facing a 1k - 2k tax hike.

I'm amazed how the Government I voted for can't grasp the simple concept that middle income families are having a very hard time after been milked relentlessly for the last decade.

For goodness sake could they at least change the tax system so we can use partners tax allowances.

I feel very let down.

Ian said...

High taxes pay for the benefits (and the enormous bureaucracy that goes with the benefits).

The Government's message should be that ideologically they are committed to stop unnecessary recyling of tax revenue and ultimately the aim should be to reduce the tax burden.

Secondly - in the rethink that is now inevitable - I just pray they have the sense to scrap the anachronistic universal child benefit in the entirety. Child tax credit already provides enormous assistance to those with children on the lower end of the scale. (Lets face it tax credits are welfare - they are a benefit and nothing to do with a credit on the amount of tax you pay.)

Disquieted said...

One earner on 44K is NOT the same as two on 22K i.e. the two tax allowances make the couple much better off. Yet this couple, already much better off, will also be getting child benefit paid for by the couple who are worse off.

If you think this is fair, then your definition of fair is off the mark.

Mirtha Tidville said...

My God the selfish ones are out in force today Iain..I agree with all you said. The middle classes already get Health,yes education for their kids, Police, Fire services et al..If you are lucky enough to earn north of 44k you ARE rich..Trying bringing up kids on less than half that without your wife working..

This benefit does need to go but Cameron and the `Boy` George really need to sort out the household versus individual income aspect and rules or it WILL end up a farce that will cost them dearly.

Step in the right direction though..oh yes and I AM a Tory supporter....

Piers said...

Apologies for cross-posting (Dizzy etc) and as ever I'm prob missing something (or perhaps the Coalition has missed an opportunity of presentation): childcare arrangements for working couples.

Removing child benefit from the non-working half of the couple could be seen as ok because that person is presumably at home to look after the children. If both are working then the extra benefit (or all of it) is used – and be proved to be used – to help pay for third party childcare arrangements otherwise it is lost.

Plus bonus economic argument brought to bear on the situation: more money circulating among nannies, nurserys & childminders and an incentive to go out to work.

Mostly Ordinary said...

Torontory said...
Parents - potential and actual - should exercise fiscal responsibility and only have children if they can afford them.

Where do you live, can I come there? I'd love to live somewhere that income, taxation and cost of living all rise at the same levels, for 16 years.

Lady Finchley said...

No Tory Mum, you are damn lucky to even be in the position of staying home with your children. You chose to have the children, you chose to stay home - so you were careful - do you want a medal? You made the choices - I just don't have to reward you for them. Just as I don't expect anybody to reward me for mine. I do however agree that the Government has to do something to correct the anomaly. The American idea of deducting for dependents would be the way to go and would not penalise umarried couples.

The only thing I agree with all the Moaning Minnies - our rate of tax is crippling. However, if you want a National Health Service and a cushy welfare system - you pay for it in taxes. Do the math.

Oh and by the way Tory Mum - I never had any subsidies for childcare - it came out of our own pocket. Only parents on low incomes get that. And if you don't depend on Child Benefit why are you going on about it? Sense of entitlement?

Jerusalem Posts said...

It looks like the government will do a u-turn on everything they said before the elections. The Child Benefit fiasco is the Tories 10p tax moment and will lose them a lot of support.

They're already trimming off front line services for the disabled, and have already cut the care packages of tens of thousands of disabled, elderly and bed-bound people.

Instead, couldn't they opt to penalise some of the Tory councils like Barnet, who have awarded themselves a minimum of 60% pay rise, with Brian Coleman being paid £124,428 for doing FOUR jobs, none of which has his full time attention.

I hope that these greedy, grabbing Councils won't be heralding in a new era of financial corruption.

Right now, the future looks pretty gloomy for the Tories for whom I had such high hopes.

Newmania said...

Lady Finchley

So I paid for your child benefit but you will not be paying for mine.Great deal for you then.
You may feel free to send me a cheque any time you like.
This is £2500 tax hike for me and if you do happen to have that down the back of the sofa .....cash will be fine thanks

(We`ll get by but it is a terrible blow :) )

Yes Tory mum , we also had long term plans that used to add up ... we are in a mess now and it all that lying bastard Osbourne and his smarmy boss Cameron`s fault

I cannot belivee I actually went around delivering leaflets for the lying snob and his cretin side kick.

Never again

Lady Finchley said...

