Tuesday, October 05, 2010

Child Benefit reform - a spectacular own-goal

Toasting the first day of Conference with a glass of sparkling mineral water, David Cameron and George Osborne have taken a swipe at the very foundation of society they promised to support.

His Grace is not in favour of universal benefits: it is indeed absurd that the poor should be taxed to subsidise the rich and that the state should cream off the costs of administering such an arrangement .

But the announcement yesterday on the reform of Child Benefit is as unjust as it is non-sensical. It completely upstaged the rather more welcome cap on benefits, which will put an end to families of 10 living in £1.2million mansions on benefits worth £166,000 a year, all courtesy of the taxpayer. And no doubt the Child Benefit reform will rumble on today, upstaging important debates on poverty.

The Chancellor's announcement was simply to withdraw the benefit from households in which either parent pays the higher-rate of income tax (40 per cent), so that anyone earning more than £44,000 (c£32,000 after tax) would lose £1,056 per annum (for one child); £1,753 (for two); £2,449 (for three); £3,146 (for four); or £3,843 (for five).

This is not petty cash or pocket money.

What irks His Grace is that any couple with one earner on more than £44,000 will lose their child benefit, even if the other stays at home and has no income.

Many mothers opt to stay at home to look after their children: this is wholesome, good, and a manifest benefit to society which ought to be encouraged.

But two working parents each earning just under the higher-rate tax threshold can now earn more than £80,000 and retain child benefit, while a household with just one income of £45,000 would lose it.

How is this supporting marriage and the family?

Why is the Conservative Party penalising families in which the mother chooses to stay at home to rear and nurture her children?

As Michael Gove said last year, the decline of marriage is 'bad for us all'. He said:

If we're all reviewing our economic perspectives in the wake of the credit crunch, shouldn't we also extend that same process to our most intimate concerns? Shouldn't we see personal relations less through the prism of celebrating freedom and maximising pleasure and more as a means of growing through sharing? Support for marriage should actually be a cause behind which progressives rally. We may promise to wed for richer, for poorer, but we all live in an impoverished society if more and more people choose to put me before we.
And at the 2008 conference, Maria Miller MP, then shadow minister for the family and one of Michael Gove's team, announced a new policy:

Most young couples now get married in a civil ceremony. Unlike a church wedding, there is no tradition of pre-marriage preparation for couples marrying at a registry office. We want that to change. We want local registrars to start signposting couples to pre-marital education as a matter of routine. The Local Government Association who co-ordinate the role of wedding registrars, agree and I am pleased to say that they (are) putting forward this policy so that every young couple getting married will be made aware of the benefits they would get from relationship support at this critical point in their life. In the US, couples who have this type of pre-marriage education are a third less likely to divorce. We want this type of support for couples to be routine in Britain too.
Along with tax-breaks for married couples, this crucial support for marriage appears to have been a victim of the Coalition agreement.

This is not progressive, and neither is it compassionate nor particularly conservative.


Anonymous John Hayward, Jubilee Centre said...

Glad to see I'm not the only one who recognises that this proposal undermines marriage and the family. As I concluded yesterday:

"If we simply want to ensure that all women have money that they are free to spend as they see fit for their children, then perhaps the new restrictions on who receives the benefit should be determined not by household income but by the income of the mother. If a mother is earning more than £44,000, then she does not need the protection of the state to provide her with the basic means of support."

5 October 2010 at 10:14  
Anonymous Stuart said...

Yep totally agree with the premise of this post. Nothing much else to say except very disappointed....

5 October 2010 at 10:24  
Blogger jdennis_99 said...

Sorry, Your Grace, but I disagree with you on this one.

Incentivising people to have children by offering them benefits is not supporting the family - it is encouraging irresponsibility and idleness. I, personally, would go further and abolish Child Benefit altogether, using the proceeds to increase tax credits to compensate. This would also overcome the problems you describe.

