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Child benefit cut: Tough but is it fair?

Nick Robinson | 12:32 UK time, Tuesday, 5 October 2010

Team Cameron expected its leader to have to fight off charges this morning that cutting child benefit was tough but it clearly wasn't prepared for the accusation that it's unfair.

David Cameron

 

The whole point of unveiling the policy at this conference was to back up the argument that the Tories are being "tough but fair" ahead of a spending round which will hurt many people who have no chance of ever being top-rate taxpayers.

Instead of toughing the row out the prime minister said he had plans to introduce a tax break for married couples, allowing papers - like the Mail and the Telegraph - to believe that he would compensate the losers. Those with concerns - like the Tory MP Penny Mourdant - were briefed to that effect.

There are several problems with that though:

• The coalition agreement did not promise a tax break for married couples. It said only that:

"We will also ensure that provision is made for Liberal Democrat MPs to abstain on budget resolutions to introduce transferable tax allowances for married couples without prejudice to the coalition agreement."

• The Tories' policy at the election was a tax break but it was that basic-rate taxpayers would be able to transfer £750 of their tax-free personal allowance to their partner in order to reduce their partner's income tax bill. This would save people up to £150 a year per couple but be of no value to those losing child benefit.

• The Treasury team has always been sceptical about the value of this policy and is not in any rush to introduce it.

Listen hard and you might hear the sound of policy being made up on the hoof in response to an unexpected row.

Update 1310: Policy is already being clarified. There will be a tax break for married couples introduced in this Parliament.

Although Tory policy was to limit the proposal to basic-rate tax payers, it has been drawn to my attention that the coalition agreement did not repeat that. The implication is, therefore, that the chancellor might seek to partially compensate some of the stay-at-home mums who feel aggrieved by the child benefit cut.

Watch this space.

Comments

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  • Comment number 1.

    As a life-long Tory I have to say that this has been very badly handled.

  • Comment number 2.

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

  • Comment number 3.

    Basic principle that well off people should not receive benefits - fair.

    Implementation where a family earning £45K from one working parent loses every penny, whilst down the road a family with two working parents can earn £80K and I am still paying taxes to give them full benefits - ludicrous.

    Tends to reinforce the view that we are being governed by a bunch of public school boys who have no experience of the real world or government.

  • Comment number 4.

    There is another grossly unfair aspect to this.
    Child benefit was introduced by Barbara Castle to replace the old family allowance AND tax allowances that a family could claim for dependent children. Child benefit is being withdrawn from higher tax payers but the tax allowances are not going to be reinstated.
    This means that a higher rate tax paying man with a wife at home looking after two children will pay the same tax as a higher rate tax payer with no family dependents at all.
    Under what logic or thinking can that be fair ?

  • Comment number 5.

    Uk going though cold turkey as a result of gordon debt fuelled decade long party, going to be some hangover.

  • Comment number 6.

    This is a fair move. Especially if balance can be brought to 'stay at home mums' to negate the loss through a tax break for married couples.

    Cuts have to come from somewhere and given the horrendous backdrop of failiure the Tories have inherited from the last administration, it is good and proper that they are not targetting the less well off, which is what the opposition were expecting.

    Watch now as Labour frantically re-position to stand up for 'middle England.'

  • Comment number 7.

    Great Nick - great stuff - keep pushing!

    On the subject of pushing ConDem Ministers, when will someone start asking them about the other essential ingredient to make their economic strategy work other than spending cuts?

    £120 Bn of net spending reductions will reduce aggregate demand in the economy by £1Tn+ because every pound that is spent tends to change hands about 10 times before it lodges back on deposit. Leaked treasury forecasts predict 1.2M public sector jobs to go - alarm bells are now ringing for jobs in defence, construction and manufacturing employment continues to fall, not rise.

    The Office for Budgetary Responsibility forecast requires o/o/m 2m+ new ADDITIONAL private sector jobs, £400Bn of new private sector investment and exports up a third by the end of the Parliament.

    How can Gorgeous George expect this to happen and square the circle of a reduced public sector and an expanded private sector?

    If he doesn't, all that the spending cuts will do is to give us an action replay of what is happening in Eire: 13% fall in GDP, UK equivalent unemployment level @ 5m, 35% fall in property prices, ANOTHER massive bank bailout and RISING national and private debt is the outcome of spending cuts across the Irish Sea.

    In UK local government Cornwall Coundil is shedding 1 in 6, Somerset 1 in 4 employees. The Scottish CBI were asked on Sky News a couple of weeks ago about job creation - their spokesman was unequivical - the private sector north of the Border couldn't replace the public sector jobs that are going, let alone generate additional ones - if this is true in the rest of the UK economy, GO is going nowhere with this policy.

    Unlike Eire, Greece, Portugal, Italy etc the UK isn't in the Euro, so the odds of a run on Sterling and a collapse in our credit rating are likely outcomes if we end up in a similar position as the Irish Government, as we will be without EuroLand to keep us afloat - the impact of the spending cuts will have achieved exactly the opposite effect to that which justified them in the first place!

    The debate about child tax credits is very interesting, but in comparison to the bigger economic picture it's a very small drop in the corner of the bucket, given the impending emergency stop in the construction industry as local authorities and government departments cut their capital spending programmes overnight and existing projects like the Olympics construction come to an end, there is good reason to expect 500,000 building jobs to evaporate over the next 6 months - 5m unemployed looks quite probable to me.

    WHERE ARE THE NEW JOBS GOING TO COME FROM?
    WHERE IS THE NEW INVESTMENT GOING TO COME FROM?
    WHERE ARE THE ADDITIONAL EXPORTS GOING TO COME FROM?