Wait, Newmania, how did you pay for my child benefit? I am a basic rate tax payer, always have been so why should I subsidise someone on higher rate? Why should I give you a bloody thing? Where did you get such a sense of entitlement? If you're feeling the pinch - like we all are - cut back. Maybe your wife can get a part time job.

And actually if you read my post properly you'd see that I think Child Benefit for everybody except those on low wages is obscene.

Lady Finchley said...

Oh and Newmania - you can forget about that £2500. Even though I put money by for a private pension (not a vast amount, I admit, only what I could afford)I will have to work until I drop. So suck it up - I have.

Lord Blagger said...

The question, what's fair is not being answered.

Why shouldn't the people responsible pay the price? Parliament. They have run up the 5,000 billion plus of debt.

Time to take their pensions, cut their salaries to start paying for it.

All they want to do is for me to cut my spending on my family, so they can live in luxury and avoid paying anything for their errors.

It's a bit like saying, we only jail agrophobics. After all they can deal will prison the best.

Disquieted said...

It's been announced that the government will also introduce a marriage tax allowance.
So they're taking from some couples with children and giving it to couples that do not have children!

It's also been announced that they will look into transferable tax allowances.

I can't help think that they're in a tizzy and making policy on the hoof.

Jimmy said...

It would be interesting to hear the LibDem perspective on govt tax policy being made up on the hoof at the Tory Conference.

This is going to be fun to watch.

jbw said...

Newmania said...
Is there anyone else here commenting who actually has young children by the way. Who knows what child care costs, who is paying a mortgage in the South of England who runs a tight family budget...

Yup. Totally agree with you.

All I can say is they didn't get my vote last time and they won't get it next time either.

Roll on VR!

Robert said...

The reason why every mother should receive child benefit is that it is a very potent symbol - a symbol which says that society values children, recognises that we all have a part to play in their upbringing, and that being a parent is hard and that society is willing to help all parents.

So much for the party of the family!!

ToryMum said...

Lady Finchley, you need to read people's responses properly before reacting.

I do not have a sense of entitlement when it comes to child benefit. I said quite clearly in my original post that I accept the need to cut it for people in my position (stay at home mum with husband earning £44k) as I can do without it.

But I do have a strong sense of fairness. And whatever way you look at it, a household with an income of £82k should not be keeping child benefit when it has been cut for a household like mine on almost half that income.

Don't be so quick to pigeon hole people, Lady Finchley. I had sympathy with many of your comments re. Mumsnet posts and Boden. And no, I do not expect a medal for being responsible. Just a government I campaigned to get elected to fulfill its promise to be family friendly and fair.

ToryMum said...

Lady Finchley, you need to read people's responses properly before reacting to them.

I do not have a sense of entitlement when it comes to child benefit. I said quite clearly in my original post that I accept the need to cut it for people in my position (stay at home mum with husband earning £44k) as I can do without it. Indeed, I have always spoken up for the view that people like myself should not be entitled to receive child benefit or family tax credit.

But I do have a strong sense of fairness. And whatever way you look at it, a household with an income of £82k should not be keeping child benefit when it has been cut for a household like mine on almost half that income.

Don't be so quick to pigeon hole people, Lady Finchley. I had sympathy with many of your comments re. Mumsnet posts and Boden. And no, I do not expect a medal for being responsible. Just a government I campaigned to get elected to fulfill its promise to be family friendly and fair.

Osama the Nazarene said...

An unintended consequence of this measure, as well as attacking aspiration, is encouragement to tax AVOIDANCE (not evasion) by paying extra pension contributions rather than taking salary increases.

Beowulff said...

What kind of tax system is it that penalises someone with 3 kids such that if they earn just over £44,000they lose £2,400 and then have to earn another £6,000 before they get any incremental benefit for their efforts.

The message is Forget aspiration or effort. Keep your salary under £44k and go home early.

If this is modern conservatism they can stuff it. I'd rather vote for a declared socialist than this nonsense.

How stupid can they be not to have worked this out ?

Newmania said...

Lady Finchley-

Simple stuff.I am tax payer. I have therefore contributed to child benefit, not only your £19,000but for many people far wealthier than me.
Not a problem ,don`t mention it , no really no need,we all got a turn ..or so we thought .
When it comes to my turn , however , the tap is turned off after a specific promise that it would not be.

You will never have to contribute to my benefits as I have to yours . You get £19,000. I get sweet FA. That was not the deal. If the deal is off I would like my money back

Thats all

PS... and I would like idiot Oaborne and liar Cameron`s heads on spikes also .

