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Child benefit saga: Lessons to be learned

Stephanie Flanders | 11:45 UK time, Wednesday, 6 October 2010

What are the lessons of this week's child benefit saga? I can see three, which the government will be learning and re-learning over the coming weeks and months.

George Osborne

 

Lesson one: people often don't see much distinction between the money they've earned and the money they get in benefits. If you cut the latter, you can expect everyone affected to treat it the same as a tax rise. You can also expect the families who are not affected to worry that you'll be coming for their benefit next. Most consider it an entitlement, not a gift.

Lesson two: voters, particularly middle class voters, have strong and often mutually inconsistent views on the subject of women, children and work, and different views about what constitutes a "family-friendly" tax and benefit system.

For some, it means subsidised childcare to make it easier for mums who work; for others it means extra incentives and payments for mothers who chose to stay at home.

Often, voters will believe both of these things. The government should somehow be giving women incentives to work, and incentives not to work. (Though where low income families are concerned, there tends to be more emphasis on the former.)

If the chancellor didn't know already he does now: he will never be able to reconcile all of these views. And, in an era of cuts, he can't take the Gordon Brown route of giving "special support" to nearly everyone.

Which brings me to lesson three: Labour tilted the tax and benefit system in the direction of children and families, particularly low income single parent families. For better or worse, that is what their target of eradicating child poverty encouraged them to do. It is going to be hard to raise serious money from the benefit system without tilting it back.

According to the IFS, single parents are now about 13-16% better off as a result of Labour's tax and benefit changes, depending on whether they work. Non-pensioner households without children, on average, are worse off than they would have been if the 1997 system had remained unchanged. (These averages exclude people earning more than £100,000 a year who have been hit by higher tax.)

Interestingly, given this week's debate, Labour's changes also turn out to have favoured families with "stay at home" mums.

Other things equal, the average one earner household with children was nearly 6% better off in 2010 than they would have been under the old system, whereas, households with children where both couples work were just over 1.2% worse off.

But note this last group still did a lot better than dual earner couples without any children in the house, who were about 4% worse off as a result of the changes Labour brought in.

The upshot is that the coalition is not going to be able to take a lot of money out of the system they inherited without leaving a lot of families worse off. Put it another way: "family-friendly" deficit cuts on the scale that Mr Osborne believes to be necessary are almost certainly a contradiction in terms.

Comments

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  • Comment number 1.

    Damned if he does damned if he doesn’t! I'd have thought it far more simpler to levy all those smart money banks / investment companies then sell off the really pricey national treasures to those with the means to buy them! Quite quickly the deficit would be a reversal.............

  • Comment number 2.

    Stephanie,

    I agree with all that you say about the perception of benefits and the reality of rolling back the tilt towards single parent families if real savings are to be achieved.

    This is what happens when government try to get involved in social engineering, phrases such as "the biggest cause of problems are solutions", and "the law of unintended consequences" spring to mind.

    Well intended as Labour benefits for single parent families were they do enable individuals to choose a lifestyle funded by the state by means of having children. We are over populated and for society overall we do not need more children, especially those that will not be nurtured by responsible parents who have the time, energy, and resources to raise them to be positive contributors to society when they grow into adults.

  • Comment number 3.

    All fair points Stephanie.

    I think what bothers me are the reason why this is not being extended to dual income families, which seems to be that to make it means tested as opposed to 1 higher rate gets no benefit is too expensive.

    But surely if means testing meant that you not only captured the single income but also the dual income families then the benefit cut would be higher? Is HMRC that inefficient that there would be no net gain from capturing the dual earners......

    If this is the case then surely Mr Cameron's objective needs to the inefficiancy and inflexibility of HMRC.

    Either way I am happy to lose this benefit for the good of the country, but I am severly agreived that my next door neighboors who take home almost twice as much (after tax) then I do but both are not higher rate tax payers do not have to as well, simply because the Conservitives appear to believe HMRC are not fit for purpose.

  • Comment number 4.

    3. ISTHERE...

    I agree that it should be household income based and not individual salaries. This could be easily done by basing it on how children's tax credits already work. This is graduated i.e between 51K and 59K you loose progressively more of the credit until over 59K household income you get nothing

  • Comment number 5.

    As expected then - a single term Conservative government - at least on the basis of the current shambles.

    I'm happy to lose the Child Benefit but it must be fair and like all initiatives it needs to be implemented quickly - in the 2011 tax year. If not then the idea of the deficit creating a criss will disappear.

    For politicans who are great communicators Osbourn and Cameron have done a hopeless job. They need to make very clear what the incomes are in this country and bang the message home.

    In addition it is time again to look at Parliament itself - end subsidised bars and restaurants that hard pressed tax payers have to pay for. Implement a freeze on all second jobs for MPs. Freeze salaries for the parliamentary term. End payments for second homes and force MPs to stay in hotels when they need to. Implement wide spread video conferencing to cut on travel costs. Allow voting by mobile phone and remotely to save money.

    In trusth as this latest mess shows no party has any real interest in taking radical steps to address the deficit. Sad and disappointing.

  • Comment number 6.

    Sage - Agreed,

    I just wish I'd bothered to proof read my post, before submitting that terrible excuse for a comment!

    ho hum 'more haste less speed' appears to be relevant to both the powers that be and me.

  • Comment number 7.

    Stephanie
    You highlight merely the political animal at work, which is what I always expected from Cameron & co. He and the government have perhaps learnt this week that he can't meet both populist considerations of fairness and the bond markets clamour for cuts.
    You can see this too with the so called welfare cap. The populist press have long been publicising the welfare recipients receiving bucket loads of cash. When Cam & co. announce the measure, the putative limit is so high it will only affect a limited section of the welfare recipients mainly in London and the South East and in reality save very little. If Cameron/ Osborne were realistic about capping welfare so that the marginal benefit from entering employment was worthwhile, and material savings on the welfare budget thus achieved, the cap would have to be much lower. However, we would then have the tabloids highlighting poverty in the UK, with graphic pictures of distended stomachs in the streets of Sheffield and areas outside M25. To make the cuts which we are being warned about, it IS going to hurt. It WILL hit some groups unfairly, and there is no way around this. Nothing nice about this to positively spin for Dave the PR expert.
    If he had a brain he would be spelling out where all this hardship will take us in 10-15 years time so that the short term pain is seen to be worth a long term gain. His philosophy constrains him from doing so as he believes the market will sort the mess out (through export led growth and private investment) (Did I see an expectation of creating 10,000 new businesses a year somehwere, utter delusion) and not planning. Trouble is the market if left to its own devices will throw the UK economy again into ever greater dependence on financial services (our main industry left with any competitive advantage) and asset bubbles. Not optimistic.

  • Comment number 8.

    Of course the way this government chooses to try to reduce the deficit is through transfer payments like family allowances but there will be more to come from the CSR which will make many poorer people worse off. In spite of the LD's interest there will be no wealth tax which could easily be collected by just adding a band or two to Council Tax for £1M+ and £2M+ and reducing the Treasury support to local government. After the CSR cleggmeron will hear the pips roar.

  • Comment number 9.

  • Comment number 10.

    A very cogent article. But there's more than bad politics here, there's also a fundamental misunderstanding of what universal benefits are about. They are not intended to be redistributive, and these changes are an extremely ineffective and cack-handed means of making them appear to be. We do need greater redistribution, but fiddling with universal benefits is not the way to do it, as I argue here: http://billynojob.wordpress.com/2010/10/05/universal-unfairness/

  • Comment number 11.

    I think the big lesson to the Government is to not say something is fair when it patently isn't. For them to try and support the removal of the child benefit from a single earner family with three kids earning £45k, which is effectively a reduction of nearly 10% in their household income, and at the same time support the notion that it is still fair to allow two non high earners earning more than this combined to keep the benefit is unforgiveable. To then say that the reason they couldn't look at household income as it was to complicated really raises questions about their competency to govern.

  • Comment number 12.

    I think the biggest lesson here is that when you introduce a measure to demonstrate fairness then at least make it fair.

    I am like many others in this debate, my family will lose our child benefit even though only one of us is a higher rate tax payer. I don't object to losing it, we're not rich (like most we have a big mortgage etc) and would need to consider how to accomodate the drop in income. I do however object to losing it when others who are better off do not.

    I also object to the PM claining to assess on joint income would be difficult and "hugely" costly. It should be easily possible to put the bulk of the administration on to those who wish to claim, make them go online to fill in a form including the UTR's of the household earners along with the last P60 / Self Assessment gross incomes. The system would need to check only one item per UTR and then check the total.

    This could not be significantly more complex then the system they are planning, after all they will need a way to identify couples where at least one person earns over the higher rate threshold anyway to ensure they stop claiming. This is particulalry true where the benefit is paid to the lower or non earner.