    We've heard nothing about any of this - yet these are absolutely critical questions to be answered to hold the Government to account for its economic programme.

  • Comment number 8.

    This item is being misunderstood or misrepresented in the media. The higher rate taxpayers will still get the Child Benefit, so it remains a universal benefit, but it will be added to their tax bill. So it is in effect a tax rise for the better off - rather than withdrawal of a universal benefit.

    It is also a good solution for women since it is mainly women who claim the benefit and men who pay the higher tax. Splendid!

    A neat solution that should be welcomed by socialists. Why didn't the Labour Government think of it?

    The principle could well be extended to other benefits (as it already is for the state old age pension). Thus, the winter fuel allowance, free tv licences etc could all be taxed at the taxpayer's marginal rate of tax. Again, this would be broadly redistributive (i.e. progressive), although some adjustments to allowances, tax rates and amount of benefit might be needed to achieve the desired overall result.

  • Comment number 9.

    What a cuffuffle from what can only be from a small number of individuals who've had it all but aren't prepared to give any of it back.

    I think for this particular minority who choose not to work and bring up their children they should think themselves lucky they have a choice.

    There are thousands of mothers who would like to go back to work but are unable to do so because they cannot afford childcare for two or three children.

    I presume that those that come just under the threshhold have to pay for childcare as well as the other expenses asccociated with getting to and doing their job which those at home do not. They are also paying a lot of their income in taxes.

    I have noted that many of the women interviewed are well aware of this and it seems that it is the male members of society who are keen to stir this up as some sort of negative story.

  • Comment number 10.

    Given the cut in child benefit was a policy clearly drawn up on the back of a postage stamp and just not thought through I have no doubt they will compound matters by making something else up on the hoof to try and mitigate the impact rather than admit they got it wrong.

    However, Osborne's incompetence aside what is the point of mitigating it at all? If you want to raise the cash and this is the way you have idiotically chosen to do it then it's no use giving some back!

    The original policy is either sound or it isn't so for once why not just admit they screwed up? It's supposed to be an era of new politics isn't it not one of stubborn intractability?

    I still have found nothing out about how the N.I. credits you get when in receipt of child benefits will be handled for those who lose the benefit. Has anyone at the BBC, in the Labour opposition or even, however unlikely it may seem, the government actually thought about this issue?

  • Comment number 11.

    Surely if the tories want to reduce the net amount given to higher rate tax payers, the simple solution would be to raise the rate of higher rate tax. Or is that just a bit too complicated to implement?

  • Comment number 12.

    How annoying! They're taking benefits from some people who don't really need it, just to give to others who don't really need it!

  • Comment number 13.

    Since this is to be based on any earner in a household earning over the threshold it does beg the question of how HMRC will connect up individual taxpayers into a 'household' in the absence of any connection via a married persons allowance. It cant simply be based on address since that would penalise single mothers where a lodger earns over the threshold. This looks like an another implementation nightmare for the tax system.

  • Comment number 14.

    The struggles of welfare capitalism.

    What is fair and what is affordable?




    It's a great time to be an armchair critic.

  • Comment number 15.

    The problem in my eyes is that being a top rate tax earner is in some areas not a lot of money. I now live in London and the cost of child care is astrononical and effectively takes up my wife's salary. Therefore, my money has to cover all the other bills that even in a recession do not appear to be coming down. I would argue that the upper level tax thresholds in some parts of the UK are too low and not a proper indication of the true cost of living.

  • Comment number 16.

    The key problem for Cameron and the Tories is that the measure fails on so many levles, is is not fair, fast enough - coming in in 2013, one is left with the idea the deficit is not that important if they can wait so long. Because of the timing and unfairness one is left to think that the measure is just not thought through.

    When measures smack of "knee jerl politics" I'm reminded of Michael Howard and his dangerous dogs act that was unenforceable. Cameron and Osbourne would have been on safer ground to:

    + Consider total family incomes, and potentially offer transferability of tax free allowance from one non working partner to the other working partner.

    + A ceiling on payments limited to upto and including theh 3rd child

    + Transfer of allowance to the child at 16 if they prove they are in full time education ending at 18. This would give teenagers a taste of money they could then work for.

    Sadly, none of this has happended instead many people are expected to accept the unfairness. The Tories now have to work doubly hard to overcome the idea they are institutionalising unfairness. I doubt there are votes in how this measure has been positioned.

  • Comment number 17.

    Tough: not really. If you're earning over 44k, then you don't need child benefit.

    Fair: No, but understandable. I'm sure they'd have liked to base it on household income, but there is no system for calculating this. People are taxed independently and have been for many years. I suspect that the costs of implementing systems to base the cut-off on household income outweighed the savings that would be made from such a mechanism.

    So think of it like this: The preferred option was to have a household limit cut off. But this was too expensive. However, by having an individual cut-off, no one is worse off than they would have been under a household-income-based approach. But some people get a bonus because they retain child benefit because to implement systems to take it away would be too complicated and expensive.

  • Comment number 18.

    Strikes me all the hot air seems to be coming from media commentators who have probably been hit for the first time!

    It really is ironic that the government are being attacked for taking a benefit away from high earners !

    I'm waiting for labour to come to their defence!!

  • Comment number 19.

    Cameron says he 'wants to keep his promises' - wants to but isn't going to. Keeping his promises isn't a high priority for him as he slashes the child benefits he promised to protect. Clearly his priority is to take money from mothers with young children and to hell with promises.

    I believe the banks are due to give out 7 billion in bonuses this year.

    Same old Tories.