5 October 2010 at 10:33  
Blogger Charlie said...

I feel the need to support the government on this one. £44,000 may not be millions, but it's enough - enough to support a family without help from a cash-strapped state. I think this policy will do the Conservatives good - as it places them on the side of the 85% of voters who don't make it into the top tax bracket.
As to the problem of supporting single-income married couples, surely the solution is to implement the sharing of tax allowances that the Tories flirted with before the election? This would instantly restore the political and social credit on that front.

5 October 2010 at 10:34  
Blogger Rebel Saint said...

I think some people are missing the point. It is not being argued that people who earn more than £44k SHOULD get child benefit. It is being argued that what should have been considered is the FAMILY income. That actually, having a family with £86k income receive child benefit is grossly unfair and actually penalises those who save the state money!

I always thought it bizarre that new labour would pay out nursery vouchers to get mums to leave their children in the care of strangers / the state when it would have been cheaper and more beneficial to the children to pay the mothers to stay at home and look after the children themsleves.

5 October 2010 at 11:03  
Blogger AncientBriton said...

A shambolic decision indicative of a bunch of rich boys appearing to play politics as a hobby.
If these millionaires keep telling voters that "we are all in this together" they shouldn't be surprised at the consequences when votes are counted.

5 October 2010 at 11:11  
Blogger Jomo said...

Your Grace

It looks like you are the only sane commentator on this policy.

Saving £1B is not worth the political damage that is likely to result.

This looks like another holiday folly by Osborne. His limitations will cause further political damage as he tinkers with the deficit while continuing to spend enormous sums on welfare and the NHS and cuts defence to pay for them.

Cameron was unconvincing trying to defend this policy on Breakfast Time this am.

Looks like we are heading for interesting times

5 October 2010 at 11:17  
Blogger D. Singh said...

Your Grace

I agree with you. The approach on the basis of universal benefits should be scrapped and replaced by means tested benefits: why should the poor be taxed to subsidise the rich?

The payment of child benefit so that a mother can stay at home to look after children supports the nurturing of the child and indirectly supports the institution of the family.

The Coalition government needs to rethink through its cap on benefits that will put an end to families of 10 living in £1.2 m mansions.

There are sound reasons for this rethink. The reason why Housing departments install families of 10 in leased accommodation worth £1.2 m is because the alternative is far more expensive to the taxpayer: putting them in Bed & Breakfast.

On the one hand you cannot extend Britain’s borders from Dublin in the west, to Bucharest in the east, and from Helsinki in the north to Athens in the south under the EU ‘free movement of peoples’ rule and, on the other fail to build new council homes (on Green Belt land?) to accommodate EU citizens: madness.

So what’s it to be?

The Nottinghill option: leased accommodation?

The more expensive option: Bed and Breakfast (assuming that the Bed and Breakfast market has enough capacity)?

Build council homes on Green Belt land?

Shanty towns?

Withdrawal from the fascist EU?

5 October 2010 at 11:39  
Anonymous len said...

This reform of Child Benefit seems poorly thought out and I hope it is not a sign of things to come!

5 October 2010 at 12:10  
Anonymous TheGlovner said...

My word, agree with two articles in two days.

Will wonders never cease?

5 October 2010 at 13:00  
Blogger Woman on a Raft said...

That's two posts Your Grace has written which make me wish you had one of those little click boxes for "I agree".

I'm not sure, however, that we "ought" to encourage a parent (mother or father) to stay at home. That is very much their business to do as they think fit.

What the Conservatives shouldn't be doing, however, is penalizing a family which makes this choice as that is a sure way to make the remaining ones split up.

Or is that the aim?

5 October 2010 at 14:27  
Blogger Oswin said...

A good idea badly executed. One can only hope that the glaring discrepancies are attended to forthwith.

Someone used the word 'shambolic'
... an apt description suggesting: 'fools, amateurs and bunglers' ... as Len says ''I hope it is not a sign of things to come!''

