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Child benefit cut: No such thing as an easy reform

Stephanie Flanders | 10:45 UK time, Monday, 4 October 2010

A government that is cutting benefits for the very poorest families has no business handing upwards of £1,000 a year, tax free to everyone in the top 15% of taxpayers who happens to have a child.

George Osborne

 

That is George Osborne's defence of his decision to remove child benefit from higher rate tax payers, and it is a pretty good one.

Economists who wanted to see the benefit properly means-tested will say this is the very least the chancellor could have done - saving only £1bn from a total child benefit bill of close to £12bn in 2010-11.

Quite possibly, he will come back for more. The proposal to remove it from 16-18 year-olds is not entirely dead.

But - as Margaret Thatcher learned in the 1980s and Mr Osborne is about to be reminded - when it comes to the benefit system there is no such thing as an easy reform.

We heard at the weekend that the work and pensions secretary has won the Treasury over to wholesale reform of the benefit system. "Making work pay" has been the holy grail for benefit reformers for decades - it's not as if this is something new. When we see the details we'll be able to judge how far Mr Duncan Smith has avoided the pitfalls, and how far benefits are to be cut to make the numbers up.

But the government will get a dress rehearsal in the downsides of benefit reform in the popular reaction to this change in child benefit.

By far the largest of these is the messy overlap between households versus individuals, which is the reason why we have a benefit system separate from the tax system in the first place.

The first "tricky examples" put to Mr Osborne in his interviews this morning have all revolved around this basic issue: how can you justify, he was asked, taking benefit away from a household with one earner earning £45,000 a year, when you will keep paying it to households where each parent earns £40,000? The problem arises because benefits are paid to the household - but taxes by the individual.

The chancellor's answer, in effect, was that the Treasury had to find some way to keep it simple. It's certainly true that if you are only saving £1bn a year, you can't afford to spend a lot on extra administration. But it is going to make for a lot of perceived - and widely publicised - inequities.

Supporters of the principle of universal benefits have always said that any suspension of that principle would be a slippery slope - that, from here, the end of child benefit is only a question of time. Perhaps.

Much will depend on the political reaction to Mr Osborne's reform in the weeks and months to come. But whatever Mr Miliband says now, I would not put much money on a future Labour government ever feeling the need to give this money back.

Comments

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  • Comment number 1.

    If the Govt had decided to make this about FAMILY income, not INDIVIDUAL income, I think it could have set a different threshold.

    A family earning £60K a year (eg 2x £30K) is probably more able to afford to lose child benefit than a family with a single income earner on £50K/year. This would even exempt families where both parents are earning the national average income, which seems fair.

    I'd be very interested to see what the savings to benefit payments would be using a model such as this - how much more would the treasury save in this instance? How many more households would become ineligible for Child Benefit as a result of this far fairer mechanism?

    I doubt very much if the relatively simple calculation that is required to determine household income would be so expensive to implement in HMCE systems that it would make a significant dent in the extra savings arising (and the extra political capital that would be generated).

    I also think it would be better for the economy - an awful lot of families with a single income earner will now be revising their spending plans to take account of the reduction in disposable income. How much is that going to take out of the consumer economy?

  • Comment number 2.

    Full means testing would be extra complication when the system desperately needs simplifying, so perhaps this is the right decision for now, even if imperfect. It's better than shrinking back from reform just to avoid the problem, in any case.

  • Comment number 3.

    @theocupier

    You are correct that this should be done by household income, not just attacking those who pay 40% tax. The government already knows about household income, it uses this to decide whether to pay family tax credits. Why not use this to decide who should no longer receive child benefit.

  • Comment number 4.

    This will surely just result in more parents 'declaring' that they are living apart, so as to not only claim Child Benefit but also for the lower paid parent to additionally claim Working Tax Credit.

    Didn't the Tories claim, in the run up to the GE, that the family unit would be at the heart of their policy, especially those with married parents?

    I guess they've certainly done that by targeting them with tax hikes.

    Families yet again represent the softest/easiest targets in the economy.

    I predict a strong rise in the black economy!

  • Comment number 5.


    I find it very difficult to take any so-called analysis by George Osborne serioulsy, even though the consequences of his actions will have a very deleterious effect on so many families. He started his interview on radio 4 this morning by saying 'When 96pence in the pound is taken from people in taxes, reform is needed...'.

    As nobody has paid taxes at that rate since the late 1960s, when many pop stars chose to be non-resident for tax purposes to avoid this ...how can any other so-called analysis by George Osborne be taken seriously. Let's face it, there has not been any analysis of the consequences of proposed Tory changes.

  • Comment number 6.

    It is about timne child benefits and the whole benefit system were reformed. I have four kids and yes, I will lose out but this makes a lot of sense to me. The overhaul of benefits to make sure that the poverty trap is removed can only be beneficial.

    My only real worry about the reform of the benefits system is that it will need to have a major IT overhaul and governments have a very poor record on IT implementation.

  • Comment number 7.

    It would be interesting to know just how many of the more well off in society actually claim child support in the first place - particularly by amount earned vs percentage of claimants

    The main point being is this just a political statement that affects relatively few people but makes the poorer feel like something is being done?

  • Comment number 8.

    There is a lot of nonsense about couples with two earners on £40k per year and one earner on £46k and a non earner.

    Apart from the fact that this will be a very rare instance, what about child care? The non earning parent will act as child carer, so providing a considerable saving to that family - the £80k couple will have to pay for nurseries/ child minders/ nannies etc - and they're not cheap.

  • Comment number 9.

    thoccupier wrote: ,snip.:

    "...an awful lot of families with a single income earner will now be revising their spending plans to take account of the reduction in disposable income. How much is that going to take out of the consumer economy?"

    Er none. The money will be spent elsewhere in the economy by either the Government or will no longer be raised meaning that the whoever was taxed in the first place will be able to spend it instead (and more of it as there will be no money lost owing to administration etc).

  • Comment number 10.

    Inequalities are inevitable until the Government - any Government - addresses the structural discrepancy whereby taxes are levied individually and benefits administered jointly.

    Rather than fix this fundamental issue, the Chancellor is merely trying to apply yet another plaster. Which is a pity, because this is an area ripe for reform.

  • Comment number 11.

    A simple cut off point is required, and I believe this is the right action to have been taken. A complicated means test on all families is timely and costly. We are cutting the child benefits here to try and save £1bn, means testing could potentially cost us as much as we save.....
    At a time of economics instability we need to cut back where we can to reduce the current deficit. More of the welfare state needs to be assessed and cut back...

  • Comment number 12.

    It's kind of convenient to MP's on basic pay of £42,500, i'm sure George Osborne is trying to avoid upsetting any of his own back benchers no doubt.

  • Comment number 13.

    #5 rustevebrit

    The 96 pence in the pound referred to is the tax take hitting those on low incomes replacing benefits with earned income - a powerful disincentive to finding work. In other words, if you're on benefits and find employment, the corresponding loss of those benefits means that you will be better off by only 4p for every extra pound. Can that be right?

    Quite widely publicised. Keep up at the back.

  • Comment number 14.

    Even more reason not to get married before you have kids, then depenfding whoever is not earning above the threshold registers themselves as sole parent to the children.

    Easily done, and you save the cost of a wedding as well.

  • Comment number 15.

    7. At 11:48am on 04 Oct 2010, peardox wrote:
    It would be interesting to know just how many of the more well off in society actually claim child support in the first place - particularly by amount earned vs percentage of claimants

    The main point being is this just a political statement that affects relatively few people but makes the poorer feel like something is being done?