  • Comment number 20.

    A principle on which most people will accept (no benefits to the well off) even if they don't like it. But a method of implementing it which is just sloppy. It makes George Osbourne look incompetent taking an acceptable idea and alienating people unneccessarily.

    Incompetence is not quickly forgotten. This could stick to Mr Osbourne for a long time.

    With a lot more cuts to come it looks like it is too much to hope that they will be done in a competent manner. This is going to be even harder for the government than it needs to be.

  • Comment number 21.

    "The Tories' policy at the election was a tax break but it was that basic-rate taxpayers would be able to transfer £750 of their tax-free personal allowance to their partner in order to reduce their partner's income tax bill. This would save people up to £150 a year per couple but be of no value to those losing child benefit."

    It would be of value if the higher-earning partner earns just over the higher rate salary threshold, as it would effectively nudge that threshold upwards and therefore prevent them from being categorised as a 'higher rate taxpayer'. e.g. someone whose personal tax-free allowance is increased from £6475 to £7225 can then also earn £37400 of income taxed at 20%, i.e. up to £44625 before they become eligible for the higher rate tax. (I know that higher rate taxpayers weren't supposed to benefit, but what about someone near the threshold who is only a basic rate payer by virtue of receiving the tax break? Could there be a catch-22 at play here?)

    ANYWAY, if they do figure out a way to compensate the married stay-at-home mothers to placate the Daily Mail, that still leaves a major category of parents who will lose out, namely the single parents (the divorced, the widowed, etc), whose lifestyle options to compensate for the removal of child benefit are most limited. So much for 'No more Nasty Party'!

  • Comment number 22.

    #7. You are wrong about what's happened in Ireland.

    The 13% contraction in GDP is not down to spending cuts, the economy was already in freefall before the government began cutting and putting up taxes. Ireland's implosion is a lesson about what happens when you let your economy become grossly dependent on property development and banking to fund those developments.

    Secondly the reason why the cuts are so severe is that the bond markets won't pay for continued unchecked spending and the EU has instructed Ireland to have it's deficit down to 3% of GDP by 2014. Many people in Ireland now regret voting yes in the second Lisbon referendum as they were told that if they did the EU would bail the country out with no consequences! That's one lesson from Ireland we do well to heed!

  • Comment number 23.

    Scanning the papers today those in favour of the CB changes are:
    The Sun
    The FT
    The Times

    Q. Spot the connection...

  • Comment number 24.

    The way the child benefit cut is presently set up is tough but NOT FAIR. That being said, there are ways to make it fair, such as basing the cut on a "family means test", but as you can tell calculating this "family means test" will be complex & difficult. In modern times, what exactly is the definition of "family" - father-figure, mother-figure and natural or adopted children thereof? Even this simple definition is subject to subjectivity.
    I do back the Coalition Government in cutting any Government benefits to "wealthy persons" e.g. child benefits, senior benefits, married-couple benefits, even disability benefits. These are the upper echelon that can take care of themselves, and that should not expect to be taken care of by the state when they have the means to take care of themselves.
    But here again, you are down to a "family means test".
    I cannot see any TOUGH BUT FAIR WAY way to cut "people" benefits without doing a "means test", and brother is that going to get messy! First you have to define the family unit. Good luck with that.
    The Coalition Government is uncertain, too subject to public criticism, too vascillating, and I don't know about you, but this makes me uncertain.
    Suppose that the Coalition Government had said:
    1. We are going to define the "family unit", subject to appeal for unique situations.
    2. We are going to place a means test on the fmaily unit.
    3. We are going to stop paying benefits to those fmaily units that exceed "x" dollars in income.
    Now, doesn't this make you feel certain?
    I like your commnet re: "policy being made on the hoof" because that's how it feels to me, and I get more and more apprehensive that some needy soul is going to take a header.
    As far as a tax break for married couples, define "marriage".
    It may have been better to limit the proposal to basic-rate tax payers; at least there is no problem in defining a basic-rate taxpayer.
    Here we go again, another "policy on the hoof": "The implication is, therefore, that the chancellor might seek to partially compensate some of the stay-at-home mums who feel aggrieved by the child benefit cut."
    Okay now let's define "stay-at-home mom". How many P/T hours can she work? Shouldn't the word "mom" include "pop"?
    I'm watching this space because I know Nick Robinson will sooner or bring pristine clarity the entire mess, right Nick?

  • Comment number 25.

    Interesting the argument that high rate tax payers are well enough off to not need child benefit, what about childless high rate tax payers who receive state pensions - arguably they are even better able to take the pain?

    Or does the fact they are are most likely to vote affect the decision politically?

    My wife lost her job last week at company that does work for RDAs, child benefit is going and I have three kids looking forward to 10K+/yr fees at university over next 8 years. The cost-benefit analysis to staying in UK starts looking a bit different to this engineer...

  • Comment number 26.

    Firstly, I am absolutely astonished that the Labour Party and their drones are kicking the Coalition for this move: How hypocritical is that – the Labour Party are typically only too quick to talk about raising more tax from high-earners.

    Secondly, be thankful that this reduction in income is only hitting the high-earners. The Sovereign Debt is so huge for the UK that George Osborne could have made Child Benefit obsolete. As a tax on the high-earners it is fair as anyone on £44,000 (or more) really should be thankful they are not on the breadline and £2,500 (Maximum Child Benefit) is really small beer

    This is a benefit supposedly targeted to benefit children and I am incredulous that there is so much whingeing: £44,000 is nearly TWICE the national average income and there are a lot of people on less than £44,000 who might gladly swap their £26,000 income + £2500 child benefit for those people on £44,000. They would even throw in the £2,500 for good measure and still be better off.