    Making it a clear criminal offence to mislead and randomly checking a sample of the entries would ensure very high levels of compliance, at least as high as the self assessment system...

  • Comment number 13.

    I must question the statistics on this one - I'm sure I read that the number of people this would affect was only 50,000.

    ...however there were 3 people in my office complaining about it yesterday - either this is a anomoly - or the Government is up to it's old tricks.

    The complainers did have a point in that
    a) It unfairly impacts single parents
    b) This change is on top of their loss of child tax credits - recently implemented by the same coalition.

    Funny that - the banks brought the house down, but so far the same set of 'non-banking' people have been targeted twice to stump up.

    Parents - you have until 2013 to set this right - I suggest you start by turning up on October 23rd to defend yourselves against the coalition's cuts.
    If you missed the cut this time - don't worry, on October 20th you'll find out where you're really going to get hit - this is just the warm up act by the Tory led coalition.

    What do the Liberal party think they're doing? - They are truly dead in British politics - thanks to a wonderful leadership choice.

    This whole episode has become a story of how self interest works both ways - the people were all up for cuts before the election when it was loosely about 'getting rid of quangos' and 'removing benefit cheats' - but anyone with any sense knows that you could get rid of all the quangos and it won't make any noteable difference - to really cut public spending you have to target that which is common to all - benefits.

    Is this revenge by disgruntled MP's for the removal of their 'benefits' last year? - the difference being even the worst estimates will show that we (the public) don't abuse our benefits to the extent MP's abused theirs.

    ...all forgotten by the 'X-Factor' public - luckily I will always be here to remind them of history - no matter how hard the coalition try to erase it.

    ...get rid of a few quangos indeed - of course everyone will agree to that!

  • Comment number 14.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 15.

    Stephanie. This is politics, not economics.

    Do you really think they didn't know all this when they made the decision? They chose this policy knowing it would cause uproar. The question is why did they do it?

    Politics is all about appearing to be stupid. The media have gone mad, and now I bet many interesting policies will slip under the radar unnoticed because hyped up journalists have taken the bait.

  • Comment number 16.

    Why are both paying child benefit or subsidising back to work possibilities for mothers "mutually exclusive" ? The point of real choice is in whether and when to have children - once that decision made, suitable support measures may need to be in place (or not) to go back to work or stay at home....but these are not mutually exclusive.

    Since birth rate decline would be a risk going forward, it may well be appropriate to subsidise multiple choices for women.

  • Comment number 17.

    12. At 1:18pm on 06 Oct 2010, Steve Way wrote:

    "Making it a clear criminal offence to mislead and randomly checking a sample of the entries would ensure very high levels of compliance, at least as high as the self assessment system..."

    ...but isn't that the same method by which the banks were policed by the FSA?
    - how did that work out?

  • Comment number 18.

    I too believe this has been handled poorly.

    However, it does show you how difficult it can be when we choose not to like a cut because our next door neighbour is not getting their benefis cut too.

    Surely, as good people, we want our neighbours to be ok and receive money?! Is it that we believe this cut wasn't savage enough and should have affected more people? If that is the case we are shortly to get our wish!!

    I think it should be based on household income (including other benefit incomes) but I do think regardless, there will always be an element of NIMBYism over any cut - quite understandably.

    Until the point that none of us have anything left - then it doesn't matter!!

  • Comment number 19.

    The child benefit is a deflection to the task in hand.

    Over the next few weeks cuts after cuts will be announced , the public will be shell shocked and the child benefit issue will become a non issue.

    We all know that Labour inflated the social state and the easy option would be that the Tories could just roll back the Labour initiatives . However some of these initiatives for pensioners are protected by "Cameron's Promise".

    So we are faced with the reality that the working population will have to pay the deficit off , pay for the un-accrued pensions of the elderly and save for their own retirement. I would suggest a real drop in wealth of 10 % is the minimum we can expect . Have a good holiday in September it may be your last...

  • Comment number 20.

    Well hooray for the British middle class - there's been no threats of rioting or striking or civil disobedience, it seems to me that most of the people who will be affected by this cut have quietly & universally (with typical British stoicism) accepted that it should happen...

    Middle England mutually takes one on the chin for the good of the country....now lets move on.




  • Comment number 21.

    'For some, it means subsidised childcare to make it easier for mums who work; for others it means extra incentives and payments for mothers who chose to stay at home.'

    Or put another way:

    For some it means recognising that it's uneconomic to go back to work even though they could earn a higher gross salary than their child care provider; for others it means asking households with the same income to make the same contribution to government spending irrespective of who that income is earned by

    Middle class families feel the distortions of the tax system particularly acutely. They should be entitled to the odd whinge.

  • Comment number 22.

    'Interestingly, given this week's debate, Labour's changes also turn out to have favoured families with "stay at home" mums.'
    ................................

    Has anyone seen any hard evidence for this statement?

    Of course, Labour's changes favoured families with stay at home mums ... those of us working and paying taxes ... have paid/are paying for some to stay at home!

  • Comment number 23.

    Severely cutting benefits was never going to work, so they’ll have to print more money instead.

    So here’s the funny bit.
    If you want to keep the UK on debt based money, it can’t be allowed to default.
    And if it doesn’t cut its expenditure it will default.
    But if QE comes back buying Government debt, the UK Government is no longer operating on debt based money.

    The supreme irony of course would be that the Central Bank (BOE) is committing (at least in the banking world) the cardinal sin of allowing a Government to operate on a non-debt based monetary system, at least as long as QE lasts.

    And here’s the not funny bit, unless your wage, pension or benefits is keeping up with inflation (RPI excl housing currently 5% and wages 1.5%) you’re going to get a lot poorer.

    And finally the really worrying bit, fiat currency is no longer backed by anything other than the supposed commonsense and prudence of the issuing Government. Now if you remove commonsense and prudence, that doesn’t really leave a lot left.

    A Government can operate on a debt based system or a non debt based system, but not alternate between the two, as and when it feels like it, unless of course it wants the credibility of its currency tested to potential destruction.

  • Comment number 24.

    I always thought that benefits were there to support the unfortunate and to keep them from poverty.

    So why do the rich need support from the tax-payer?

    Is it the case that a banker in the City of London can receive massive bonuses and get child benefit at the samme time?

  • Comment number 25.

    The Chancellor said in his speech the other day “we’ve got to be tough but fair”. The excuse given for cutting the child benefit of a single earner family with £43,876 of income, while retaining it for a two earner family on £87,750 is that it avoids means testing.

    If he wants to avoid means testing all he has to do is raise the higher (40%) rate tax by a fraction of 1% to get the extra tax need to retain the benefit for all. The burden on retaining the child benefit for all will then be shared by all the 40% and 50% tax payers proportional to their income.

    It also avoids the problem of means testing self employed people who may not know with certainty from year to year whether they will be paying 40% tax or not.

    For those higher earners without children who say: Why should we pay for other people’s children? I would point out that it is other peoples’ children that will be looking after you in our old age, and who will contribute through their NI and income tax to the future finances of our country.

  • Comment number 26.

    The Tory Lib Dem Government attack on poorer* families with children by cutting Child Benefit for a single / ‘’individual’’ member of a family / ‘household’ earning more than £44,000 per annum is not only a fiasco but proves once again this ConDem Government want to keep the richer** - likely Tory supporting families happy while snatching Child Benefit away from those ‘undeserving’ families who earn less than richer families.

    It is SIGNICANT to note that when it suits the Government DWP/DSS benefit entitlement is worked out by family ‘household’ i.e. by adding up and including all INCOME and savings from ALL adults in the household /family (and partners living with or without the family) but NOT this Child Benefit case!!

    Thus the RELATIVELY *poorer family – a single WORKING mother or MARRIED couple with ONE earning on £45,000 will have her Child Benefit cut while a **’richer’ MARRIED couple with a joint income of £80,000 keep their Child Benefit.

    Therefore the Tory – Lib Dem ‘In the National Interest’[sic] coalition Government Child Benefit public spending cut is unfair and penalises the relatively poorer families as will other Welfare benefit cuts!

    One policy rule for the rich families and one rule for the poorer families – cut their benefits where possible – to keep the rich Tory Lib Dem Government’s supporters happy!

  • Comment number 27.


    Our government recognize what a runaway -train disaster our economy has become.It seems that Clegg and

    Cameron are prepared to throw themselves into it's path in a vain attempt to slow it's momentum .what ever

    their decisions are, they will become the most vilified government in modern history.....perhaps this is the

    way new religions are created ?






  • Comment number 28.

    The CB changes do not take effect until 2013 and no one has actually lost out yet and the issue about the non working spouse in a higher tax paying household being disadvantaged by the proposed cut in child benefit ... can very easily be rectified by a very simple appeal system (a few lines on the back of the child benefit letter) whereby e.g.