    ----------------------

    Very interesting point that. As an imminent father of twins I had no idea what my family to be were entitled to, and I had always assumed based on our jobs it would be nothing. I can't be the only one! Another question would be how many more people are going to claim now before the 2013 deadline!?

  • Comment number 16.

    I don't understand this. They can test to see whether one of a couple is earning over ~£43k but they can't test how much your combined earnings is and give you a tapered off relief?

    Wouldn't gross salary means testing be easy? Test combined gross salary. If it is above 70k no benefits?

  • Comment number 17.

    Why not combine tax credits and Child Benefit? It seems that if we are now linking the eligibility for Child Benefit to tax and income, why not just merge the two? the tax credits system is means tested anyway, so surely there are some real savings to be made by such a move? Why have two arrangements, with twice the admin etc? Also, such a move would mean both parents income was taken into accout....

  • Comment number 18.

    9. At 11:52am on 04 Oct 2010, therealunderwhelmed

    So, not being used to cut the deficit then?

  • Comment number 19.

    Our family falls into the one main earner (over £44k, just), one part-time earner bracket and we have always said that child benefit for us is a nonsense (because we're not poor and wanted to have children).

    But to take it from us but still give to the benefit to twin earners who each earn below £44K is a greater nonsense. The Tax Credit system already knows family income so where does the complication come from. Those who can manipulate their claimed income clearly will do, the rest of us will loose out.

    Yet again the family who want to have just one main income earner gets punished.

  • Comment number 20.

    This is just the beginning. The pips will be loudly squeaking all round soon.

  • Comment number 21.

    It is the tax free bit that I find so silly.

    Why not simply treat child benefit as income for tax purposes. That way you get a nice gradual reduction in the amount the the mother gets as she earns more.

  • Comment number 22.

    Surely the simple answer to this problem, which has been around, but ignored for many years, is to make all non means tested benefits taxable, so that means testing is effectively achieved by clawing back unneeded benefits as tax. There would also big administrative savings to be made by dropping means testing of some other benefits.

    Changes to tax rates and thresholds would be required. Unfortunately, the red top newspapers and those working in other parts of the media, who simply take their cue from the red tops, would make sure that these changes were completely misunderstood by the numerically challenged members of the public .

    So a much braver politician than Mr Osbourne, would be required to propose this solution.

  • Comment number 23.

    Child Benefit is only the first of many social security benefits that the Tory Lib Dems Coalition intend to cut.

    Next will be Freedom Passes and then the State Pension for the elderly and DLA for the sick and disabled.

    While cutting befits and attacking the poor and vulnerable in society, the Government will be pumping more taxpayer money QE into the private companies and banks to ensure the rich lifestyle continues for the idle fat cats and casino bankers - the parasites in the City of London.





  • Comment number 24.

    Stephanie Flanders wrote:

    ‘The first "tricky examples" put to Mr Osborne in his interviews this morning have all revolved around this basic issue: how can you justify, he was asked, taking benefit away from a household with one earner earning £45,000 a year, when you will keep paying it to households where each parent earns £40,000? The problem arises because benefits are paid to the household - but taxes by the individual.

    The chancellor's answer, in effect, was that the Treasury had to find some way to keep it simple. It's certainly true that if you are only saving £1bn a year, you can't afford to spend a lot on extra administration. But it is going to make for a lot of perceived - and widely publicised - inequities.’

    ________


    Things are always ‘simple’ when it benefits the rich ‘higher earners’ and rich peers and MPs claiming expenses and home allowances (remember?)

    If you happen to be unemployed because of the Government’s mismanagement of the economy and allowing rich greedy bankers to gamble and then bail them out with £1.2 trillion of taxpayers’ money, claiming your entitlement to Social Security Benefits is highly complex and ALL income is counted when working out benefits including so-called partner’s income. Why should it be any different with Child Benefit for the richer higher earners claiming benefits?

    The Government have spent £ billions on IT computer technology at the DWP/DSS and HM Customs and Revenue (Tax) offices throughout the UK. They know to the last penny how much people earn on PAYE at the touch or click of a button.

    It’s very ‘simple’ when it suits the Tories and Government but complex and penal ‘inequities’ when poorer families / ‘individuals’ (note how the Tories change to ‘household’ when its suits them and then back to ‘individual[s]’ when it suits them!) claimants – the unemployed, genuinely disabled and sick and carers of the sick and disabled on derisory £53.90 per week ‘Carer’s ‘Allowance’* have to claim any benefits they are ENTITLED to. Then ALL income from all adult members of a family household and even partners living away from the household are COUNTED to work out benefit entitlement. Why if the Tories claim they want things ‘simple’, are entitlements to ALL benefits not paid automatically?

    According to one estimate the Government DWP/DSS save £50 billion a year because people who are entitled to benefits fail to claim them (often because they don’t know they are entitled to the benefits!)
    Again, why if the Tories now claim they want things ‘simple’, are entitlements to ALL benefits not paid automatically?

    ‘Simple’ isn’t, George?


    *Carer’s Allowance: It is estimated that carers save the DWP and Government - taxpayer up to £80 billion per annum for providing direct care of 35 hours a week minimum for a member of their family at home rather than the disabled and sick person going into institutionalised care - hospital / nursing home - or providing independent private paid carers instead of family carers.


  • Comment number 25.

    Straight out of the starting blocks and Osborne is derailed at his first conference as Chancellor by this silly proposal. The man has no judgment if he did not realise this policy has a major fault that will be ruthlessly exposed and impossible to defend leaving him with egg on his face - i.e. high income families will escape this change as long as both partners keep their individual incomes below £44,000 whilst he gleefully takes large amounts from single income families who happen to earn £44,000.01.

  • Comment number 26.

    Hear hear to no. 4.

    I am the sole earner in my family, with a wife and 4 children, 3 of which will still be eligible for child benefit in 2013. My salary is in excess of 44k. We will consider seriously looking at 'declaring' that we are living apart, so as to not only claim Child Benefit but also for my wife to additionally claim other benefits.

  • Comment number 27.

    This is also a tax on people who live in Cities as the cost of living is far lower for those who (can afford to or happen to) live far from population centers in the first place.

    It's, basically, a South / North divide with preference for the coutryside

    I can forsee a lot of MPs having their 'main home' declared as being in a lower cost area of the country as a result...

  • Comment number 28.

    Surely a simple answer is to give everyone a tax allowance which can be transfered to anyone else. This will be fairly easy to administer will give children the ability to have some income/their parents some relief from the expence of having to raise them be of benefit to those in work. For those out of work with children there should be nothing more than a safety net which provides food and clothing to a basic standard and this should be reduced with every child as they can benefit from hand me downs and can share other resources....

  • Comment number 29.

    OK, in principle I approve of this. On the fact of it, it's ludicrous that someone who's rich enough to be paying higher rate tax should get any state handouts.

    However, wasn't is supposed to be a key theme of the tory manifesto that why wanted to encourage couples to stay together through the tax and benefits system, and make sure that couples were better off together than apart?

    This fails on that score, for any couples in which one parent is a higher rate taxpayer and the other one isn't. They would be better off separating as long as the kids go with the parent who isn't a higher rate taxpayer.

  • Comment number 30.

    As well as the basic unfairness against single parents or those who chose for one parent to work there is another problem. It lies in the world of economics.According to notayesmanseconomics.

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

  • Comment number 31.

    18. At 12:19pm on 04 Oct 2010, Squarepeg wrote:
    "So, not being used to cut the deficit then?"

    Hopefully, as:
    a) the deficit is the amount we owe in future taxes and;

    b) we are paying £120m per day in interest alone on the total debt and therefore need to reduce that debt to reduce the interest payments. By the way, £120m per day is more than we spend on education (which is itself the highest it has ever been) and it must be a completely immoral to be wasting such money on interest payments.