    This benefit was introduced to replace the former Married Couples Tax Allowance so that people with children were given some money to help with the rearing of children.

    If everyone just takes a step away from whingeing about how unfair and beastly this is one can actually see that, logically, the only failure is that as long as no one member of the house hold earns more than £43,999 then it is possible for several members of the household to earn that much each and so some larger income families may be better off.

    However, as only 15% of the population live in households where at least one member of the household earns £44,000 or more it seems to me to be ridiculous that the whingers are complaining. They should be thankful that they are getting that much income - there really, really are lots of people who are less fortunate and who would miss the Child Benefit far more that the high income households.

    If the complaints persist and if I were George Osborne then I would propose a suggestion: “If the wealthy whingers really do think they are being cheated by this necessary saving then how about I do away with Child Benefit altogether?”.

    Be thankful for what you get, stop being whingers and realise that the world does NOT owe you child benefit but you DO have to pay more because you are fortunate enough to earn £44,000 and even more in some cases.

  • Comment number 27.

    To be fair, a benefit should be there for those who need it. A blanket or universal child benefit means those who are less well-off, but without children, are subsidising people who earn more than they do.

    Similarly, proposed tax breaks for married couples means single people who are less well-off are subsidising married people on higher salaries.

    It's a mess, and it's unfair.

    Tax breaks for married couple also smacks of social engineering because some Tories (like IDS) seem to think it's the job of MPs to tell people how to live.

  • Comment number 28.

    The latest suggestion to compensate high earners for the loss of child benefits has obviously been written hastily on the back of a fag packet and is badly thought out.

    One report suggests it could 'cost billions'

    Universal child benefits have had their day and it is quite right they should be abolished. There is no good reason why wealthy parents should be subsidised by poorer people without children. But the Tories should stick to the plan, not introduce subsidies by the back door in the form of tax breaks for married couples.

    Obviously, it is right that people in need should receive help. But why should low-earning single people or those without children subsidise those who are better off?

  • Comment number 29.

    #7 Richard,

    You make some good points - the new jobs have to come from somewhere and as yet there are no firm plans for this

    You can't however compare us with Ireland. The Irish economy was entirely built on a massive property bubble that burst, they have a tiny population compared to the UK but have still had to find a disproportionate amount of money to bail the banks. Ireland are in a much worse position than the UK, they cannot raise the same tax revenue that we can but have still had to borrow huge amounts of money to bail AIB, far more than the UK tax payer had to contribute by a long shot, the advantage they have over us is that Ireland is quite successful at attracting big business that provides employment (Intel is a good example)

    We are not in the same position however, we have a large population to tax but we don't seem to be able to attract business to the UK. Tax is too complicated and each government changes policy on the hoof to appeal to the red top papers - just as the coalition are now doing

    No-one is interested in investing massive amounts of money in a country that changes taxation (corporation or personal) at the rate that we do, and also when we make it impossibly difficult to work out who owes what

    I believe we should scrap the entire tax code and start again! No NIC, no road tax, no hidden tax. 10,000 tax free and then flat rate to a certain income and then banded after that, road tax will be added to petrol cost - something along those lines, keep it simple!

  • Comment number 30.

    #7 Richard Bunning

    Agree with you that getting the macroeconomic policy right is the most important.

    You might start with the IMF:
    "The government's strong deficit reduction plan will ensure fiscal sustainability and will help to rebalance the economy.

    "These benefits outweigh the expected costs in terms of adverse effects on near-term growth."

    So near-term growth will be lower than if the current level of borrowing was maintained. I think we agree on this. But you, and the Labour Party, should consider not only the short-term, but the longer-term as well, as the economists at the IMF have done.

    By the way, I note your use the term 'Georgeous George' in your post. I say, serious times require serious commentators.

  • Comment number 31.

    19 Laughat..

    1) that 7bn in bonuses down on the year before when newlabour threw money at the banks and the economy...

    2) over 4bn of it will go straight to the treasury thanks to higher taxes

    What exactly is your point?

    Same old politics of envy from the socialists? Same complete lack of understanding of the basic numbers.

    Her Majesty's Loyal Opposition - could't be trusted with your kids' pocket money.

    It's a great time to be a tory...

  • Comment number 32.

    #23 - Spot the connection? I give up, but if you're thinking of Rupert Murdoch you're wrong - Rupe doesn't own the FT. (Not yet, anyway)

    As for Child Benefit - it beggars belief that the Tories weren't anticipating this sort of fall-out from yesterdays announcement.

    A couple more misjudgments like this and the p45s will start rolling in Tory Party HQ. They must already be on notice anyway after their inability to gain an overall majority in May.

  • Comment number 33.

    How can anyone say someone earning £45k is poor? oO

  • Comment number 34.

    "Listen hard and you might hear the sound of policy being made up on the hoof in response to an unexpected row."

    I don't think you have to listen that hard.

    The idea behind what has happened is a good idea so a 10/10 for the theory.

    Unfortunately, implementation is at the other end of the scale with a 0/10.

    So where in the ranks did they allow a good idea in theory to become such a PR disaster?

    All I can say is that a colleague of mine complained about what she and her husband would be losing out on with the cuts to child benefits, my simple response was...

    "So does that mean you can't get on in life without these cuts?"
    She replied: "Of course we can get by but that money really helps."
    I responded: "So you can easily live without them?"
    She replied: "Yes but with that money we can pay for their clothes, school holidays.....etc."
    I responded: "People who earn far less than you and your husband are able to bring up their kids on what they earn so it's not like the cuts will stop you from giving the kids things but you will just have to spend a bit less on them."