Hard measures are indeed required; but such measures will only be acceptable if they are fair, just and competently administered.

This is NOT a good start!

5 October 2010 at 14:40  
Anonymous Anonymous said...

If the coalition pulled us out of the EEC as the majority of the people want, we would stop throwing billions down the Eurodrain into the pockets of the unspeakable & be a thriving nation once more.
Easy solution.

5 October 2010 at 16:44  
Blogger Jared Gaites said...

Good article YG, and indeed an own goal. Quite hilarious. Even more funny is the LibDems though trying to look intelligent in the middle of it all.

I think the electorate should be just about waking up some time soon now.

5 October 2010 at 16:52  
Blogger Jared Gaites said...

"This is not progressive, and neither is it compassionate nor particularly conservative."

But the mega rich and the bankers will be left alone, which is very conservative.

5 October 2010 at 17:06  
Anonymous not a machine said...

It is rather disturbing that the scale of Labours debt hasnt really got through to those peole who are well off . I would have thought that a tempory withdrawal of certain benefits say for 4 yrs is the way to go , but reinstate them when conditions allow . This of course works while interest rates are low . It is far better to make progress on the debt while interest rates are low , be much harder when they rise .

very odd your grace a post put on Geert wilders has vanished , not removed by you , its just gone and it was definitely saved I saw it , very odd

5 October 2010 at 17:19  
Blogger Gnostic said...

Surely one of the requirements of being Chancellor of the Exchequer is that you can do basic arithmetic. You know, addition and subtraction and stuff. Being able to follow a logical line of reasoning shoud be mandatory too. What shouldn't feature anywhere in the job description is being Camoron's thick as pigshit school pal!

6 October 2010 at 07:31  
Anonymous Jason Crabtree said...

And apparently (Radio 4 news), the LibDems were not even consulted over the idea. First thing they hear is the PM's announcement - so much for coalition government.

6 October 2010 at 09:29  
Anonymous Voyager said...

The basic question is why The State thinks it has any right to tax Income or Capital. Income Tax was introduced to fund war against the French Republic - it now subsidises its farmers.

Allowances were exempting Income from taxation to recognise costs of maintaining a wife and raising children. These were abolished but tax relief on Alimony maintained for some time thereafter.

The cost of buying a house was recognised in MIRAS but this too was abolished.

It was determined that tax rates should be lowered - Nigel Lawson did so. They are much higher at lower rates of income than before but NO allowances.

Higher Rate taxpayers had to declare Child Benefit on the tax form - now they lose it altogether. Pensions lose Age Allowance at a 50%+ Marginal Rate.

The protected classes are those living on The State especially if they live "over the brush" and are re-populating the nation. The fear the Victorians had of feckless reproduction on the Poor Law has become reality.

We are approaching the moment where the very question of The State and its purpose must be discussed as this Leviathan becomes an all-consuming Moloch requiring ever more money to fund its lurch to destruction

6 October 2010 at 10:24  
Anonymous Anonymous said...

Your Grace,

Once upon a time, in a different country, what became known as Child Benefit was considered a very Good Thing. It helped out the poor and focused their minds on spending the blessed benefit on their kids, rather than their fags, booze, bookie and crack pipes. It helped out the rich(er) and bound them into the system. Not charity but society making a contribution to the cost of raising the next generation. The financial incarnation of the Word 'We're all in it together'.

Now it has gone. How long will we wait before 'Higher Earners' with the 'broadest shoulders' are asked 'in the national interest' to 'make a contribution' towards the costs of other universal 'benefits' such as the NHS and State Schooling. Its the slippery slope, you know. Salami Tactics. Slice by Slice the Middle Classes will see themselves evicted from the Welfare State. No longer beneficiaries but still contributors.

8 October 2010 at 12:32  
Anonymous Tony B said...


10 October 2010 at 09:37  

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