    Those in the 'disadvantaged category' who wish to continue receiving the tax should provide their last two years annual household income and if this is less than the highest regional/national average income of those households with two non higher tax-rate paying adults ... then the disadvantaged household should continue to receive child benefit.

    This will cost some extra money to administer but is minor in the scheme of things and should still be cost effective and ensure that most of these disadvantaged non-working individuals receive 'fairness'.

    Why such a fuss about a minor tax and benefit anomoly from the BBC? ... the UK tax and benefit systems are full of such loopholes and anomolies, including those maintained by Gordon Brown for 13 years as benefitting e.g. 'non doms'.

    If the BBC want to write about something that is genuinely unfair and anomolous try e.g. ... Council Tax ... whereby only about 40% (?) of UK adults are actually pay anything towards the extensive local govt services that everyone receives ... as is also subject to massive fraud and tax evation.

    Never a mention on this from the BBC

    BTW - However, For goodness sake Mr Cameron ... just put in some caveats that there will be a few 'anomolies' to be sorted out before all tax and benefit changes take full effect.

    This should indicate however that where specific tax and benefits changes themselves create anomolous and specific material unfairness the Coalition must be prepared to make transitional tax arrangements to soften the impact.

    Eventually, the coalition will realise that unless it applies higher indirect taxes to issues like retailers importing too many artificially low priced foreign goods that are unsustainable for the UK domestic economy ... the political concerns will submerge, outweigh and outshout the economic objectives of cutting the deficit(S).

  • Comment number 29.

    Why isnt Stephanie more often on the 6 and 10 news as she is the only major female commentator and economic policy is surely the most important issue facing this and other governments worldwide? I find her newsreporting informative and interesting instead of others I could mention. I am not related to her by the way.

  • Comment number 30.

    RE: 17. At 1:27pm on 06 Oct 2010, writingsonthewall wrote:

    1. A good point re the FSA except that the HMRC already have the details of individuals gross income and can access in seconds using their UTR. Checking a sample in more detail would simply be a fail safe.

    2. Most individuals are far less willing to gamble (particularly with a criminal record) then our financial institutions.

    3. Getting this wrong for an individual would cost the state at most a few hundred pounds per month. The FSA's failure to regulate the banks has cost the state hugely. This would also allow people to support further cuts knowing they are being fairly introduced.

  • Comment number 31.

    26. MAXONE,

    Ill conceived as the clumsy calculation method may be of taking child benefit from higher rate tax payer families, you can hardly twist that into a political "tories are bashing the poor" argument. The dual earners that happen to be above £44K but with neither earner in the higher tax bracket can hardly be described as rich compared to a single earner £45K family. For a start off the single earner won't have child care to fork out for (unless they are a single parent).

    It's just clumsy compared to using the same household calculation method used by the children's tax credit system but it's definitely not "let's bash the poor" politics.

  • Comment number 32.

    12
    "Making it a clear criminal offence to mislead and randomly checking a sample of the entries would ensure very high levels of compliance, at least as high as the self assessment system..."

    I'm sure it already is an offence, however the threat of getting a criminal record would be enough to put most middle income families off from trying it on. Benefit fraud is more common among those at the bottom of the scale as they have less to lose in terms of getting a criminal record.

    I agree that the cuts should apply to joint incomes.

  • Comment number 33.

    Thanks Stephanie, so let me get this straight. Im a stay at home mum who's husband is in the police force as a humble officer. We look certain to lose child benefit so, I look for a job and I really do want to go back to work.
    Mr Cameron tells me that we are well able to go without child benefit given we are high earners on just about £45,000 a year. So, if I look for a job to supplement my husband's earnings to make up the difference then thats ok.
    But the trouble is jobs are like gold dust and the cuts will just push mean more and more of us going for the jobs that traditionally were for us working mums. Dinner ladies, teaching assistants..... So I should apply to see if I can get job seekers allowance- it is my right isn't it?
    Oh sorry Mr Cameron, now I'm a lazy sponger!
    This government is taking tough decisions which I think we all understand, but the patronising tone they use deliver the message and to justify their actions is just making us, jobless,child benefitless, but certainly not lazy mothers very very angry!
    If I hear Mr Cameron use the word "Fairness" one more time I will insist he look up the correct meaning in the Oxford dictionary!

  • Comment number 34.

    Why don't we make all those with more than 2 children pay the equivalent of the child benefit back in tax.

  • Comment number 35.

    Selling sub prime debt as AAA rated could be argued to be misleading, but it was not deemed illegal. WOTW's comment on the FSA is not really relevant in this case.

  • Comment number 36.

    30. At 2:03pm on 06 Oct 2010, Steve Way wrote:

    "1. A good point re the FSA except that the HMRC already have the details of individuals gross income and can access in seconds using their UTR. Checking a sample in more detail would simply be a fail safe."

    HMRC - records? They don't have a clue who's earning what - I mean they can't even get the taxes right - what hope do they have of assessing this (and it's not whether they can do it - but what the cost is)

    "2. Most individuals are far less willing to gamble (particularly with a criminal record) then our financial institutions."

    I like this.

    "3. Getting this wrong for an individual would cost the state at most a few hundred pounds per month. The FSA's failure to regulate the banks has cost the state hugely. This would also allow people to support further cuts knowing they are being fairly introduced."

    I like this more - but it's a bit contradictory - why should people support cuts which you have just admitted were not caused by them (whether it's the banks or the FSA doesn't matter)- all cuts will be unfair - except cuts to banker throats (metaphorically speaking of course) as the people claiming child benefit (no matter what their earnings) are not the reason we're in total economic meltdown now is it?

    ...and as someone who has no children but contributes my share of tax - I am happy to subsidise children and I know for many families child benefit is the difference between survival and abject poverty - I don't mind too much if my money finds it's way into the odd underserving pocket....however subsididing banks and CEO's pensions is not acceptable in my book - and I've done a lot more of that in the last 2 years than I have subsidised undeserving parents with child benefit.

  • Comment number 37.

    Although the Media don't like these proposals the public overwhelmingly do. 83-86% support in the YouGov poll.

    The fact that 2-mid-income families will get the benefit and 1-high-income won't is an anomaly but not an injustice: there are many far worse in the benefits system. A partially transferable tax allowance between married couples with children is clearly on the agenda and will help resolve it.

  • Comment number 38.

    Cutting child benefits, what about the Public and State pension liability which is approaching £4 trillion. Bearing in mind the UK government is already a £1 trillion in debt.

    All those pension liabilities and all that debt, (government, corporate and private) rests upon the private sector’s shoulders, and it’s far above and beyond that which it will ever be able to service.

    In addition to which they let the banking machine run out of control, and now having spent ten years watching it spew debt all over the place, they’re now wondering what to do with all the damn stuff.

    And as far as I can see, unless they want strikes and social unrest, all they can do is print more money. And seeing as gold has passed $1300 per troy ounce, it would appear I’m not the only one.

    So I reckon ‘pensions’ and ‘benefits’ are safe, and we can go happily forward in the full and complete belief that we will get our ‘pensions’ and our ‘benefits’, but by the time they’ve finished printing money, they’re not going to be worth a tin of beans anyway.

  • Comment number 39.

    George Osborne seems to have picked up some of Brown's worst habits in a very short time.

    Repeating again and again that something is fair when the most basic arithmetic shows it to be unfair does not make it fair. Top marks for a Brownesque black is white approach to the logic.

    Announcing painful measures well in advance of their occurance in the hope that we have forgotten who was responsible when we see the huge drop in income some years from now was one of Brown's most pernicious strategies.

    Different coloured party same aim. Get us to pay for their own particular brand of social engineering, and hope we forget the cuplrit

  • Comment number 40.

    "The government should somehow be giving women incentives to work, and incentives not to work."

    Don't be silly Stephanie: it's not about "incentivising" one choice or another, it's about supporting mothers whatever they choose. Providing childcare for working mums is a great idea; so are benefits for stay-at-home mums. There is no contradiction here.

  • Comment number 41.

    The chancellor made the point, fairly I thought, that because tax is done on an individual basis it is far to complex and expensive to reclaim Child Benefit from higher earning families but only from higher earning individuals, hence the anomolies which he said were a price worth paying. Yet in the next breath he says that other benefit payments, jobseekers, housing benefit etc, will be capped at £26K per family. So if all other benefits can be dealt with at the family level, why not Child Benefit?

  • Comment number 42.

    I disagree with the three reasons that you suggest angered people.

    I think the problem stems from the lack of fairness in the benefit cut where by high earning dual income families keep the benefit but much lower income single income (including single parent) families lose it.

    To me it is intellectually incoherent to have a benefit that is neither universal nor means tested.