    I grew up with less than what others around me had and I never complained.

    These benefits are nothing more than a drug that has claimed our society, it's no longer about necessity but about need. Because people have gotten so used to having them, they feel that they need them even if they don't. Now, those who will be suffering from cuts are suffering from withdrawal symptoms instead of realising a truth, which is that a £2k cut to someone earning £40k is not much of a comparison to someone earning £25k with a £2k benefit. If the person earning the £25k can get by then there is no reason for the person earning £40k to complain.

    The implementation is somewhat stupid and unfair but disregarding these elements and jumping on the idea bandwagon.....

    If I were earning £40k, I'd be able to live what I would consider to be a luxurious life without the need for benefits. Needs are nothing but desires born out of a desire to have what others have. However, if I had kids, I would have to forego luxuries in order to provide necessities for the family.

    I NEED Food. A necessity I will agree with.
    I NEED Liquid. Also a necessity.

    I NEED a top spec PC. Not a necessity but in our technological age I can understand why it can be considered a necessity. I certainly didn't have one growing up.
    I NEED a huge house. Not a necessity unless you have a huge family but if you don't live in a huge house why are you considering having more kids than what your house can cater for. All I can remember are small simple houses with small rooms. Even if I did have loads of money I would still see no point in a huge house, it becomes nothing more than a status symbol at a certain point and a status symbol is not a necessity.
    I NEED Cable / Sky TV. Not a necessity. I didn't have this growing up.
    I NEED 4 TVs in the house. Not a necessity. I didn't have this growing up, we made do with 1 TV.
    My Kids NEED a Nintendo DS each. Not a necessity. I grew up with a NES and SNES but I even consider myself lucky that I could have such a thing.

    Such simple examples but in truth we have all lost sight of what truly matters and that there should be lines drawn between true necessity to be able to live an adequate life and what is simply a bonus to make life that little more exciting and enjoyable.

    I feel like I lost out on things as a kid but I understood that my parents were poorer than others and because of that I had to live with sacrifices so that we could afford to live.

    Also, as has been stated somewhere on this blog before. Now that the government has started talking about such ideas, the next step is to start talking about pay caps across the board in both public and private sectors. The problem with the culture is that people get used to their larger salaries and larger bonuses, thus they desire more and more. These people should wake up from their money 'highs', enter the real world and acknowledge that they don't need all this excess. That way, what doesn't get paid in wages gets driven through the economy in lending, re-capitalising and re-investing to help drive this economy forward.

    Just as a simple point, a bonus of say...£1 million can create how many lower level jobs?

    The government go on about tackling legal substances with harmful effects, well in my opinion it appears as though money has become nothing more than a legal drug in certain circumstances that has caused harm to both our country and our society. So it's about time this drug that has taken a hold of our society gets tackled properly. Money is a necessity but somewhere along the lines it has become an out of control desire for higher earners wanting more and more.

    Therefore, let's start progressing towards a 10/10 for implementation on such ideology.

  • Comment number 35.

    So it costs more to close the loophole than closing the loophole would bring in...big deal.

    I want to know how much will this bring in to help cover George's £6 billion giveaway to Vodafone?
    Perhaps enough to cover the year-on-year loss to the Treasury from his largesse? Doubt it.

  • Comment number 36.

    23. At 2:23pm on 05 Oct 2010, craigmarlpool wrote:
    Scanning the papers today those in favour of the CB changes are:
    The Sun
    The FT
    The Times

    Q. Spot the connection...

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

    They all start with The and their websites are subscription only services ?

  • Comment number 37.

    How pathetic is this -less than 24 hours after the big 'tell us how it is' ending of universal benefit - a partial U turn. I thought this was the tough government clear in its purpose to reduce welfare and cut the nasty deficit that the finance sector...sorry the Labour party created ....apparently not when it affects your core vote.
    So we are all in it together are we?....don't make me laugh.
    What political cowardice is this at the first smell of the distant gunpowder. Will we have a load of U turn announcements on Oct 21st if the headlines in the tory press are hostile after the CSR.
    If they had stuck to their election pledges then this mess would have been avoided.
    I wonder how long it will be before the PM next goes on Mumsnet -I can hear the cry now 'Cleggster I've got a job for you...'

  • Comment number 38.

    "Watch this space" means wait until the next briefing to BBC political journalists who can be relied upon to report verbatim whatever spoon fed news the Conservatives want them to report.

    Get real and start digging for the detail of the cuts that you're not being briefed on, the ones that people are going to really suffer from. Or are you only interested in those cuts that affect high earning political journalists and their families?

    For example....Last week the Government introduced a 40% cut in the support for mortgage interest payments to some 65,000 disabled people. Where did the BBC report that?


  • Comment number 39.

    19. Laughatthetories

    Cameron says he 'wants to keep his promises' - wants to but isn't going to. Keeping his promises isn't a high priority for him as he slashes the child benefits he promised to protect. Clearly his priority is to take money from mothers with young children and to hell with promises.


    So Latt, in principle, you're OK with someone on £55k pa getting the same child benefits as someone on £15k pa?
    I'm talking in principle, not the flawed proposals the Tories are offering. And if not, what would your suggestion be to readdress that?

    Not a trick question, just trying to understand the thinking behind those who support universal benefits irrespective of income.

  • Comment number 40.

    If these cuts are not implemented and the markets give up on us and start raising interest rates on what we are forced to borrow then those complaining at the moment should start thinking about the cost of their mortgages when interest rates have to rise.