  • Comment number 32.

    The problem is defining what is meant by a couple. It can't be done for example on the basis of people living at the same address. Establishing a 'household income' would be anightmare in beaurocracy. Fundamentally the tax system treats us as individuals and has done since the ablolition of the married persons tax allowance. I think the proposals regarding child benefit are the thin end of the wedge. 1 billion is poulty in comparison to the deficit. Having a go at the state pension would bring in billions and might be the next stage although the government do it at their peril!

  • Comment number 33.


    You mean to say that we are currently "giving away" £1bn of taxpayers money to people who are already earning more than £40,000 a year?

    Scandalous.

  • Comment number 34.

    The majority of middle/high eaners in this country took a decision to vote for a government that was bound to hurt them financially. However, I believe that they took this decision in the knowledge that the alternative (national bankruptcy) was a far bigger threat to their collective and personal well-being. Surely the political priority for the Government is to keep these people on side - not by preserving unaffordable benefits and the like, but by demonstrating that cuts of this type have been carefully and properly thought through. This is not the case with this announcement, and the anomaly of a family earning £86k (2x£43k) still receiving this benefit whilst another earning £45k (1x£45k) does not looks clumsy and ill-considered, and bound to provoke anger.

    In response to ltfcunited (8), comment regarding childcare costs etc. - what about a couple with a 'high' earner on £45k and a low earner of £13k. Why would they lose the benefit whilst a couple both earning £29k (same income) keep it? Same income and same costs of childcare in each case.

    This decision is also being described as capturing approx. 1.2m families. Is this based on the numbers paying 40% tax today? If so, the actual number of famiies will be far higher by 2013 given that the 40% threshold has been frozen for several years and will capture more and more people every year in the meantime. How many families will have a 40% taxpayer by the time this change comes into force?

    As always this hit will probably be avoided by those outside PAYE, and further increase the disparity in taxes paid / benefits received by those who can play the system (non-PAYE) and those that can't (PAYE).

  • Comment number 35.

    The two income v one income anomoly just highlights the deeper bias in the tax system against traditional families.

    Time to allow all tax allowances to be shared between married couples

  • Comment number 36.

    #22 stanblogger,

    "make all non means tested benefits taxable," At least the Tories bete-noir Incapacity Benefit is both non-means tested AND taxable. Check it out if you don't believe me.

  • Comment number 37.

    #24 Maxone wrote
    The Government have spent £ billions on IT computer technology at the DWP/DSS and HM Customs and Revenue (Tax) offices throughout the UK. They know to the last penny how much people earn on PAYE at the touch or click of a button.

    the spending billions is certainly true, but they only know how much people earned in the previous whole tax year.

  • Comment number 38.

    I understand the principle of reducing benefit to the rich but this ultimately hits the section of higher rate tax payers with the least spending choices and disposable income. A family with 2 kids will lose £2k in benefit which is more like £3k in gross salary. To a young famaily with £50k salary income, this is a lot of money. After bills, rent, mortgage, etc, are taken out it could quite easily be 10% of family disposable income.

    This is at a time when wages are being frozen, jobs are being lost, etc, so its not as if people can work a bit harder to claw this back.

    If you want to take money from the rich, raise the higher tate of income tax.

  • Comment number 39.

    It is not paying child benefit that put this country into recession, nor did it cause the current high deficit level. Single income households are already disadvantaged as the do not have access to dual tax relief levels enjoyed by dual income households. To say that it is difficult to determine household income in this day an age is really taking us all for fools. Simple Maths: 2 households A and B, both have 3 children. Household A 1 earner income £60K; Household B 2 earners income £70k. Tax free income A approx. £5k; Household B approx. £10K, then the government hands Household B furthe approx. £2K in child benefits. How is that for equality?

  • Comment number 40.

    This is going to open up a can of worms. The cut will be devastating for alot of families who rely on a single income of a little over 44k with either mum or dad at home caring for their children. The universal child benefit is a much needed source of income and improves the quality of life for all of those who receive it. The higher rate taxpayers rightly see this as their only real tax break, it is not welfare at this level as they contribute considerably more than that.

    With income tax, national insurance, mortgages/high rents, council tax, pension contributions, inflated food costs etc etc this will amount to a huge cut in disposable income especially when we are looking at VAT going up to 20% next year.

    So effectively a 7-8% tax rise from 2013 plus the 2.5% and this won't take spending out the ecomonomy.. I don't think so, expect retail workers to lose jobs over this.

  • Comment number 41.

    I'm sure it's not the Chancellor's intended outcome, but as someone on the cusp of the 40% tax band, it would seem to be a sensible step for me to look to limit my earned income to just under the threshold (and pay less tax etc) rather than forego over a £1000 worth of child benefit for my child. And even more so if I have more kids. See, if the government doesn't take account of the nuances of people's lives, the people will adjust to the system themselves.

  • Comment number 42.

    This is a step in the right direction of removing state sponsorship of having children in an overpopulated country and world.

    However, it would have been much fairer to take this first step to judge it by household income. This could have been achieved by tying it directly into the means tested and graduated child tax credit system. Why reinvent the wheel and duplicate effort when we already have a benefit relating to children that is means tested and graduated?

    I would go further and say no more state benefits of any sort for children born after 1 August 2011. This would mean parents had to be responsible when considering having children giving fair warning and taking a step in the right direction to reduce over-population and put an end to pram pushing Vicky Pollards.

  • Comment number 43.

    Sir
    "x" =$ well thats how the chancellor must see it 2x2=4.
    So if you earn as one earner in the family more than the top rate £43.660 Before Tax you loose your child benefit, Yet, if for example both parents are working total income total £52.000 then you retain all your benefits.
    If you are not working then you will get the average earnings as benefit. Why should I go to work, will I still get Housing and Council Tax benefit.
    I am better off than a pensioner, and they havn't started on them.
    God help the ecconomy with a nutter in control.
    Cliff B

  • Comment number 44.

    In principle, I oppose a cheese paring approach to welfare reform - the whole edifice built up over the years is byzantine in complexity. IMHO child benefit should, if paid at all, be limited to 2 children. I'm no reconstructed libertarian, but what business does the government have in supporting having children beyond 2 in number? I would also suggest the benefit is paid in the form of vouchers rather than cash as I suspect too many households use CB to top up other benefits and finance the drugs, booze and fags. If Osborne is really serious about deficit reduction a billion here or there isn't going to make a difference. The inequities in the step announced today are self evident, unless a comprehensive overhaul is made then inequities will always arise. We all have to adjust to the fact that cuts will be made, they will not impact fairly and the next few years will be painful. Pussyfooting around so as not to upset a certain group for any given cost saving measure just puts off the inevitable and then ensures other items of greater social merit get cut instead whilst adding to overall welfare complexity.

  • Comment number 45.

    There are all sorts of different ways of looking at welfare payments. In my view it is grotesque that even the better-off have their hands outstretched to the taxpayer like a bunch of mendicants.

    Can't you see the absurdity in how our society and economy is organised? Have we reached the point at which we are all beggars? Since this is clearly not the case then the social model which we have can't be working in the way it should.

    Rather than meddle with all this complex nonsense it might be more efficient to just declare socialism in which all being free and equal, then each will contribute according to his ability and receive such according to his needs. So much more simple and practical.

    If this does not appeal then perhaps a more traditional economic model in which value is created through productivity, ensuring full employment and a rate of pay sufficient to meet daily needs like we had once upon a time.

    It all went wrong when we stopped working for a larger cake and begun squabbling over who got the biggest slice. Now we just moan that our bit is cut a bit thinner than last time. Well what do you expect from an economic model based on borrowing money from the Chinese so that we can buy what they make in their factories? We just can't go on like this.