  • Comment number 43.

    Child benefit is touted as a universal benefit. It is not, because it is a benefit the childless have no access to. Why should taxes paid by poorer childless people go to subsidise those wealthier people who choose to have children?

  • Comment number 44.

    I don't think you've taken enough account of scale - the sheer number of people who lose out and are seriously harmed due to a small across-the-board reduction in income (as opposed to the few who lose out when cuts are targeted at those with a lot to spare).

    A parallel is happening in schools: if a small or medium-sized cut is made in school budgets, the first to go will be teaching assistants and similar support staff. But it will take a massive number of such 'small' redundancies to meet the deficit in any particular school and the benefits claimed by those made redundant will be huge as there will have been so many made newly and suddenly unemployed.

    Cuts to universal systems of support will have a similar effect: 'the edge' (beyond which finances are not sustainable without huge personal discomfort) is much nearer for a much greater number of people (with or wothout children) than is being talked about at present. How quickly can a benefits system go into meltdown?

  • Comment number 45.

    I don't think the withdrawal of child benefit for higher rate tax payers is bashing "the Poor" as such, but wherever on the income scale that tax and benefit changes are applied, it's a basic principle of good governance that they are fair. In this case, treating alike households alike. Withdrawing a benefit that has always been for the good of the household on the basis of one person's income, as opposed to the household's is illogical. Secondly the tax system has always worked on the basis that if someone earns more, they get to take home more, maybe a smaller proportion of their earnings, as tax allowances are used up or higher rates kick in, but always more money to take home than if they were earning less in gross terms. Instead there's a massive disincentive to earn more just as the higher rate kicks in. I don't deny that peoople at that income are well off, and probably have less need of child benefit, mabye it could be even withdrawn at a lower income, but coming from a party which has long proclaimed the necessity of a tax system which incentivises more work, and now is finally about to deal with poverty traps at the lower end of the scale, it's a bit careless, to say the least. Yet it seems that any anomoly or injustice can now be justified on the basis of deficit reduction. We expect our governments to try harder than that.

  • Comment number 46.


    To my mind, this is the harbinger of things to come: and amounts to a fundamental and probably final breach of the contract between the middle classes and the welfare state.

    The welfare state (which for the political hounds on this blog I fully support) took tax from everyone, but mostly from the middle class, to provide universal healthcare, education etc.

    If they are not already (and many are) the middle class will soon be paying to educate their children privately: paying for medical insurance: paying into a private pension - and asking themselves what all that tax is paying for.

    That will be the end of the welfare state as we know it.

    The political battle will then turn to how you persuade the midlle class to go on paying tax - when they get nothing back: and when the middle ground goes there then welfare state is heading for a wall.

    I must say, even after all the parallels with the 1930s that this recession has thrown up - I did not think we'd end up there.

  • Comment number 47.

    33. At 2:25pm on 06 Oct 2010, Fiscully wrote:
    ..... So I should apply to see if I can get job seekers allowance- it is my right isn't it?
    ------------------------------------

    Another myth, no it is not your right if your partner lives with you and earns over about £24k (it may be less).

  • Comment number 48.

    37. At 2:30pm on 06 Oct 2010, NBeale wrote:

    "Although the Media don't like these proposals the public overwhelmingly do. 83-86% support in the YouGov poll."

    ...and how many working single parents were out wandering the streets in the middle of the day with nothing better to do than answer YouGov pollsters?

    These polls are based on the opinions of those with nothing useful to do - they are not election results - even though some like to think they are.
    I mean most people agreed with the cuts pre-election (according to the polls) - but you watch how many people have changed their minds since then - and also how many simply didn't understand the question they were being asked!

  • Comment number 49.

    Excellent and very interesting analysis.

    The reaction to this policy has been bizarre and I think many would have struggled to predict the uproar.

    After years of the masses saying high earners should pay more, a move designed to hit high earners has caused uproar amongst low earners. I've even heard some in the media suggesting that people on £44k a year were low income workers and people saying the Tories are "bashing the poor".

    I think Stephanie sums it up perfectly in that people seem to think benefits are part of their salary. They believe that they are 'earning' state benefits and that it's just an unlimited supply of free money that they are entitled to.

    The only way around this mess now is with means testing. A big slice of the money gained will be lost in admin costs and then people will be complaining about admin and red tape!

    Child benefit really needed sorting out but the newspapers have taken over now so I'm not sure it'll happen.

  • Comment number 50.

    35. At 2:27pm on 06 Oct 2010, Dr_Doom wrote:

    "Selling sub prime debt as AAA rated could be argued to be misleading, but it was not deemed illegal. WOTW's comment on the FSA is not really relevant in this case."

    errrr - what about insider trading? - or is that just misleading too?

    Seems there are a number of people getting lynched for it now - so where were all these prosecutions 2 years ago when the FSA carried out the same 'spot checks'?

    You have mistakenly assumed I'm talking about the sale of sub-prime debt - but there are many other illegal activities the FSA are responsible for ensuring are stamped out - practices which are only coming to light now the money has run out.

  • Comment number 51.

    32. At 2:24pm on 06 Oct 2010, Dr_Doom wrote:

    "I'm sure it already is an offence, however the threat of getting a criminal record would be enough to put most middle income families off from trying it on."

    So what about the middle class who knowingly put their children on their insurance as a named driver (when they are the main driver)

    Illegal I think you'll find - and that appears to be no deterrent to the 'honest middle classes'.

    "If a young driver owns a car and then insures it in a parents name with the younger driver as a named person on the policy, you are running a considerable risk. Fronting, as it is called, is the practice of insuring in another persons name just to get a cheaper policy. It is fraud and if proved can lead to void policies which may mean claims not being paid, driving without insurance convictions for the young driver and even prosecution for fraud."

    http://www.superquote.com/young-driver-car-insurance/should-i-insure-in-my-parents-name.htm

    Do you want more examples of middle class law breaking - or do you accept that the law is not the deterrent you make it out to be?

  • Comment number 52.

    There is a lot of stress about tax change principles, but this is a simple stand alone change at the moment. It is silly to give people earning a lot of money a benefit and we should draw the line at some point in a persons earnings; the coalition has now done that. It is however unfair to take from a family earning £44,000 pa and give to a family earning £87,000 pa. Lets resolve that and move on.
    Admin problems? When you apply for CB, make the application online and every 5 years and just ask the question, does your family earn more than £44,000 p.a. A lot of people will answer a question correctly if the tax is perceived to be fair.

  • Comment number 53.

    Hi
    My views are, I suspect, rather different to many. I am 43 years old, a father of two, a high rate taxpayer, and not married to my partner. I have absolutely no problem with forgoing child benefit, even though this means an effective £3000 per annum gross pay cut. I also have no problem in missing out on whatever tax break is being planned for married couples. My grievance is that my generation is forever being asked to dip into its pockets in a disproportionate way. As well as this latest example, I can give a further three which spring immediately to mind:
    1) Gordon Brown's removal of the pension tax credit has had the most impact on those in the 'accumulation' phase - ie aged 25 to 55.
    2) All the family silver (BT, British Gas...) was sold off before I was in a position to benefit (ie early to mid 1980s)
    3) It is us that have to work longer (ie later retirement ages) to fund the state pensions of others

    The generations which have contributed most to the state we're in have had the cash, spent the child benefit and are sitting pretty. One day, a politician will be brave enough to do the one thing that would fairly grab money from all of those who can afford it, and not a selected few. That one thing is, of course, to raise the tax rates (from 20% to 21 or 22 and from 40% to 43 or 44).

  • Comment number 54.

    I think quite a lot of folks are forgetting that two working parents are also paying in two lots of tax and national insurance (plus having to pay for childcare or nursery schools) so if there is a bit more for working parents ( it can only at the most be thirty odd grand before tax and NI)the coalition is being fair I think.

    Lady Grey and I do not have any 'little dudes' or claim any benefits, so we do not have an axe to grind, but I think like some earlier posters, that this hit well off first, is just a water tester for tackling benefits for the great unwashed.

  • Comment number 55.

    Correction insert*: It is *significant to note that when it suits the Government DWP/DSS benefit entitlement is worked out by family ‘household’ i.e. by adding up and including all INCOME and savings from ALL adults in the household /family (and partners living with or without the family) but NOT this Child Benefit case!!

  • Comment number 56.

    I am constantly amazed that an apparent majority believe that the state i.e. the taxpayer should sudsidise their children.
    Having children is a life choice and there are financial consequences-it is not compulsory.
    I have thought for a long time that no-one paying higher rate tax should receive Child Benefit and if this produces anomalies then so be it

  • Comment number 57.

    As a single 31 year old man who is not a freeloader i am totally unaffected by cuts.

    If you are affected then tough you should of not been given handouts in the first place.