    The money has to be raised somehow and I hear all those labour voters licking their lips at the thought of the middle classes being taxed at 50% instead of 40% to keep their public services and benefits intact.

    It's time realism came to the fore and squealing because this government is trying to graduate the pain instead of inflicting it in one fell swoop is not going to change the state of the country's finances one iota.

    We are where we are and the sooner we are told the truth about the real mess we are in the sooner we will come to terms with who is really to blame and what the true cost of it all will be.

  • Comment number 41.

    32 close
    36 correct...and thanks for getting me out of a tight situation...
    (I'm sure Murdoch will own the FT soon...)

  • Comment number 42.

    Essentially it's not fair. But perhaps we should be considering why it can't be fair.

    Osborne and Cameron are saying it has to be done this way, because assessing a household income would cost too much and would defeat the object of the original cuts.

    Well perhaps it's about time we looked at the system(s) used to assess these things. The reason they can't means test families is because the current set up is a horrible mess, using completely indepedant systems to assess different things, all run by different private companies.

    Now I know the government has a horrible record with implementing new systems, but maybe it would be worth the risk. Surely one system that logged all salary payments, benefits, entitlements, taxes paid, addresses, dependants, assets etc. that could all be accessed from a central office that processed everything could be a must more effective and efficient system. That way the family means testing could be done at the click of a mouse. It might even help make massive cockups by HMRC avoidable!

  • Comment number 43.

    Of course it isn't fair, it should be household based not based on the earnings of an individual.

    It's also quite ridiculous of Mr Osborne to say it's too complicated to bring in a system that's household based, if that's the case stop piddling around with removing benefits and just change income tax, VAT is already rising, those are the two most straight forward revenue raising areas.

  • Comment number 44.

    @Menedemus. You position on this is right out off the floor of the Tory party conference. Where you one of the acolytes on News Night yesterday who would not dare disagree with this policy in public?

    Going on about how well off people on £44K for half a dozen paragraphs will not make this policy any more fair or well thought out. It is the unfairness and other anomalies you deliberately try to brush under the carper or ignore completely (such as what happens to peoples N.I. credit) that has got peoples backs up NOT the fact a benefit is being cut for the "well off".

    The Tories had done a good job of getting the UK public to think they were the ones who had to pay for the bankers mess and no doubt thought this policy would prove we are all in it together. Instead what it has done for many who are not even high rate tax payers is show the government up as untrustworthy and incompetent.

    They may not be affected by this cut but what promise will be broken next they will be affected by?

    If you or anyone else think it was only the low paid who lost faith in Brown when he scrapped the 10p tax rate you are wrong and it will be the same here and the more squirming the government does the worse it looks.

    We can't tax you fairly but we will tax you anyway does not go down well with anyone.

  • Comment number 45.

    It's quite simple. A man and a woman live in the same house. The woman has a child. The man is a high-rate tax payer. So the woman loses the child-benefit?

    (a) The man is her brother/father.
    (b) The man is her lodger.
    (c) The man is her landlord.
    (d) The man is her partner and may also be the father of the child.
    (e) The man is her husband and may also be the father of the child.
    (f) The man is her friend/colleague, they are not in a relationship.

    How is HMRC supposed to work that one out?


    \\
    __()
    o(_-\_

  • Comment number 46.

    Of course its fair.

    I am a higher rate tax payer (although I don't have children) and I am certainly not a Conservative supporter. However this is one of the better things they've announced. No one earning enough to pay higher rate taxes, like myself, should be receiving any kind of 'benefit' or hand out from the state, I was genuinely shocked when I learned how much we spent on child benefit (i.e. how high the benefit is) and that it is paid to everyone regardless of income. I'm all in favour of benefits to the less well off, it's just and moral and should be a sacrosanct part of any decent 21st century democracy but there is no justification whatsoever for cash payments from the government to the well off for no reason, especially when we are trying to cut / balance the Budget. All benefits should be means tested (including fuel allowances, free TV licences, bus passes, etc) and if basing this on the tax rate is the simplest and cheapest way to do so then so be it.

    Please note I am very in favour of benefits in general, just not the government handing out cash to people like me who don't need it, especially at the expense of others who do.

  • Comment number 47.

    It was the Chancellor George Osborne himself, on BBC Breakfast, who quoted the £44000 single earnings figure as the threshold at which child benefit will stop.

    Has he forgotten that only three months ago he announced changes to the tax bands that will take the threshold when 40% kicks in down to just over £42000 ??

    (From April 2011, in order to counteract the increase in the personal tax-free allowance by £1000, so that higher rate taxpayers won't benefit from the increased personal allowance.)

  • Comment number 48.

    I love watching the tories on here trying to justify charging working people taxes in order to fund giving benefits to people on £80k pa

    Laughable.

  • Comment number 49.

    Why is this political dynamite? Here's why:

    A family with an income of a single salary of £44,000 already pays £7,530 tax and another £4,198.85 in National Insurance. Thus, take home pay is £32,271.15. The family may be able to claim Child Tax Credit of about £275 but the system is so complicated I've ignored it.

    So, if this family has three children, household income will drop from £34,720.35 to £32,271.15. This is a reduction of 7% in net income, which is massive. In terms of disposable income, the impact is far greater still. The working middle classes haven't budgeted for this because David Cameron, George Osborne, Nick Clegg, Vince Cable and Gordon Brown pledged at the election that Child Benefit was safe. This is a huge tax bombshell.

    The argument that the poor shouldn't pay the Child Benefit of the rich is fatuous. A family with an income of £44,000 is already paying £11728.85 in tax and NI. Hence they are paying in far more than they receive - more than four times in fact. The reverse becomes increasingly true as families live on less.