  • Comment number 46.

    Didn't Georgie say a few weeks a ago that child benefit was one of the few things that parents get regardless of their income and don't have to ask for it?

    How things have changed for the good. This is a great first step, this government should go onto looking at the inequity of a couple who earn less that 44k individually but more together, then

    1. Means test child benefit
    1. Means test winter fuel payments for the elderly
    2. Means test the freedom pass
    3. Means test free subscriptions
    4. Look at stop paying a state pension to those above a certain income.

    In most cases we already know people's annual income so means testing shouldn't be that huge a task.

  • Comment number 47.

    So families on income support need £500 per week (the equivalent of £35,000 per year) as part of our welfare safety net. Yet hard working families who earn £44,000 per year need to pay 40% tax and the children are not given any child benefit.

    There is something wrong.

  • Comment number 48.

    What rot, there is a VERY simple way of fixing the whole benefits system entirely fairly.
    Give everyone legally here a fixed amount - enough to ensure they don't starve.
    This is simple, fair and reasonable. If you want 500 kids then go earn enough to support them. If you want to do a little part time, full time, or casual labour to improve your standard of living then you no longer need a minimum wage, no longer need a tax allowance, no longer need to lose your benefits at all.
    If you want some insurance against the effects of redundancy because you have a mansion on credit and a horde of kids then go and buy it from an insurance company, or put some money under the matteress.

    It really is sick that at the moment we have:
    People who are WORSE off from getting a payrise (imagine goign 100 over the higher level tax bracket at the moment)
    People who can't work because they loose too much benefit by taking a part time or short term job - and we end up with farmers bringing people in from East Europe
    People who get huge amount of benefits because they went to the pub and drank it all while others that worked and saved lose all that advantage 'because they are rich enough to afford their own care'.

    A flat rate to stop people starving is fair and equal. To be honest I wouldn't even be bothered with making allowances for people being disabled etc. After all we have masses of laws now to make sure 'they are treated fairly' (or discriminated in favour of).

  • Comment number 49.

    Why not just scrap it and sack all the civil servants who implement it? Same for nursery subsidies.

    Then reduce tax slightly with the money saved. Hence earners get to keep their salaries, giving families with one or more earners more in their pocket. This would mean less red tape. And smaller government.

    Yes people with no income would suffer, and I hate it that kids have to grow up under these muppets (note this is not about people on disability etc). It's not fair on those kids but Labour worked out their principles first then asked for the bill. Now the grown-ups are in we need this to be sustainable otherwise in the end we all loose. Let us not forget why these cuts are required - the deficit created under Labour, not bankers (which contributed to the debt).

    20. watriler - too right. We are going to have to move from the "extend and pretend" zone setup by Labour to bridge them into election, into reality - which bites! Ouch.

  • Comment number 50.

    Below (**) is a list of DWP / DSS Benefits and Pension Credits* (*benefits in all but name) with ‘estimates’ of take-up and unclaimed Benefits/Credits in the UK.

    The figures are staggering in that multi £billions – up to a estimated £50 billion in today’s money – according to some experts - remain unclaimed because of the COMPLEX claims procedures for the DWP / DSS Benefits and Credits (read benefits).

    Question, if the Government claim they want things ‘simple’ (George Osborne) why are the unclaimed Benefits not paid AUTOMATICALLY to the person / ‘individual’ or ‘household’ entitled to the Benefits and Credits?

    Surely the multi-billion taxpayer paid for DWP/HMCR IT super computer and software already in place can compute that in seconds?

    If not I can do a ‘simple’(George) estimated calculation on my cheap £300 pound laptop and save the Government and taxpayer money to boot! Or perhaps I could charge a relatively small IT computing fee of £1 billion and still save the Government and taxpayer money?

    (Apparently it is going to cost the Government DWP several £billions to implement the new so-called ‘universal credits’ system!)

    What about it, George?

    Perhaps, Stephanie Flanders can put that question and the others mentioned above and below to George, the ‘simple’ Chancellor?

    Also, please ask George when the Government propose to increase ‘Carer’s Allowance’ – currently a derisory slave wage of £53.90 per week for 35 hours caring - less than the minimum wage at insulting slave wage of £1.54 per hour!

    Apparently the last Government were meant to Review the Carer’s Allowance but put it off because it is estimated that by paying family carers this saved the Government up to £80 billion per annum in the DWP/DSS/NHS care bill!

    Can George, also confirm this estimated £80 billion per annum Government saving by paying slave wages to family carers.





    ** Some DWP ‘Estimates’ / statistics (latest available??):

    ‘Income Related Benefits Estimates of Take-Up in 2005-06’

    http://www.dwp.gov.uk/docs/ifd130907benefits.pdf

    Pension Credit Estimates of Take-Up in 2005-06

    http://www.dwp.gov.uk/docs/pce-29-03-07-1.pdf

    Income Related Benefits Estimates of Take-Up in 2007-08

    e.g.:

    ‘Total Housing Benefit take-up in 2007-08 was in the range 80 per cent to 87 per cent by caseload and 85 per cent to 91 per cent by expenditure. These estimates may understate take-up to some degree – see notes 4, 5 and 7 in Notes for Editors.

    Overall, there was evidence of a slight fall in caseload take-up of Housing Benefit by around one percentage point between 2006-07 and 2007-08.

    The total amount claimed was £14,080 million, claimed by 3.94 million recipients.

    The total amount left unclaimed by entitled non-recipients was between £1,350 million and £2,470 [*] million.

    The number of people that were entitled to but not receiving Housing Benefit was between 600 thousand and 990 thousand.

    By family type, couples with children had lower take-up than pensioners, singles with children and non-pensioners without children. These results held on both the caseload and expenditure measures of take-up.’*

    *Source: http://www.dwp.gov.uk/docs/ifd250609benefits.pdf


    [*] Almost £2.5 billion left unclaimed in Housing Benefit entitlement in 2007/2008 and the Government wants to cut Child Benefit and save £1 billion!!

    I am sure MPs would claim the Housing Benefit immediately if if it was available to them!!

  • Comment number 51.

    Like many others commenting, I agree the proposed cut to child benefit is being done in a less than equitable way, being based on individual rather than household income. I have 3 children, and will lose our child benefit, and I fully support this. I would rather that this benefit is removed from someone like me, and used to help those who really do need every penny of this benefit to manage to survive. Our welfare state is a fantastic institituion, but it is 60 odd years old, and needs some maintenance to make it work for our current and future economic reality. No measure will please everyone, but shouldn't we be looking at helping those who really do need it through a fairer benefits system, and perhaps a more redistributive tax system?

  • Comment number 52.

    James wrote
    "You mean to say that we are currently "giving away" £1bn of taxpayers money to people who are already earning more than £40,000 a year?

    Scandalous."

    I reply
    "Giving away billions to people who sit on their backside all year smoking, drinking and reproducing the country into over population, debt, environmental damage and a disasterous future based on stealing from those who can be bothered to work, control their base desires and contribute - scandalous"

  • Comment number 53.

    T Murfin - yep - we are no longer going to borrow money from other countries against our children's future to pay to people who don't work so they can go to buy goods from shops made in other countries.

    It was never sustainable, and now it's ending in a much bigger mess because nobody had the Balls (sic) to pull the plug earlier.

  • Comment number 54.

    Wonder how many people will be asking for a pay-drop in 2012 to fall just short of 44K :-)

  • Comment number 55.

    Tough times call for tough measures.

    Either the people in the middle pay more or the people at the bottom fall further. It is a decent idea to make it pay to start work rather than be caught in the poverty trap. The new 50% tax for people at the top has already strarted so they are doing their bit.