    I had to listen to my boss whinge about losing his child benefits despite earning 47K per year, nearly double what i earn.

    Nobody earning over 40K should get any kind of tax breaks or child benefits. They are YOUR children YOU pay for them.

  • Comment number 58.

    37. At 2:30pm on 06 Oct 2010, NBeale wrote:

    'Although the Media don't like these proposals the public overwhelmingly do. 83-86% support in the YouGov poll.'

    -----------

    Codswallop!

    The above mentioned 'poll' was conducted for the Tory supporting 'Sun' newspaper - owned by a Tory supporting media mogul!


    And this represents the 'public'[sic] of which 45 million are on the UK electoral register!

    Pull the other one - it's got bells on it!

    Next you'll be telling us the 'public overwhelmingly'[sic] voted for the Tory Lib Dem led Coalition too!!

    15 million members of 'public' didn't even bother voting at the last General Election!!

    Funny that Tories were too scared of being rejected by the ''public'' that failed to mention once in their 'Conservative Manifesto' that they intended to CUT Child Benefit!!

    Get real!

    Reality check: the Tories don't have a 'public' or 'overwhelming' mandate to Govern let alone make massive public spending cuts!

    At next General Election both the Tories and their little Tory coalition helpers - the unprincipled Lib-Dems - will be wiped out by the 'public'!


  • Comment number 59.

    What concerns me is not the actual discrimination against single-earner, higher tax paying households versus dual-earner, basic rate paying households but rather the so-called logic for it. No sensible reasoning offered at all, simply the limp excuse that it would be too expensive to administer if they were to base the threshold on household income intead of individual income.

    Really? Come off it George... how difficult can that be? We're led to believe that the government is grotesquely overstaffed with thousands of unproductive civil servants sitting around all day doing nothing - why not get some of them to administer a newer, fairer, child benefit system?

    You can't have it both ways ConDems... passing unfair legislation with the excuse that we don't have the manpower to do it any differently then making thousands of bureaucrats redundant because they apparently don't have anything useful to do. Oh silly me, you're politicians, of course you can have it both ways.

  • Comment number 60.

    7. At 12:53pm on 06 Oct 2010, tonyparksrun wrote:

    Cameron and the government have perhaps learnt this week that he can't meet both populist considerations of fairness and the bond markets clamour for cuts.

    ###############################################

    Good point.

    My problem is that I do not want a government being given 'lessons' in how to govern - at my expense.

    This government doesn't seem to know what to do or how. It's one thing to have a broad 'policy' i.e. cut the deficit. But if they do not know how to do it, or how to handel the flak they get at every announcement, then they are in for a lot of trouble.





  • Comment number 61.

    Stephanie,

    I was intrugued to read, "Most consider it an entitlement, not a gift."

    It matters not if it is a universal benefit or one that only applies in certain instances (Jobseekers, Incapacity Benefit, Old Age Pension, etc.), they are part of the fabric of our welfare provision. They are a contract between the State and those individuals who are or have been in employment. They most certainly are NOT a gift and should never be considered by any administration as being so.

    Each government will review to whom and at what rate and for what purpose these benefits will be administered. We may or may not agree with their decisions. However, we are on a very slippery slope when either governments or individuals are allowed to act upon the assumption that they are in fact a gift which can be arbitarilly removed.

  • Comment number 62.

    36. At 2:29pm on 06 Oct 2010, writingsonthewall

    Just to pick up on WOTW's comment - which represents the thread we've all debated for a while - i.e. taxes being diverted to bankers pockets more than its is to even those who claim it fraudulently as benefits.

    It is important now to make people realise the scale of the problem we face. For years I've heard people moan "My taxes support all those benefit scroungers" and indeed, everyone has heard someone say to a public sector worker "My taxes pay your salary" (although you never hear policemen claim they pay half their own wage from their own taxes do you?!).

    Anyway, these cuts which everyone initially naively supported have come round to haunt us since there is now a real hit in the pocket from having to bail out this crisis. I'm saying nothing new here but it warrants pointing out to people who still believe it (Sam_from_Hendon being one of a long list) that those in power and in the large financial institutions etc who have hoarded the countries wealth, still can't justify their pay demands when such suffering emerges elsewhere (RBS came out recently defending the right to pay bonuses to prevent the most important individuals leaving).If the act of paying a large sum to an individual had an immediate visible effect on several hundred lives, people would not be so naive as to consider the two events exclusive of each other. Since there has been a couple of years in between the pay excesses which went on (even though they still do) and the poverty some face now, it appears the politicians find it easier to hide the obvious unjustness under the carpet and blame the previous government for the debts they must make cuts for.

    I was reading this morning I think, an interview in the Metro with Shia le Beouf (Transformers, Wall St actor) who said he gained exposure to some traders to find out about his role in Wall St. He agreed there were excesses and greed but then naively went on to say something like "Some of these guys are extremely generous, collectively raising $45m for charity in one night" as if paying them bucket loads could be justified by their generosity to charity. It simply doesn't yet occur to enough people that charities would need less cash if it hadn't been hoarded by a small number of individuals in the first place.

    The apportioning of individual wealth beyond a certain point can serve to hurt society and perhaps the 'X-Factor' public who have so far been blind to it all are now begining to see the light...or should that be darkness?

  • Comment number 63.

    52. At 3:17pm on 06 Oct 2010, Peter Steele wrote:

    "There is a lot of stress about tax change principles, but this is a simple stand alone change at the moment. It is silly to give people earning a lot of money a benefit and we should draw the line at some point in a persons earnings"

    Like MP's expenses?

  • Comment number 64.

    49. At 3:12pm on 06 Oct 2010, CaptainJameson wrote:

    "I think Stephanie sums it up perfectly in that people seem to think benefits are part of their salary. They believe that they are 'earning' state benefits and that it's just an unlimited supply of free money that they are entitled to. "

    ...like MP's and their expenses?

  • Comment number 65.

    This con-dem'd government seems hellbent on making life harder for the hard working family.
    First it was cuts to the childcare vouchers scheme and now the child benefit.
    This government should be encouraging the stable upbringing of children in a hardworking family environment not knocking them down. The future of this country is dependent on them.
    Lets not be politically correct here, there are estates all round the country where there are families of 3 generations that have never had a job. They continue to produce offspring, that through no fault of their own, will continue to perpetuate the decay in these areas.
    If you are going to take away child benefit from the hard working then at least use it to prevent children in deprived areas. If it means paying a young girl £20 a week to be given and continue using contraceptive implants then it will be money well spent and save the country a lot more in the future.

  • Comment number 66.

    I will watch with interest for further cuts to benefits for working parents. If they change other "universal benefits" like childcare vouchers or nursery entitlement for 3 yr olds, it might be in my interest to reduce my working hours so I am just below the 40% tax bracket. In fact, I might find myself better off working 4 days a week rather than 5 with the savings in childcare costs and not losing child benefits. Of course, the government would be worse off as they would lose almost £3000 a year from my taxes.

  • Comment number 67.

    43. At 2:55pm on 06 Oct 2010, Simon wrote:

    "Why should taxes paid by poorer childless people go to subsidise those wealthier people who choose to have children? "

    Why should taxes paid by poorer childless people go to subsidise Duck houses, moat cleaning and second homes - because some wealthy toffs who don't need to work decide to 'play politics' and become an MP for a while?

    Have we all forgotten? - are we so quick to accept the removal of benefits for children following the disgraceful abuse of the benefits system by MPs? (I'm including public 'expenses' as benefits)

    Even the language some of you are using "people think benefits are an entitlement" - now I wonder where they got that idea from?

    "No one doubts that most MPs and nearly all ministers work long and antisocial hours, but any temptation to sympathy is dissipated by the culture of entitlement that has been revealed by some of the correspondence that now sees the light of day. Such as the temporarily anonymous Labour MP who said that "natural justice" required that he be reimbursed £3,100 for a 40-inch TV because he had not realised there was a price limit. "

    http://www.independent.co.uk/opinion/leading-articles/leading-article-a-flipping-sense-of-entitlement-1682151.html

    They really play some of you like fools - divide and conquer is their strategy - divert the attention elsewhere whilst they plunder the public purse by far more than you could possibly have imagined.

    Whilst you're all scrapping for crumbs from the masters table - arguing about who gets which benefit - they're covering the escape of the crooked bankers who have bought porsches and ferrari's with money you're all now going to have to pay back (I say you're - I mean we're - but they will have to take mine from my cold dead hand)

  • Comment number 68.

    52. At 3:17pm on 06 Oct 2010, Peter Steele wrote:
    There is a lot of stress about tax change principles, but this is a simple stand alone change at the moment. It is silly to give people earning a lot of money a benefit and we should draw the line at some point in a persons earnings; the coalition has now done that.
    ............
    Whats silly is to expect families to pay for the mistakes of a bunch of wealthy bankers.