    The media and political classes don't understand the impact of this because they earn far more and are generally too narcissistic to be about families rather than career and ego.

    Cameron's political radar has failed him very badly here. 'Red Ed' will now transform himself, with a spending commitment of only £1 billion, into a champion of the hard-working middle classes and the family. I can assure you that Tony Blair, with all his faults and permatan, would never have been so politically naive as to have introduced this. And it certainly wouldn't have delayed its introduction until shortly before the next general election.

    Utterly stupid. Political suicide.

  • Comment number 50.

    45. At 3:45pm on 05 Oct 2010, WunnyBabbit wrote:

    It's quite simple. A man and a woman live in the same house. The woman has a child. The man is a high-rate tax payer. So the woman loses the child-benefit?

    (a) The man is her brother/father.
    (b) The man is her lodger.
    (c) The man is her landlord.
    (d) The man is her partner and may also be the father of the child.
    (e) The man is her husband and may also be the father of the child.
    (f) The man is her friend/colleague, they are not in a relationship.

    How is HMRC supposed to work that one out?

    ______________________________________________________________________

    The same way it's done now for tax credits perhaps? This really shouldn't be complicated in this day and age and making it less complicated would probably save more money than this change for a variety of issues.

  • Comment number 51.

    Incidentally, this is being compared to 'Brown's 10p tax debacle', but people forget that it was Brown himself who, in his early years as Chancellor, introduced the 10% tax rate for the first £10000 of earnings in the first place.

    The withdrawal of it wasn't handled well but looking at it in the round, Brown effectively gave everybody a 10% tax cut from ten grand of their earnings for a whole decade.

    How anyone can compare that with what the current shower are up to beggars belief.

  • Comment number 52.

    It only takes a moments thought to realise that dealing with an individual is really quite straightforward - compared to dealing with a 'group'.

    Becuase with the 'group' one is immediately one is confronted with having to construct a group definition, in this case, a 'married couple', within the context of a tax-and-benefits system.

    For example, a 'married couple' might be a male/female, male/male, female/female or possibily some other combination.

    Then the definition has to include whether they are 'living together' (another definition) or apart, whether one or both has disabilities and on and on.

    Then the definition may be further extended to include dependants, children, elderly relatives, siblings etc.

    Then further extended to take into account their living arrangements, i.e. home-owners, tenants, social housing, hole-in-the-road and so on.

    The group dynamic may change, i.e. couples being separated or divorced and the tax-and-benefits system wheezes and groans and tries to keep up.

    All of this is the primary reason why taxation, and to some extent, benefits, become focussed on the individual rather than any sort of partnership; it is simply easier to manage.

    Now these politicians have got themselves into a hole and they are frantically continuing to dig.

    Do not dig - dismantle (read drastically simplify), which I believe is where IDS comes in.

  • Comment number 53.

    He's just pandering to the Tory faithful and Daily Mail readers again. David Cameron tries to be civilised, but he's getting drowned out by his more right wing colleagues. The "nasty" party rises again.

  • Comment number 54.

    (Following my post#51) Actually, maybe there's a reverse analogy to be had here.

    The reason why it was such a BAD idea of Brown's to withdraw the 10p tax rate, was because it was such a GOOD idea of his to introduce it in the first place.

    Maybe Osborne is thinking that this withdrawal of child benefit is such a BAD idea, that it will seem such a GOOD idea when he announces in the Spring Budget of 2013 that "We've turned the corner/reached the horizon/scaled the summit" (pick your cliche) so that "I can now announce that we will no longer need to cancel child benefit for high earners from this April". Or is that me being overly cynical?

  • Comment number 55.

    Well now we know.

    I asked yesterday what would be the next "policy off the hoof" announcement and now we know - rushed forward in panic because of the backlash against the "benefitgate" debacle - we now have the old chestnut of rewarding marriage and so "they take with one hand and give you back with the other" what a waste of time,

    Dodgy and Gormless strike again.

    And the Lib Dems sit back , biting their tongues as policies they argued tooth and nail against 4 months a go, go forward with their silent consent.

    A "Coalition of Chaos", masquarading as a Government.

    What is it the Boy Wonder says... "Its a great time to be a Tory"...Sorry Robin, sounds hollow, I seriously doubt if it is for most...Its all starting to look embarassingly incompetent!!!!

  • Comment number 56.

    So the Tories were "forced" into such a welfare cut to tackle the structural deficit that was left by Labour, but as soon as it proves unpopular they suddenly agree to give the money back.... Doesn't sound like an ideological measure to shrink down the State at all then, no.

    So to answer some of the earlier posters above, the reason why universal benefits are still relevent:

    * Simple to administrate, with no expensive or complicated means testing required.
    * It guarantees all citizens a mimumum standard of living
    * It gives all citizens a stake in the state.
    * Taxation (Income Tax?) can then be used above certain thresholds to return all monies (through earnings) to the Government.

    So why didn't the Tories decide to do this..... please see the openeing paragraph.

    And before any right-wing dogmatists decide to criticise the giving of money in one hand and taking away with the other (both of which are clear, and simple to administrate) it this any more ludicrous in taking away all benefits based on an arbitrary tax banding then increasing credits for a chosen few to damp down the innevitable furore.

  • Comment number 57.

    Second bite of the cherry having read through a couple of recently moderated posts....

    Yes, this policy is shambolic. An approx. £2,0000 loss of income for a family earning, BEFORE TAX, £44,000 compared to no change for the family next door earning (yes, BEFORE TAX) say £80,000 is already ludicrous. Then add in the pay freezes over the next few years and the promised, if moderate, further rises in tax and National Insurance.