    This whole deficit thing really demonstrate how self interest is in fact most peoples only interest. Whinge whinge whinge, strke strike strike.

    Hardly the blitz is it.

    Most voters in England understand what needs to be done. More tax, less benefits, less public sector waste and clamp downs on tax dodging and scrounging.

    If you cannot pay for it you cannot have it.

  • Comment number 56.

    Osborne should have gone further and made Child Benefit fully means tested but this is a modest step in the right direction.

    Gordon Brown was a control freak who liked to micro-manage how we lived our lives. His legacy is a horribly complicated and very expensive tax raising and spending structure - which still doesnt work effectively.

    We need to pare down our tax structure and make it simpler. At the same time, we need to simplify the benefits system and wholly means test it. There should be no giveaways to those who dont need it.

    There will always be winners and losers with any changes and the press will always be able to find someone who is hard done by. BUT, is anyone seriously saying that the State (that means all of us) should subsidise the top 15% of earners simply because they chose to have children? They made a choice to have children. They should get on with it and stop moaning.

  • Comment number 57.

    While supporting the revision of Child Benefit the current measures fail on three basis; fairness (single income higher tax payers will be adversely affected), speed (the measures come in in 2013) - we have been sold the urgent need for savings, well thought out - in failing the first two options they fail the last.

    A thought through approach could have looked at:

    + A household based income - so where income exceeded GBP50k the child benefit ends for that household.

    + Transferability of tax free allowances between married couples or those in civil partnerships.

    + Limitation of child benefit to the first 3 children

    + Transfer of child benefit from parent to child at 16 and proves they are in full time education - payable to age 18.

    + Impose a residency and personal drawing requirement on Child Benefit - currently many families who are non resident get it paid into UK banks only to draw the funds eslewhere around the world. Make it payable at post offices again.

    If this is the first of Mr Osbournes ideas it does not promise much in terms of fairness nor votes.

  • Comment number 58.

    I (hypothetically) earn £43,999 which I use to support my non-working wife and 2 children. As a result of no pay rise during the recession, coupled with a rising cost of living on life's essentials, I finally broach the subject of a pay rise with my boss, despite the fact that I know the company is struggling also. My boss somehow manages to offer me a 3% pay rise, which will net me about £60 per month, but will also trigger the withdrawal of £130 per month in child benefits, leaving me in the region of £70 per month worse off. What do I do??

    This is not, I fear, likely to be an uncommon example. How can we have a tax system where you need a 6% pay rise at a certain threshold just to tread water in terms of net income?????!!!

  • Comment number 59.

    Re: post #37. At 1:31pm on 04 Oct 2010, AnotherEngineer wrote:

    #24 Maxone wrote

    'The Government have spent £ billions on IT computer technology at the DWP/DSS and HM Customs and Revenue (Tax) offices throughout the UK. They know to the last penny how much people earn on PAYE at the touch or click of a button. ''
    ___

    AnotherEngineer wrote:

    'the spending billions is certainly true, but they only know how much people earned in the previous whole tax year.'

    ------

    Given that PAYE tax and NI contributions are deducted weekly and monthly, any claim that is made can be calculated and or estimated within a month at the most at click or touch of button by the DWP/DSS and HMRC.

    Computing is 'simple' when is suits the Government for tax deductions purposes BUT complex when paying benefits!

    It doesn't take a Rocket Scientist to work it out even a 'simple' Chancellor can do it on his laptop calculator or spreadsheet with a bit of basic tuition!!

    e.g. Gross Monthly pay = £4,000 [x] multiply by 12 months = £48,000 per annum.

    e.g. Gross Weekly pay = £923.07 x 52 weeks = £48,000 per annum

    An 11 year old child at school (entitled to Child Benefit) could work it out in seconds - you don't need a DWP/DSS HMCR super computer do it!

    'Simple'!








  • Comment number 60.

    Another attack on the traditional family model.

  • Comment number 61.

    @33, you say, "You mean to say that we are currently "giving away" £1bn of taxpayers money to people who are already earning more than £40,000 a year?

    Scandalous."
    Not quite - "we" are not "giving it" to them. They are us, as well. The nation as a whole includes the higher income earners who have out money into the national coffers. The nation as a whole decided many years ago that there should be a child benefit for all families, regardless of income.

    At the time that meant most particularly that the money was not means-tested, since means testing was much hated, and seen as undignified. So the benefit was universal. This was also a measure which saved a lot on administration.

    Incidentally Family Allowance was also, I think, originally a benefit given directly to mothers, so that they had some money which they did not have to get from the wage earner (presumed to be the father of the family) where it might be refused.

    Your principal objection, though, hits at one of the biggest problems in welfare reform - differing notions of fairness.

    Why should taxes from the less well off go in benefits to the rich?

    On the other hand, why should money from the industrious and the prudent go to the spendthrift and the idle?

    The most interesting development in more recent years is the cry that money from those who chose not to have children should not be paid to those who do. Children, in this view, are a "lifestyle choice" and should not be subsidised. This is a very different point of view from the traditional one that the children in a society are both its most vulnerable and its most valuable members. They are the future, and a society that values its future has to nourish, protect and educate its children.

    Then there are those who say, "Sod the future, what has it ever done for me?" And, of course, those who say that, "There is no such thing as society."

  • Comment number 62.

    First child benefit, then it will be the end of free healthcare, and then kiss goodbye to an old age pension. Roll on the good times eh.

  • Comment number 63.

    sophiecardiff - £500 a week? What is that figure based on please?

  • Comment number 64.

    Cutting child benefit seems grossly unfair: families with a single income earner are already tax disadvantaged as they benefit from only 1 personal-tax allowance, despite the sacrifice of a potential second income in order to bring up their children 'in-house'. Families are already squeezed to the bone at this very expensive time in their lives and have little disposable income as it is.

  • Comment number 65.

    The Economic 0aces built by the labour egosystem around the laggoon show of fractional reserve banking is reverting to des[s]ert and its suckulent delicacies are turning into a mouthful of sands Awaiting the coming blowout mistral from the AAA holes .

  • Comment number 66.

    There was me foolishly thinking that benefits were primarily there to provide financial support those less fortunate, not as handouts to those who could and should be able to afford to manage without.
    I was unaware that earnings of £45K+ now counts as less fortunate.
    Get over it and get on

  • Comment number 67.

    Dear BBC Moderator/Editor

    • Re my post comment #50. At 2:10pm on 04 Oct 2010, you wrote:
    This comment has been referred for further consideration. Explain ‘

    Can you 'Explain' why this comment has been referred for further consideration?

    e.g. Is it too political for the BBC?

    Is Tory Central HQ now censoring posts on the ‘Independent’ BBC ‘ Have You Say’?

    Do you have to NOW refer comments to George and Dave first before publication?

    Please explain.

    Thank you.

    Maxone


    cc: Mr Mark Thompson

  • Comment number 68.

    Isn't it easier, cheaper and simpler to pay every individual £ N thousand per year for existing and then take all or nothing of it back by taxation.

  • Comment number 69.

    "Making work pay" has been the holy grail for benefit reformers for decades.

    So why make it less profitable to work?

    Just another tax on jobs ...

  • Comment number 70.

    Ken - yes healthcare is free. It's all free. In reality, it's only free if you don't work!

    I'm not saying I don't like the NHS, but it's this kind of thing that makes me wonder if we should even have a democracy, such is the public's inability to join the dots.

    ps this generation's pensions are an anomaly - nobody will ever get 20 years well-paid retirement again. Or at least not until we are all living like Buck Rogers. Why can people always say "yes we need more" but never have spending reverted back to where it used to be?