  • Comment number 69.

    All this fuss about about child benefit. I wonder how much the cuts in services will generate in terms of protest. It should be substantially greater. I wonder if this cut was simply a ploy by the government to distract attention from the real cuts that will create perhaps 1 million unemployed or more. We shall see. I'll be there on 23 October.

  • Comment number 70.

    Lesson 1: The Civil Service the organisation that is supposed to warn the amateur ministers of pitfalls in their policies DOES NOT DO ITS JOB! And will leave you in the lurch.

    Lesson 2: 'Shooting from the hip generally results in a serious foot injury'. Ask for and take advice from professionals - clearly NOT the present Treasury Civil Service. By the way these were the same guys who sat by and did nothing to stop the bubble that led to the crash - should they really still be in their jobs!

    PS Explain this to Michael Gove please, and to whoever came up with the idea of introducing a dramatic administrative change in the NHS WITHOUT consultation or piloting it or checking that those who will be responsibility have the technical capability to do the job!

  • Comment number 71.

    54. At 3:32pm on 06 Oct 2010, AudenGrey wrote:

    "Lady Grey and I do not have any 'little dudes' or claim any benefits, so we do not have an axe to grind, but I think like some earlier posters, that this hit well off first, is just a water tester for tackling benefits for the great unwashed."

    ...who are the great unwashed? - Those who are too poor to afford water - or those who have dirty hands from all the wealth they extracted from the Economy.

    You will find no comfort in believing you're a "favourite of the master" - for it's only a short while from 'Lord and Lady muck' to 'bread line beggar' - no matter what you're financial situation.

    If the only way to make you feel superior is to lift your nose at those you feel are below you - then you're going to get the shock of your life when you realise that the middle class was simply a figment of your - and the media's imagination. For when crisis comes - we all find out who we really were all along....

  • Comment number 72.

    what a lot of fuss about what is a tiny bit of income to the people involved!
    soon we will all (well almost all exluding heads of banks and celebs and a few others) have a lot more to worry about.
    Like having no income to worry about whether we are paying too much tax on and the fact that we have food shortages and being uable to afford heating. While the only prosperous countries are China and India

  • Comment number 73.

    41. At 2:51pm on 06 Oct 2010, joaniesman wrote:

    ''The chancellor made the point, fairly I thought, that because tax is done on an individual basis it is far to complex and expensive to reclaim Child Benefit from higher earning families but only from higher earning individuals, hence the anomolies which he said were a price worth paying. Yet in the next breath he says that other benefit payments, jobseekers, housing benefit etc, will be capped at £26K per family. So if all other benefits can be dealt with at the family level, why not Child Benefit?''

    ----------

    Indeed. See my posts elsewhere and above on the attack on the poor or relatively poorer families and the less ''wealth'' off families and the irony that when the BIG Welfare benefit cuts are announced others (the middle-class) will support the BIG cuts to 'household'/'family' benefits and they will be ASSESSED not then as 'INDIVIDUAL' tax payers but as a household/family unlike Child Benefit which is a family benefit and does NOT apply to single individuals without children.

    Of course the Tories are using the old divide and rule strategy here: attack one section and then another and blame the 'idle' on benefits; what 8 million people on a range of different DSS/DWP/HMCR benefits and 'CREDITS'[sic] are all suddenly 'idle' in the UK?

    Or could some those millions be poor unemployed mothers, poor sick, poor disabled and poor elderly? And without the financial means to support themselves or their families and household?

    The very poor who had their PERSONAL / INDIVIDUAL INCOME Tax increased from 10p in the £ to 20p in the £ pound under New Labour.

    Will George Osborne REVERSE that attack on the poor - a 100% TAX increase on the poor low-paid? Not likely!

    In contrast the 'idle' parasites in the House of Lords will NOT be getting a CUT in their daily £250 plus 'Allowance' under the public spending CUTS because these UNELECTED [sic] ''scroungers'' will be voting [sic] for the public CUTS to Child Benefit and all the other benefit cuts to come under this anti-family anti-mum public schoolboy Tory Lib Dem coalition!

    Note, in sharp contrast the Tory Lib Dems will be REDUCING, yes that's right, REDUCING, Bankers' Business Bank Tax by 3%.

    Is that 'fair'?

    For the slogan 'In the National Interest' - read: In the Bankers Business Interest with fat cat greedy bonuses too!


    These policies are not 'clumsy' [sic] they are DELIBERATE and well thought out Tory policy put forward and thought of by ''IDS'' and his Tory misnamed 'Social Justice' Think Tank buddies who have been working and PLANNING the public spending cuts and so-called 'Welfare' CUTS 'Reform' [sic - for 'reform' read cuts] for several years!

    Think about it!










  • Comment number 74.

    @Tony (Comment 53) You are right, both in your analysis of the "lucky" generation (well, that part of it with index-linked occupational pensions) that is currently benefiting both from the welfare infrastructure built up since 1945 AND the money-spinning liberalisations of Thatcherism; and also in your prescription for dealing with the problem. Increase income tax and slay the sacred cow.

  • Comment number 75.

    56. At 3:46pm on 06 Oct 2010, madasasnake wrote:

    "I am constantly amazed that an apparent majority believe that the state i.e. the taxpayer should sudsidise their children."

    Some people subsidise the roads - but don't use them
    A lot of people subsidise wars - but don't start them
    A lot of us subsidise higher education - but never used it
    A lot of us subsidise rubbish collection - but recycle most of what we waste
    A lot of us subsidise street lights - but don't have any in our area
    A lot of us subsidise MP's - but have never voted for a winning candidate
    Some of us subsidise health care - but haven't needed the doctor in years

    What is your point exactly (apart from a self centred one)?

    If you want to play that game then I suggest you get off my roads, stop using my NHS and clean up your own rubbish!

  • Comment number 76.

    I think you miss the point here. Having a flat rate benefit that everyone, regardless of income, can claim when they have dependent children, is a bit odd, but its a throwback to an earlier age.
    I see no objection to having it tapered or means tested, since families with the incomes of D & S Cameron frankly don't need the £180 per month it gives them. They wouldn't notice if their income fell by £20,000 pa!

    The problem is in the maths around the cut off.
    Single parent earning £45,000 looses the benefit.
    Two parents, one earning £42,000, the other on (say) £25,000, keep it.
    That's a household income of nearly £70,000.

    Two parents, one earning £45,000, the other on (say) £5,000, looses it. Household income of £50,000

    Where, exactly, is the justice in that?

    If Osbourne had talked about household incomes, it would have been a different matter.
    He talked about it being too costly in administration to do it any other way, but since the Child Tax Credit is mean tested against household income, that maths has already been done!

    Maybe they are trying to soften us up for some major battering in two weeks. I hope not, because I keep wondering what will happen for the million or so public sector workers out on the street next year, when the benefits claims come flooding in, and the unemployment figures have just gone skywards with no sign of any dip?

    That'll be a lot smaller tax base for a lot more benefit!

  • Comment number 77.

    54. At 3:32pm on 06 Oct 2010, AudenGrey wrote:
    "I think quite a lot of folks are forgetting that two working parents are also paying in two lots of tax and national insurance..."

    ...and two mortgage/rent payments, and two energy bills, and two sets of council tax...

    ...wait, wait. Hold on. No they're not. Those costs are all per household and partners (married or not, children or not) make huge savings there, with the only help for single folk being a disproportionately small reduction in council tax.

    More to the point, if only one parent is working, it'll be because they're the only parent (in which case they have to arrange childcare too, and are proportionally much harder hit!) or are the breadwinner and probably working more hours than either of the two working parents.

    The simplicity of it is, a single working parent earning just over the threshhold can and will be -paying- for two working partners who individually earn just under the threshhold but collectively earn nearly twice as much, even if you were to only make a one-sided factoring in of things like take home pay.

  • Comment number 78.

    57. I don't want to alarm you but just because you have a job and don't claim benefits, you aren't insulated from the cuts.

    Everyone will be affected, whether directly or indirectly through a reduction in cash benefits, suffering a reduction in council services, a reduction in rail subsidies meaning increased ticket prices, a reduction in demand for products (due to the increased cost of living) and hence reduced job opportunities/pay rises/bonuses etc...shall I go on?

  • Comment number 79.

    57. At 3:49pm on 06 Oct 2010, bigsammyb wrote:

    "Nobody earning over 40K should get any kind of tax breaks or child benefits. They are YOUR children YOU pay for them."

    I don't have children either - but your using MY ROADS, you're using MY NHS and you're using MY COUNCIL SERVICES which I pay for and don't use.

    Isn't it funny how some people cannot think outside of their own selfish realm - until of course someone points out that they're freeloading more than anybody else.