Trust OK



Twig said...

I'm glad I didn't vote for them.

UKIP's Policy
* Child Benefit, the Child Trust Fund, Child Tax Credits and the Education Maintenance Allowance should be merged into an enhanced Child Benefit payable for each of the first three children in each family.

* The Childcare element of Working Tax Credits, Early Years Funding, Sure Start expenditure and the tax relief on Employer Nursery Vouchers should be replaced with flat-rate, non-means tested nursery vouchers to cover around half the cost of a full-time nursery place for all children aged two to four.
Future generations will marvel that we gave up so much, with so little in exchange, and without even a token resistance. Sometimes, I despair for my Country.

Roger Helmer MEP

eb said...

A true "heir to Blair. Nothing thought through, policy on the hoof. Policy statements to please a section of the electorate regardless of their subsequent implementation, or lack of. Why did the Tory party ever choose Dave?

tory boys never grow up said...

Lady Finchley

Perhaps you should look up the word democracy and then tell me when thsi proposal was put to the electorate. But don't worry it will be over the next two years in local elections - perhaps then you can come back and lecture us as to why your proposals are right.

Like Newmania I live and work in the South East and I have a family and if today's reaction at work is anything to go by I haven't seen mich support for Osborne or Cameron, or for that creature without a backbone called Clegg.

Universal benefits mean that everyone cross subsidises what the public sees as goods. Until today those public goods include support for children (which you were quite prepared to take I note) and the old. If you want to shift the tax burden from the poor to rich there is a very good mechanism that can be used - it is called income tax.

Reducing the take home pay of some of those on c£44,000 with children by c10% while some of those on much higher salaries experience much smaller % reductions may be fair in your eyes - but I very much doubt that it will be a view shared by the public as a whole.

DeeDee99 said...

If you think it is fair to ask the question "Why should we tax low income people in order to pay Child Benefit to high earners" then it is even fairer to ask
"Why should we tax low earners (or any British people come to that) in order to pay Child Benefit to recently arrived immigrants who have never paid a penny into the UK tax system."

"Why should immigrants be able to claim Child Benefit from UK tax payers to fund children they claim to have but who are not living in the UK." Do we have any concrete proof these children exist and are even theirs? NO.

Before Cameron starts cutting Child Benefit to higher income tax paying British people, he should be eliminating the Child Benefit paid to Poles, Lithuanians, Slovakians, Czechs, and the rest of the influx from Eastern Europe which has turned up here in recent years.

newmodelarmytrooper said...


We really are fighting amongst ourselves here. Divided and conquered?

I say that as a HR taxpayer (only just tho) whose wife works part time cause we need the money. My house cost approx £65K 12 years ago. Hardly a mansion. I drive a 9 year old car, my wife a 5 year old car. I do not see us getting a holiday next year as we are dipping into our savings just to live.

Be under no illusions, basic rate taxpayers do not subsidize me in any way. The real problem here is the poor. Thats right the ones everyone seems so worried about. Guys like the burgler who got 120hrs community service 4 years ago and who I see hanging about street corners at lunchtime. Can someone explain to me how he is being made to do his bit? Him and the millions like him should be the first to suffer. Then we can top up from the likes of me. Lets just get the tories focus there where it needs to be. I will find a way to communicate this to George and Dave so they are left in no illusions.

drphilyerboots said...

This is an effective tax rise of £1-2000 for a higher rate taxpayer with family. This comes on top of the freezing of tax thresholds increasing the number in higher rate, the increase in National Insurance, the withdrawal of personal allowances at £100 000 and the 50%tax band.We have vastly increased university tuition fees to come. This integration of Tax and benefits means that a benefit cut is the same as a tax rise, in terms of the pound in ones pocket.

I have no problem of paying my fair share, but the continuous "soak the rich" meme does the Tory party no favours. The top 10% of earners already pay 50% of the income tax in the country. Is soaking this group further really good politics?

Why do we have Child Benefit at all? if you cannot afford children you should not have them.

Its not worth trying to better yourself with hard work in this country any more. Welcome back to Seventies Socialist Britain, courtesy of the Conservative party

HarveyR said...

Is there a by-election soon?

Should be fun.

Opinicus said...

There is no politically safe way to reform the Welfare State. It cannot be done piecemeal like this.
Only a wholesale reform like a Citizen's Wage will produce a tabula rasa that precludes comparison. If the watchword is Together in the National Interest then this sort of divisive decision is doubly counter-productive.
Who was the political genius that came up with this disaster?