  • Comment number 71.

    The very size and complexity of our benefits system has been built up by Labour, not on the basis of need, but to credit a large dependent community that would always vote Labour to preserve their benefit addiction (and of course the very large public sector required to administer it would also be dependent on Labour so more likely to vote for them).

    In other words gerrymandering on a national scale.

    I am sure someone will hunt out the figures but my recollection is that the national average household income is about £30,000. SO why exactly are we paying benefits to households earning 50% higher than the national average?

    Benefits should be designed to help people through a difficult period and give them time to get back to supporting themselves. What they have become is an entitlement and in some cases (although never as many as the right wing press would like us to think) a lifestyle choice.

    So absolutely Family tax credit should be limited to those households earning £20,000 or less (ie 2/3rd of national average), child benefit should be based on household income and paid on a sliding scale depending on income and number of kids so 1 child no benefit if income more than 80% of national average, 2 kids no child benefit if more than 100% of national average household income and definitely a cut off point (2 kids or 3) when producing more children does not provide more child benefit.

    Although I have 20 years to go before the state pension kicks in I suspect that will be means tested before then as well. And so it should be - why should we be giving a state pension to someone getting £50,000 a year from a private pension.

    Of course the rate the benefits are withdrawn needs to be structured so, as IDS has said, it is worth working. So it is pointless creating a structure where if a person works and makes £10 per week extra the tax and reduction in benefits cost him/her £9.50 nobody will work for that.

  • Comment number 72.

    Its a real shame that nobody can see the blatantly obvious fact here, and that is Child Benefit is a benefit it is not a right!

    I am a married parent of four children, and my wage means that my family will lose the Child Benefit, yes it going to be tough, but then we are all living in a benefits obsessed society that lives far beyond our means, life is about choices and we have all made choices to have children and live beyond our means, it is not for the government to support us in our failings. All i have heard is the constant moaning at George Osbourne because he has taken away a benefit from some of us, well thats the governments right and Child Benefit is not our right.

    We need to get to grips with the reality of the situation, we are living in a country that is still gripped by a recession that yet again is the making of a Labour government. We are living in a country where this time round a Tory/LibDem government is having to make the tough decisions it needs to to brings back to security.

    I have never in my voting life supported the Conservatives, Liberal Democrats or Labour and i will be one of the many who will be worse off as a result of this change, but i fully support the changes that our coalition government are making for the betterment of our country, i only hope they will now target the Billions paid out in benefits to lazy scroungers who do not want to work or the millions claiming invalidity benefit that are perfectly able to work.

    Good job Mr Osbourne.

  • Comment number 73.

    Oh let's be honest! Gorgeous George (dragging IDS behind him) crawled up the mountain squeeked and ran away again.

    Today's announcements are a load of tosh if the aim is both to get rid of the deficit in 5 years and change the system focus. You can guarantee that the £1bn 'savings' won't even be achieved.

    How the heck can you focus upon making work pay when you are about to slaughter jobs later in the month? This focus is either nieve or fraudulent.

  • Comment number 74.

    66. At 3:20pm on 04 Oct 2010, Im_alright_jack wrote:
    There was me foolishly thinking that benefits were primarily there to provide financial support those less fortunate, not as handouts to those who could and should be able to afford to manage without.
    I was unaware that earnings of £45K+ now counts as less fortunate.
    Get over it and get on

    -------------------------------

    Child benefit has always been focussed on supporting families, not helping the poor - there are many of other benefits that do this.

    This is not the legacy of a Brownite cash splurge, it has been paid to all families for decades.

    Basically we are saying we will no longer use this benefit to support the raising of the children who will ultimately run our country. Instead we will treat all £45k earners the same, whether they blow their £45k in the pub or spend it on raising a family. You might are that its the individual's choice but its hardly progressive politics.

    As I said before, if high earners need to contribute more to the economy then simply raise the higher rate of income tax. Surely thats fair?

  • Comment number 75.

    Dear BBC Moderator/Editor,

    • Re my post comment #50. At 2:10pm on 04 Oct 2010

    Thank you for publishing my comment.

    Maxone


    cc: Mr Mark Thompson

  • Comment number 76.

    everyone gets a personal allowance
    any spare allowance can be transferred to your partner
    all benefits are treated as taxable income
    no one can earn more than £20,000 per year in benefits
    any higher rate tax payer/couple receiving benefits is taxed at 100% for those benefits
    child benefit ispayable for the first 2 children only and stop at age 16
    unemployment benefit is reduced by 10% every 12 months for those claiming it
    simples

  • Comment number 77.

    I was interested to see the chancellor is hoping that those affected will simply "stop claiming" - which rather implies he doesn't understand at least one important aspect of child benefit which is that it is paid directly to the mother. The reasons for this are obvious (except to Mr O apparently) and are not restricted to poorer families.

    I'm also wondering whether this will also affect NI 'credits' currently built up by those in this group who stay home with small children; my impression is that the process for allocating these involves the use of child benefit data.

    Finally, if the HMRC computer systems really cannot implement this change properly then I suggest the government practice what they preach about competition and stop using the private sector companies responsible for designing and maintaining these systems and switch to more competent alternatives.

  • Comment number 78.

    74. At 4:19pm on 04 Oct 2010, whatbill wrote:
    66. At 3:20pm on 04 Oct 2010, Im_alright_jack wrote:
    There was me foolishly thinking that benefits were primarily there to provide financial support those less fortunate, not as handouts to those who could and should be able to afford to manage without.
    I was unaware that earnings of £45K+ now counts as less fortunate.
    Get over it and get on

    -------------------------------

    Child benefit has always been focussed on supporting families, not helping the poor - there are many of other benefits that do this.

    This is not the legacy of a Brownite cash splurge, it has been paid to all families for decades.

    Basically we are saying we will no longer use this benefit to support the raising of the children who will ultimately run our country. Instead we will treat all £45k earners the same, whether they blow their £45k in the pub or spend it on raising a family. You might are that its the individual's choice but its hardly progressive politics.

    As I said before, if high earners need to contribute more to the economy then simply raise the higher rate of income tax. Surely thats fair?

    - - - - - - - - - -
    Whilst I totally agree with your comment, I think this is one of the ways we've been getting it wrong for decades.
    How can it make sense to spend time and money taxing people only to give it back again. Surely it is better to target the benefits to where they are required, and target the taxes to pay for it to those who can afford it.
    Too much money is taken from our pockets for Central Government to spend or waste it. I can do a far better job and spending / wasting it myself at no extra cost to the country.

  • Comment number 79.

    I have no children but I have never heard such a ridiculous idea in my life. Margaret Thatcher promoted the principle of Individual taxation and in a sweep, George Osborne abandons it.

    It creates a poverty trap for those who suddenly find their incomes rising into the banding, that taking a pay increase could wipe out all the Child benefit, a non taxable benefit.

    At the same time, there are recipients of benefits who only receive it due to their age and nothing to do with their incomes.

    I do hope the all Tory & LibDem MPs receive their constituent's feedback and this outrageous proposal never sees the floor of the House of Commons...



  • Comment number 80.

    59. At 2:38pm on 04 Oct 2010, Maxone wrote:
    Re: post #37. At 1:31pm on 04 Oct 2010, AnotherEngineer wrote:
    #24 Maxone wrote
    'The Government have spent £ billions on IT computer technology at the DWP/DSS and HM Customs and Revenue (Tax) offices throughout the UK. They know to the last penny how much people earn on PAYE at the touch or click of a button. ''
    __
    AnotherEngineer wrote:
    'the spending billions is certainly true, but they only know how much people earned in the previous whole tax year.'

    I did not explain very well; I apologise, try again.