    If you want to settle this argument - we elect the person who uses least services - then they can dictate to the rest of us who should pay for what- until that time I suggest people accept that a civilised society encourages child birth and development as a good thing - which should be encouraged.

    ...otherwise you'll be moaning about all the extra ferrel kids there are about as parents are forced to go back to work to make up for their lost benefits while their kids run riot on the streets.

    It's so Daily Mail on here today - surely people don't really think they live in personal bubbles do they?

  • Comment number 80.

    The issue with benefits is not the link to taxation, its the taxation system its being linked to.

    Tax needs to look more at household income and using the tax allowances of all in it (including children) rather than being constrained by its old roots in a single bread winner society.

    The big word that Steph mentions in her comments is "entitlement" - other than a basic living and freedom from persecution, why should anyone be entitled to anything?
    Benefits should be based on NEED not desires.

    Why do people here who do nothing deserve more than those working 16hrs a day 6 and 7 days a week elsewhere in the world? - How is that "fair"?

    Its always interesting to see the liberal use of the phrase "child poverty". Absolute child poverty is extremely rare in this country. The "relative child poverty" measure is pretty farcical claim to hardship when compared to living standards in much of the world and even Britain 30 or so years ago.
    Why are we so deserving? - What right do we have to be so much better off than so many, unless we earn it ourselves?

    Labour developed a sense of dependency, partially due to social engineering objectives and some would say as a form of mass gerrymandering trying to tie those who became dependent into supporting Labour out of self interest.
    Its unlikely that the country can ever be either competitive or solvent with such high levels of dependency.

    However, everything is self focused, winners quietly take any gains (but would complain if they were subsequently lost) while losers shout from the rooftops with the media constantly pushing the "someone lost, that's so unfair" agenda; even if something is conceptually fair.

    The entire debate of "fairness" needs to be opened up and taken beyond a 7yr olds, "I can;t have what I want, its not fair" level.

    What should everyone have a basic right and expectation of?
    (Based on need not what they want or may have grown used to)

    How can we best pay for that and ensure those who can are paying towards it in a fair and balanced way, easily collected and sustainable by not harmful to the economy as a whole?

    Any system should reward effort and achievement.

    The problem is we have legacy systems that have evolved, being twisted by policy initiatives over time and are now not fit for purpose - either in relation to promoting a desirable society or the economic well being of the nation as a whole.
    ... but of course untangling the mess and establishing something appropriate and "fair" would create winners and losers; so no doubt politicians will continue to avoid the core issues for decades to come.

  • Comment number 81.

    62. At 4:15pm on 06 Oct 2010, Hugh_Joctopus

    Excellent - but we could have saved a lot of wasted time if people had considered what "worst cuts in history" actually meant. Maybe everyone polled and who voted were under 25!

    65. At 4:22pm on 06 Oct 2010, Corrado Blaise wrote:

    "Lets not be politically correct here, there are estates all round the country where there are families of 3 generations that have never had a job."

    Do you mean council estates - or country estates? Most of these 'non-jobbers' are members of the ruling elite or become MP's.
    Have a look at George's CV - and tell me which one of those was a 'real job'?
    http://en.wikipedia.org/wiki/George_Osbourne

    "They continue to produce offspring, that through no fault of their own, will continue to perpetuate the decay in these areas."

    Do you mean like producing MP's who then damage the country with their basic misunderstanding of Economics and specifically aggregate demand?

  • Comment number 82.

    I sincerely hope nobody actually believes this - I mean if you do then you are seriously gullible.

    http://www.guardian.co.uk/politics/2010/oct/06/david-cameron-speech-conservative-conference

    Your country needs you (to repair the damage the wealthy elite have created following their greed and selfishness)

  • Comment number 83.

    61. At 4:06pm on 06 Oct 2010, foredeckdave wrote:
    Stephanie,

    I was intrugued to read, "Most consider it an entitlement, not a gift."

    It matters not if it is a universal benefit or one that only applies in certain instances (Jobseekers, Incapacity Benefit, Old Age Pension, etc.), they are part of the fabric of our welfare provision. They are a contract between the State and those individuals who are or have been in employment. They most certainly are NOT a gift and should never be considered by any administration as being so.

    Each government will review to whom and at what rate and for what purpose these benefits will be administered. We may or may not agree with their decisions. However, we are on a very slippery slope when either governments or individuals are allowed to act upon the assumption that they are in fact a gift which can be arbitarilly removed.''

    ___

    This PROPOSED change from BENEFIT to so-called 'univeral credit' [sic] makes a big difference from a legal ENTITLEMENT point of view.

    A 'credit' is something given or believed. Credit comes from the Latin word credere, which means "to believe". It also implies something which can taken back - i.e. a credit - debt.

    'Benefit' means an entitlement; -

    e.g. an old age State NI pension benefit is an ENTITLEMENT to the deferred payment of wages / salary TO BE paid in the future based on NI contributions usually at least 30 years' worth!

    Sick pay or what is called 'Incapacity Benefit' (now MISNAMED 'Employment and Support Allowance') is a benefit which is or used to be based on how much and many National Insurance Contributions you PAID into the 'SICKNESS' benefit kitty at DWP/DSS/HMCR.


  • Comment number 84.

    Why do we all comment on all this ? Nobody is listening and nobody cares, probably for good reason reading some of the garbage that passes as comment. It perhaps is therapeutic to get things off your chest but it clearly is a complete waste of everyone's time. I suppose it keeps the moderators in a job.

    For what it is worth, which clearly is very little, I agree with whoever it was that said, in effect, that having children is not compulsory so if you want them, you pay for them. But it's not worth saying because there is no-one out there, and the few that are are not interested or even listening.

  • Comment number 85.

    The extraordinary thing is that there is already a perfectly simple and workable way to link child tax credit to joint income and to create a taper to avoid discontinuity at the withdrawal point. In other words the child tax credit system recognizes and avoids the obvious anomalies that have been created by the proposed method of withdrawing the child benefit.

    Why the tax credit system could not be extended to cover child benefit is a total mystery. It takes account of joint household income and smoothes the impact of loss of benefits at the margin. Fortunately, there is plenty of time to do this, since the new policy does not begin before 2013.

    But it does suggest that this new policy was rushed through without consulting any of the experts, which if true is very worrying indeed.

  • Comment number 86.

    67. At 4:35pm on 06 Oct 2010, writingsonthewall wrote:
    'Have we all forgotten? - are we so quick to accept the removal of benefits for children following the disgraceful abuse of the benefits system by MPs? (I'm including public 'expenses' as benefits)'


    Avery good point WOTW

  • Comment number 87.

    This fight is unwinnable for the government. To persevere will destroy the government, they must recognise their mistake, apologise and say they are sorry.

    If they can't do the right thing, and they can't do it right, then why are they in power? Can it be time for another election so soon?

    I'm not sure who the culprit is, Cameron, Osborne, some other idiotic tory or the lib-dems. Whoever it is, and I suspect Cameron/Osborne, they should go. They have no place in leading this country. We need real politicians, not lightweights.

    Running the country is a serious business and should not be left to such clueless amateurs.

  • Comment number 88.


    Mr Cameron should simply have abolished Child Benefit for all children born after say 1st October 2011 ; benefit to continue for existing children to age 18 as currently the case .

    No existing parent or child would be disadvantaged; future prospective parents should limit planned family size to what they can afford without State subsidy, annual savings of £660 million in benefit payouts increasing year on year for the next 18 years .

    The UK population has doubled in 3 generations, births have exceeded deaths evey year since 1900 (1975 excepted ) - no sensible person thinks the UK will be a better place to live with 100 million plus population - the 35 million we had when my grandfather was born would be a much more attractive alternative . If we can bring the annual birth rate to say 2% below the death rate the UK will have a much more secure longterm future

  • Comment number 89.

    If you want to change a system you have to be very careful penalising the people who run the system - private or public. The people who run the system know the system and know where the buttons to press are. The people who run the system earn above average income. They are the ones stamping their feet petulantly right now.

    That is the main problem the coalition faces - they have to hit the middle class.

    I am surprised, well not really in some respects, but surprised the lesson of Thatchers poll tax attempt has been forgotten. If you want to raise money you spread it around you don't allow a focus point. That lesson stretches way back and is why fuel duty collected at petrol stations is easier than a per mile road tax collected at bridges and toll points. Focus gives rise to riots and protest movements.

    As far as the child benefit is concerned the stats say over 1 in 5 kids are raised in poverty and they are the ones who need help, not people driving around in people carriers.