Thorpe said...

@ Lady Finchley 5:49pm

It's a standard tenet of tax calculations that basic rate taxpayers do not subsidise higher rate taxpayers in any form. In reality, standard rate taxpayers cost central Government more each year than they raise in revenue. They subsidise no-one.

By the same calculation, higher rate taxpayers contribute more each year than they cost central Government. They subsidise others.

The interesting calculation is over a whole lifetime. And you can see which way this is going.

Long-term higher rate taxpayers tend to make more use of private education and private healthcare than do long-term standard rate taxpayers, costing the Government less. They tend to live in houses which attract a vastly higher rate of council tax than do standard rate taxpayers, despite only actually costing councils the same. They tend to have more expensive cars, attracting higher motoring charges and taxes on fuel consumption. And so on, and on, and on, and on.

Cut to the chase. If every higher rate taxpayer pushed off, the rump in the UK would be absolutely pickled, with zero credible long term future.

Toby said...

I love the idea that someone who calls herself Lady Finchley is accusing other readers who disagree with her of having a "sense of entitlement"!

Lady Finchley said...

And if you read my posts properly, Tory Mum, you would see that I said the same thing. It is something that needs to be corrected. But you know what, life ain't fair. I will never be able to retire despite contributing to a private pension for 25 years. I have to suck it up and so should all the middle class whingers about their precious child benefit. Particularly when so many of them use it as a trust fund for their children or to buy optional extras.

And if the loss of a grand a year is going to hurt so much, the stay at home mother can always do a part time job. Way back in the olden days, the 1950's, my mother took in typing to supplement the family's income. But then again that was a time when people didn't whinge about their 'rights' and in a place where 'universal benefits' were unheard of.

Lady Finchley said...

Newmania and all the other whingers - man up and suck it up. Poor you - boo hoo.

And Thorpe - you are so patronsing. My husband and I are both basic rate taxpayers and we have contributed plenty to this country in taxes. Outside of Child Benefit which I maintain is obscene for anybody but the poor, we have never qualified for any extra help. We scrimped and saved to send our son to independent school and pay our share of council tax - our home is in Band D. But most of all we contributed to society and the community in non-financial ways such as giving our time to charity and people in the community. But then again, with people like you it is all about pounds and pence.

Patrick said...

The BBC are making a right old meal out of this.

I bet the Tories wish the BBC were on strike after all!!!

Gareth said...

The anomaly is with the tax system not the benefits system. As it stands you can already have a couple both on less than gets you into the higher rate band paying significantly less tax than a single earner with the same earning as a couple combined.

Two people earning £43K each pay significantly less tax than someone earning £86k as you have two lots of personal allowance.

With any policy there must be 'winners' and 'losers' otherwise you are not changing anything. The mistake Labour made many times was fudging welfare and economic decisions, often after an initial decision had been made, in an attempt to ensure no one was disadvantaged.

There are a number of things that could have been done other than this announced measure but it is at least a start in a direction. Replacing child benefit with tax allowances would be a much better option imo. Limiting child benefits (whether cash or tax allowances) to just two children for future claimants would stop the burden from growing.

Lord Blagger said...

My husband and I are both basic rate taxpayers and we have contributed plenty to this country in taxes


You might not be paying enough to be a net contributer.

The government spends 12K a year per person. You need to be on about 40K to just break even.

However, you are correct in your ideas on tax deductions for each dependent. Spouses should be able to share their income as though each earned the same amount. Children should attract a tax free allowance. If that was the case child benefit can go.

The reason is that if you marry, you are obligated to support. You don't get the same benefits, so you should be forced to pay more tax.

After all, that's fair isn't it.

Unlike what's being proposed. No child benefit, but you still pay the tax.

Lady Finchley said...

Gosh, Toby - don't you have any sense of irony or humour?

Sobers said...

I've just thought of the solution!!!!

Simple. All child benefit is paid 50/50 to mother AND father. And if either is a higher rate taxpayer, they don't get their half.

What could be better is this day and age of sexual equality? Harriet Harman kept banging on about gender inequality - here's something we can do for discriminated against Dads.

Its simple. When a child is registered, if no father is on the certificate, the mother gets half of the CB only (Bad news for Ed Millband types). A massive incentive for mothers to a) name the father (thus enabling the CSA to catch deadbeat dads more easily) and b) to only have children with reliable sorts who won't b*gger off with their half of the cash.

Whats not to like?