    Each pay period an employer calculates and deducts income tax (using the tax code)and NIC from each worker's pay. On the 19th of the following month they pay the total to HMRC with no details other than employer reference.
    At the end of the tax year they complete form P35 to reconcile all these deductions and payments and enter it electronically. They also complete electronically form P14 for each employee which is then returned as form P60 to give to each employee showing pay and deductions. This is the first time that HMRC knows how much a person has earned.
    Does anyone know that it is different for very large companies; I have never seen anything in the HMRC publications?



  • Comment number 81.

    12 Sand_Castles
    "It's kind of convenient to MP's on basic pay of £42,500, i'm sure George Osborne is trying to avoid upsetting any of his own back benchers no doubt."

    A very sloppy and baseless post. Try £65,738 a year.


    http://www.parliament.uk/about/mps-and-lords/members/pay-mps/

  • Comment number 82.

    Perhaps it's just me but can somebody please tell me why we pay child benefit at all:-

    Do we not have enough people?
    Why do people think they have a right to have children?

    Okay, so that the children of poor families don't suffer - surely the parents concern and responsibilty not the states- quite simply - if you can't feed it don't breed it.
    And when they do despite all the sex education and free contraceptives - we then reward them - why??

    If I decide to buy a car I do not expect the tax payer to provide/build garages and pay for my servicing and running costs

    Ric

  • Comment number 83.

    Personally, I think any family on over about £25k per year shouldn't get benefits full-stop. Benefits should be there when you have no way of being able to work. Disabled, unemployed, retired - the traditional groups with no income whatsoever should be able to claim and get something up to a sensible point.

    A "family" on £25k+ doesn't need it. That is, of course, providing that they haven't gotten themselves in silly levels of debt, don't drink/smoke and can prioritise the income versus their breeding ability.

    If in debt, then they need to default and/or come to an arragement to whom they owe.

    If they smoke/drink then they are forced to give up.

    If they spend more than the average on home/bills then downsize and/or move area and/or stop having kids. Of course, this assumes they have been sensible and built-up a reserve of, say, 6k before leaving home in the first place to fall back on to help them over such times.

    Basic accounting/survival skills and some common-sense priorities.

    Of course, common-sense is anything but common!

    I also hate the term "middle classes" as it seems to be applied these days. Of course, we are s'posed to be the "classes society" now; my, how that term seems to have disappeared in the last 2 years!!

    I'd suggest that unless you have a single income on more than £100k and come from a background of such, you aren't "middle-class". Those on less are mostly "working class" and those on much more are the "nouveau riche". Only the long-standing landed-gentry can call themselves "upper class" and usually has nothing to do with current standing "wealth" in the perceived sense, but rather social standing in a greater (and much longer) context . It also my observation that the upper-class tends to be one that is more understanding of the working/under classes and wants for their betterment when compared the so-called middle-class, etc that so often don't.

    I also wonder what my grandparents generation, that died around 10 - 15 years ago, would make of all this. They were the middle-aged during the WWII, survived and died-off (naturally) before the major "bubbles" that gave rise to so much of what we see today. They told me as a youngster that "you don't even know you are born!". How right they, perhaps, were. They saw the best and worst of the system; true poverty mixed with true blessings of the modern progress. Perhaps, if we put today in context of what they went through, the suffering and sacrifice, we might actually get somewhere.

    I fear that short of another world war, it won't happen. Society, as indicated from blogs like these, show that we have too many voices with so many differing opinions and no true centre around which to gravitate that we cannot come to a common consensus to truly move forward.

  • Comment number 84.

    80. At 6:23pm on 04 Oct 2010, AnotherEngineer wrote:

    ========================================================================

    Spot on- the deadline for submission of PAYE end of year returns is 19 May,and until the employer submits this return, HMRC have no knowledge of the pay and tax details of any employee during the tax year, unless informed of a change by employer or employee. Like it or loathe it, that is the PAYE system.

  • Comment number 85.

    #71 Justin - "Although I have 20 years to go before the state pension kicks in I suspect that will be means tested before then as well. And so it should be - why should we be giving a state pension to someone getting £50,000 a year from a private pension."

    Well ... it depends it if have been paying in or not - if you have the it isn't the State's business. And means tested benefits generally benefit the expensive and normally useless IT companies that administer them rather than the recipients. 'Means testing' is shorthand for 'privatisation in all but name'. I'm with you on the ridiculous complexity of the tax and benefits system though

  • Comment number 86.

    Why can't we just let everyone have everything that they want all of the time. It is so unfair.

  • Comment number 87.

    #72 - "We need to get to grips with the reality of the situation, we are living in a country that is still gripped by a recession that yet again is the making of a Labour government."

    No - we're in the middle of a banking crisis caused by extremely greedy and stupid people - it was in all the papers - who continue to shovel our money down their throats and are now telling their puppets in the elected government what to do, even though they have so recently demonstrated they have no idea whatsoever what they are doing.

  • Comment number 88.

    #48 Anotherfakename "People who are WORSE off from getting a payrise (imagine goign 100 over the higher level tax bracket at the moment)"

    You get taxed at the higher rate on your earnings above the lower limit, not on all your earnings. Not too complicated to work out. Might take you a while though, I'd say, from reading the rest of your post.

  • Comment number 89.

    Could someone please explain to me the purpose of child benefit and how it relates to child tax credit?

  • Comment number 90.

    what truths33k3r said. init.

    FauxGeordie - that statement is incorrect. The difference is between debt and deficit. Labour built up all the deficit. We have no bank bailout costs this coming year (besides a bit of interest from the debt), yet we still have a deficit, which is why we are having cuts.

    BTW, the vast majority of replies to this and the other thread are pro benefit cuts. The majority in the real world are behind the cuts. The coverage from the liberal BBC (who also happen to be facing major layoffs that might see some of them with no transferable skill set on the job market at a time when journalism is in crisis) is less accurate.

  • Comment number 91.

    At 6:34pm on 04 Oct 2010, Dr_Doom wrote:
    12 Sand_Castles
    "It's kind of convenient to MP's on basic pay of £42,500, i'm sure George Osborne is trying to avoid upsetting any of his own back benchers no doubt."

    A very sloppy and baseless post. Try £65,738 a year.
    -------------------------------------------------------------------------
    Sorry about that Doc for not researching my baseless point to an A*. I was referring to the recollection of the coallition's drive soon after the time of being elected, to bring MP's pay under control, especially in the wake of the expenses scandle. I was completely unaware they'd ahd a 50% increase so soon, another dose of smoke and mirrors no doubt. So perhaps we can all anticipate a little decent from the back-benches then.

  • Comment number 92.

    @79n Jonathon Marriot

    I presume you're joking? How on earth can you mention a salary of £45k/year and 'poverty trap' in the same sentence? Clearly you are aware that somewhere in the world a child starves to death every 6 seconds? I think you need to re-think your outlook on life a little. Wait until the real cuts start, you may slowly come to realize that actually, the world doesn't revolve around you.

    Some of you people just aren't in the real world anymore, you have several large wake up calls heading your way in the immediate future.

  • Comment number 93.

    I've read a number of posts saying "A billion pounds isn't going to make a difference." In the PM Programme I heard a BBC Business Editor or Correspondent saying that some planned measure would save "only a few hundred millions."

    What is wrong with people these days? There used to be a saying "look after the pennies and the pounds will look after themselves." I think we need a new rule: "look after the hundreds of millions and the trillions will look after themselves."

    The deficit and national debt will not be fixed by one HUGE cut but by (many) thousands of hundred-million pound cuts. And each of these will be achieved within a ministry, quango or council by hundreds of one-million-or-less cuts. And they will all hurt someone.