    The middle class have clearly been involved in the manipulation of the economy via house market manipulation very much to their benefit as a group. This has been principally through campaigning against housing development, the NIMBY movement. They are ferocious in defending their gains and if the coalition think they have an easy task they are very much mistaken. The idea the idea the middle class as a cohort have ethics is a joke. Just look around at where we are. They are good at talking the talk but not good at walking the walk.

    Regards

    Not Buzz Windrip

  • Comment number 90.

    67 writingsonthewall:

    'they will have to take mine from my cold dead hand)'

    That will not be a problem, there will be a death tax.

    PS The abuse of an expenses scheme is criminal, it has nothing to do with statuary benefits reform.

  • Comment number 91.

    57. At 3:49pm on 06 Oct 2010, bigsammyb wrote:
    They are YOUR children YOU pay for them.
    ===================================================>
    Fair enough ... I have, I am, and I will ... but when my kids grow up and start working, just remember it is them that will be paying your pension. I am lucky enough to (just about) afford to lose £2k/year ... but believe me, there are many who can't. £45k in London is probably the equivalent of £25k elsewhere, due to the hugely inflated property prices ... yet the tax and benefits system does not take that into account. These are precisely the kind of hard working parents that need to be empowered and encouraged in these difficult times; not chastised in the way that yourself and other singleton posters have done.
    BTW, the one thing no one seems to have picked up on yet is that with the removal of child benefit, if the recipient wants to maintain their national insurance contributions, it will cost them an additional £630 a year ... (Current rate for Class 3 NI stamp is about £50/month).

  • Comment number 92.

    tFoth Wrote
    If they are not already (and many are) the middle class will soon be paying to educate their children privately: paying for medical insurance: paying into a private pension - and asking themselves what all that tax is paying for.

    Ditto to the above I already paid to educate my children privately, I pay private medical insurance & have a private pension. I would not go as far as saying what are my taxes paying for because clearly I get national defence, I am prepared to pay for people geniunely disadvantaged through medical or extreme social conditions, we need a stable government that has to be paid for.
    But like the inequality of the CB change regarding single / joint incomes above £ 45K for any government to gain the support and understanding of the public policies have to be seen to be fair and frankly regardless of what Osbourne or Cameron are saying this policy is ill conceived and enacted. Its at a point like this I question how my taxes are being spent and as in many other goverment decisions common sense seems to be blatently missing. I have come to the opinion that ALL politicians regardless of party in the UK currently symbolise the demise of Britain, sell off everything to the highest foriegn bidder (then blame Europe), make us pay for the banks calamity whilst ensuring they retain high bonus payments (which increases costs to all other business)and blame someone else for their actions you couldnt make it up.
    So Osbourne has annouced his first Brown moment, annouce an unfair policy years before its enacted!

  • Comment number 93.


    32. At 2:24pm on 06 Oct 2010, Dr_Doom wrote:

    "I'm sure it already is an offence, however the threat of getting a criminal record would be enough to put most middle income families off from trying it on. Benefit fraud is more common among those at the bottom of the scale as they have less to lose in terms of getting a criminal record."

    This comment sounds so stereotypically biased against "those people at the bottom of the scale" - Any factual bases supporting your comment that poorer people are more likely to fiddle?, or is this just an assumption. We need to consider that poorer people could well be under greater financial pressure to fiddle, as some do literally live hand to mouth. I'm not suggesting that this makes fraud acceptable, no more so than tax avoidance, both are methods of stealing from the state, but I feel certain that there is likely to be less than 1% of people who are on low incomes or benefits who are practicing tax avoidance, as they obviously can't afford all the accountants and solicitors who support this practice.

    The crying shame is that this government appear to have no more ambition or courage than the last one to tackle this problem, even though they are patently aware that this defrauds all of us by a far greater amount.

  • Comment number 94.

    Stephanie,
    I don't agree with yours and lot of others in this web-site. The CB is part of the whole package. Lower rate payers are not subsidising the higher tax payers. Higher tax payers are by default paying more taxes. So getting a little back CB is not a crime. So you low tax payers stop winging!.
    Nest if the government don’t have resources to work-out earning of both partners in a family, how are they going to introduce transferable tax liabilities in the life of this parliament.
    So Cameron if you don't understand what is fair, may be your parents wasted their money to send you to Eaton.

  • Comment number 95.

    90. At 5:59pm on 06 Oct 2010, Not Buzz Windrip wrote:

    67 writingsonthewall:

    'they will have to take mine from my cold dead hand)'

    That will not be a problem, there will be a death tax.

    PS The abuse of an expenses scheme is criminal, it has nothing to do with statuary benefits reform.''


    Indeed!

    And indeed, and moreover, when will the ALL the thieving MPs and parasite 'scrounging' unelected peers in House of Lords involved in the CONSIPRACY to defraud the PUBLIC purse - the taxpayer - be criminally prosecuted for claiming MPs' and Lords' 'Housing' and 'second Homes' and Mortgage Allowance'?

    Cut MPs and peers' £250 per day plus PUBLIC paid for ''Allowances'' and cut the PUBLIC paid for bailouts to the parasite banks and 'idle' parasite bankers!

    Close down the casino banks! And let them work for a living like care work or cleaning at £6 per hour or less!

    Or do some Tory volunteer work for their 'Big Society'!

  • Comment number 96.

    "What are the lessons from the row over child benefit?"

    1. Our leaders do not have a clue what the word "fair" means.
    2. Our leaders don't understand the concept of "all being in this together".
    3. We should all be very frightened about the future (unless you are really rich like our leaders). Anyone unlucky enough to lose out because of a poor policy decision is on their own.

  • Comment number 97.

    There will be no austerity for the elite. It is all about driving down living standards for the plebs. Plebs with £45k salaries are still plebs from an elite viewpoint.

  • Comment number 98.

    I'm afraid the "its not fair" mantra will come around and around and around.....

    We have a budget deficit so large it cannot be paid back
    We have impending energy dependence problems
    We have social problems
    We have an ill-conceived sense of "poverty"
    We have a myriad of differing personal living arrangements
    We have a housing problem
    We have a food production problem
    We have environmental and bioligical depletion problem
    We have an unemployment problem
    We have an overpopulation problem
    We have a resource depletion problem
    We have a monetry system problem
    And so the list goes on....

    Sorry, but we have a massive "systemic" problem. And it's global in scale (not just limited to UK Plc).

    I think the majority really are living in a fantasy-land of thinking it will all continue with just a little bit less (and, god-helping it won't be YOU that suffers a bit less, but someone else) to keep it all ticking over.

    If the comments on this blog about a relatively benign "benefit" like CB is anything to go by, then I shudder to think what's gonna be said/done come the 20th when they outline something considerably "bigger" by comparison. And I'm willing to bet NONE of it will actually address the issues we face, merely attempt to "kick the can down the road".

    And what really worries me is that the majority is not apparently asking:
    a) why does it have to be this way
    b) what radical solutions that address the systemic issues can we come up with
    c) how do we deal with transition so the pain/discomfort is minimised, esp. for those who will find it less easy to adapt

  • Comment number 99.

    The furore over the child benefit anomaly is just a taste of things to come. Yes, it is not fair that two median earners in one household get to keep the benefit while one high earner has to lose it but this shows how difficult it is to be completely fair without introducing complex means testing. For those who talk about doing it through the child tax credit, that scheme will be dead in the water when Duncan Smith's universal credit scheme comes in and rightly so. The system is open to fraud, it invites feckless parenting and is expensive to administer and error prone. The only justification for keeping any sort of child benefit is that it gives some help to mothers in the early years particularly if she is at home. My suggestion is keep it universal so everyone gets it and it is easy to administer, increase it for the early years up to the age of five and limit to two children and then reduce it on a sliding scale until the child reaches secondary school and stop it then. Parents should be able to sort out some sort of part time work or live on one income.

  • Comment number 100.

    81. WOTW...

    No-one likes waking up from a nice dream and perhaps only this week, we are seeing that those who've been hiding under the covers in vain, who'd thought the dream might not be over and had sighed with relief when the papers said the recession was over are awakening to the reality that the headline 'worst financial crisis in history' really isn't just a headline. As you say, it's the x factor generation who have refused to believe they can't have what they want purely on the basis of really really wanting it, regardless of lack of actual earnings and basing their race against the joneses on cheap easy credit. Same with the x factor contestants - "but Simon, I know I can't sing but I REALLY want to be a rich and famous celeb like the ones i see in Closer magazine. You can't ruin my dream. It will mean I have to realise I am only cut out for a menial job and am not a interesting and unique as Id like to think".

    Wake up everyone, rise and shine, it's time to admit there is no more sand to bury your head in. Having everything easy was just a dream which has now ended. It'll get worse before it gets better and it'll be easier to deal with if you don't continue to pretend it isn't happening and won't affect you.

    If only we had a stupid/naivity tax - we'd be out of this mess in a nanosecond!

 

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