    This is necessary because it is not fair that my generation, or the next one, builds up even more stupid debts for those coming later. Gordon Brown's borrow-and-spend spree was either ignorant stupidity a wilful Marxist attack on the country to undermine the financial system. But we let him and his Scots accomplices get away with his property/banking bubble, so we ought to do something about paying something back.

    On the changes to child allowances: it was goo to tackle allowances, but I agree with many posters that it unfairly penalises single-earner families. It will hurt disporportinately at the margin, too. Those worst affected will be obliged to work with employers to fiddle things to get below the threshhold.

  • Comment number 94.

    As I understand it there is what's called a pay gap in this country. Men are on average paid more than women. So targeting child benefit on households where one person earns more than £44k is likely to affect 'traditional' families (husband working or in highly paid job, wife not working, part time or is less well paid job) more than others. It will do this because statistics identifying the pay gap say that on average men earn more than women.

    If that's the case, doesn't Parliament immediately fall foul of its own new, shiny Equality Act which would categorise this as indirect discrimination and would give employees of a private company the right to sue their employer for redress?

  • Comment number 95.

    EmKay makes a fantastic point: it's all very well talking about changing policies, but the fact is that in order to change those policies a greatly complex undertaking in Information Technology is required, and for the most part organisations have forgotten how to properly do this.

    The last 30 years of worldwide growth have been facilitated by computerisation, in that organisations have been permitted to grow beyond previous natural limits simply through being able to handle more information or transactional throughput. However, this agglomeration into large super-companies with high-volume transaction processing has led to very rigid structures that cannot be feasibly changed.

  • Comment number 96.

    Western governments are suffering from the terminal pessimism that comes from being of management ilk, and not of an engineering problem-solution mentality.

    Managers constantly skate on the thin ice that rests over their fear of becoming too distant from useful skills or too unpopular or to be a useful leader. This style of management is encouraged by and is a symptom of today's infatuation with celebrities, representative democrats and "Blofeld"-type hostile foreign antagonists.

    Society doesn't need passing fads, rising stars, fake Bogeymen or rockstar politicians.

    Society needs solutions to energy and resource problems right now. The only people capable of doing this are the optimistic, skeptical, engineers, scientists and inventors.

    While the Osbornes, Browns, Thatchers, Kings and all the other Queens are busy spoonfeeding us vaguaries and confusion, the others are busy working on things that will make today's worries completely irrelevant. These are the people who now need as much funding and encouragement we can give them.



  • Comment number 97.

    Morning Stephanie,
    nice blog here and I presume that to report is not to advocate?
    Reading all the replies makes me smile. Listen to yourselves, the anti-cuts posters appear to be just selfish individuals who want to retain the status quo and who haven't realised yet that the Labour promises of "something will turn up" are over!
    My concern would be the fragility of our PAYE computer system which is new and full of holes and anomalies already. Remember the pay back child benefits scandal?
    Since April, I have received 9 notices of coding and they are all wrong from this new computer system! I have written to HMRC and received a reply from a real person who agreed with my calculations and modified the coding, then 2 weeks later the new coding was overridden by a new computer generated coding! I have now given up on this system since I cannot win. Now imagine someone who doesn't understand how the coding system and the benefits system is supposed to work!
    The application of any benefits is decided by Parliament, so not much point in objecting, just remember why you voted for this or that party and change your vote next time to a party who promise to give you the world (and cost you nothing).
    Most changes to benefits will not be implemented until 2013 and I doubt that the CONDEMS will survive 2010.
    No worries, keep calm and carry on.

  • Comment number 98.

    The Uk govt has been giving out billions £'s a year in crisis loans for several years under 'Social Fund' and not/never a mention of it from the BBC.

    Now that G.O. is proposing to reduce Child benefit to higher rate tax payers ... which is exactly what Labour would have done and more besides... there's another witch hunt on child benefit cuts ... and where is the evidence that the poorest are getting hit the hardest?

    Maxing out benefit payments in line with average wage levels means that those receiving the most in benefits are receiving a reduction in the incentives to welfare dependency?

    Reducing housing benefit will help keep city rents under check as those paying rents out of their own earned incomes are being priced out by greedy landlords and students and immigrants and those on benefits who have never previously tried to negotiate a lower rent levels because the social are paying their rent for them.

    I've been trying to help someone find a rental property recently and the rents are moving higher because landlords have been finding it very easy to get higher and higher rents out of councils etc - using the direct threat of some having nowhere (that is acceptable to the renters)to live.

    A bit more of the big picture might be useful on this? Being on a low wage and trying to rent a property is very difficult as the govt funded tenants are able to outbid them every time ... although I doubt that many at the BBC would know much about that either.

    Housing rent levels matter a lot ... too much govt money in the housing sector is inflationery.

  • Comment number 99.

    #90 - Ben - "FauxGeordie - that statement is incorrect. The difference is between debt and deficit. Labour built up all the deficit. We have no bank bailout costs this coming year (besides a bit of interest from the debt), yet we still have a deficit, which is why we are having cuts.
    "

    Labour have plenty to answer for from continuing long term British policy of grovelling before the financial services sector - who don't create wealth but skim it - but as has been said on another blog, Labour "kept public spending below 40% of GDP - which was only 5% more than the Thatcher years - and less than the spending levels when John Major handed it over - how could that be?...unless of course you are misinformed and banging a party line..."

    Just to explain in little words - low debt and deficits by historical and recent levels - until the bailout - when the banks gave us a vast gambling debt at gunpoint, which is where your debt is coming from, you know, the one you'll be paying off for decades. One reason there is a bigger deficit is that there are far fewer overseas suckers prepared to buy City services - so the City has to predate on the rest of us even more than currently.

    And there IS going to be another bank bailout next year, even Rupert Murdoch thinks so - even Sky News is prepared to admit that that there is a really enormous banking cataclysm possible in a year or two - the recession not being over, but barely started.

    http://uk.finance.yahoo.com/news/uk-on-cusp-of-second-banking-failure-skynews-5809d3acd179.html?x=0

    The only way out would seem to be another huge payout by the taxpayer to the mega-brains who have done so much to wipe us all out while lining their own pockets recently.

    Fortunately they are all very very VERY clever and successful and important and even though they are about to need another massive amount of our money - that includes a big contribution from you Ben - they are comfortable with giving themselves £7 billion in bonuses - all skimmed from the trillions of our rescue money pumped into their rotten system.

    Still - got to 'pay the talent' - got to 'attract the best' - unless they are doctors, nurses, teachers....

  • Comment number 100.

    Child Benefit - a benefit, therefore it should be based on NEED not WANT.

    Of course anyone using what they've perceived as an entitlement will complain, it always the case and these days we seem to think we're entitled to everything.

    Linking benefits to taxation makes sense for simplicity and consistency; if you don't have enough you get benefits if you're earning more you pay more tax.

    The problem is that our taxation system is an antiquated piecemeal relic; its based on when there was a head of the household and sole bread winner.
    Its not linking child benefit to tax that;s the issue, its the basis of taxation; which could well be more appropriate on a household basis, after all a couple with both partners working and earning half of the household income will pay a lot less tax than a household with the same total income and only one partner working, is that fair?

    Taxation needs to be reviewed from the bottom up and preferably made to work in unison with the benefits system; but then any change would result in winners and losers, and while losers shout loudly about how unfair it is that they get less / pay more (even if this is due to a fairer approach) the winners tend to quietly take their gains (but would then protest if they were taken away from them). So although a thorough review of taxation is long overdue, (CGT on primary residence anyone? - after all when house prices were soaring people were making considerable amounts of unearned income, tax free), its unlikely to be seen as politically expedient.

 

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