    Actually, no I don't think an income of £44,000 for a family, say in the South-East, with a mortgage, transport costs, etc. should be considered excessive. Yes, I am a socialist but I do care about families such as these - talk about giving a dog a bad name.....

    Why should such people lose 5% plus of their income when the seriously rich next door lose nothing. I care because THIS IS UNFAIR. It is also seriously bad policy. Please just admit it so we can get on to debating Ken Clarke's good ideas on prisons....

  • Comment number 58.

    Dave @ #44

    One can read all to well that you are thinking like a Socialist, so tell me how fair is that anyone on £44,000 is taxed at a higher rate than some on £37,000 let alone the national average income of £26,000? Ah that’s right, they are taxed more because they can afford it but is it actually fair?

    The cut off point has to come somewhere and Labour Party has never been adverse to setting a point where they will set a higher rate of tax for higher earners. They are the party of Tax and Spend and, despite the socialist rhetoric £151bn that was borrowed and pumped into the beastly banks it is the other £900bn plus, borrowed by Labour, that has actually got us into this mess we are in.

    The Coalition thoughts on this are clearly that anyone on the existing higher rate of Income Tax should not need the maximum £2,500 of child benefit that has been a universal privilege.

    It is not right and it is not fair that people who can afford to pay more tax should lose out but is that any less fair than Red Ed Miliband announcing that, if he ever (in the highly unlikely event) achieves high office of State, that he will make the 50% Income Tax band permanent (I suspect he, like so many other socialists, would actually tax the rich even more if they could get away with it!).

    George Osborne has done his best to set a threshold in extraordinary circumstances of a Sovereign Debt crisis. What I find deplorable is that anyone living in a household with an income of £44,000 or more is even thinking they need a maximum extra gift of £2,500 as a rebate on their taxes or they see that £2,500 as essential.

    Heaven forbid Labour get into power ever again - they would tax that family even more BECAUSE they earn more than £44,000 and the tax take would be much, much greater than the maximum £2,500 the Tories are withholding now.

  • Comment number 59.

    And so it begins. The masterplan is already having to be fiddled with to protect wealthy Tory voters. As with Mrs Thatcher, so with Mr Cameron, cuts are fair when they only affect the poor, dispossessed, and vulnerable - that is, those that can't fight back. Tweak the noses of core Tories, and all hell lets loose. Policy is invented on the hoof to ensure the Tory hinterland is dissuaded from putting in an appearance in front of the cameras - the sight of all those backwoodsmen reminding us that the nasty party is still with us would spoil DC's carefully constructed lie "we are all in this together".

    Fairness, it would seem, is means tested when it comes to cuts - the more you have the less you lose. It was ever thus with the Tories. A plague on their house, and may the LibDems wander in the wilderness for the next 40 years for their complicity.

  • Comment number 60.

    7#

    You forgot about the rise in demand from the tory squirearchy for fresh babies from the poor to be roasted for their dinner parties. They'll demand that the poor sell their first born....

  • Comment number 61.

    55#

    So long as its not as incompetent as the last lot Eaton, theres hope. They proved beyond any shadow of a doubt that whilst you cant polish a stool sample, you sure can roll it in a hell of a lot of glitter....

  • Comment number 62.

    norwici @#49

    So, if this family has three children, household income will drop from £34,720.35 to £32,271.15.

    The poor dears!

    I bet their are a lot of households in the UK who would love to see a family member bring home that kind of bacon!

    This is all stuff and nonsense and I find it astonishing that the better off are not being magnanimous enough to respond to the call to contribute repaying the national debt.

    People who still take home at least £32,271.15 after tax, N.I AND losing a potential maximum of £2,500 in Child Benefits but are whingeing about the unfairness of it all are actually displaying contemptible greed and selfishness.

  • Comment number 63.

    48#

    You're very easily amused then arent you jon, by something that doesnt even exist?

  • Comment number 64.

    51. IanR

    "Incidentally, this is being compared to 'Brown's 10p tax debacle', but people forget that it was Brown himself who, in his early years as Chancellor, introduced the 10% tax rate for the first £10000 of earnings in the first place.

    The withdrawal of it wasn't handled well but looking at it in the round, Brown effectively gave everybody a 10% tax cut from ten grand of their earnings for a whole decade."
    ================================================================

    A 10% tax cut from 10 grand of our earnings is a £1000 tax cut !

    I think you'll find that the 10p tax band band was actually quite narrow relatively speaking, and nothing like the ten grand you are talking about, and the cut nowhere near £1000.

    Also when you mention "withdrawl" of the 10p tax band was not withdrawn, but actually doubled to 20%.



  • Comment number 65.

    "The withdrawal of it wasn't handled well but looking at it in the round, Brown effectively gave everybody a 10% tax cut from ten grand of their earnings for a whole decade."

    Withdrawal wasnt handled well? Talk about understatement! And that ACTUALLY happened, REAL people at the bottom of the food chain had their tax DOUBLED overnight!

    THIS by comparison, is the stupidity of thinking out loud and expecting a jaded, dumbed down, politically apathetic public who dont trust the political class anyway to instinctively "get it".

    Which, we can plainly see on here, they dont.

    No-one has lost a red cent on this yet, all it is is an idea, an intention. It has not happened and I wouldnt be surprised if it doesnt.

    All the noise from the tory haters is laughable. You're like drunks having your bottles of Thunderbird in brown paper bags taken off you by the park warden. Its just incoherent, ignorant noise.

    Gods sake, do the political equivalent of falling asleep in the bushes for the next 10 years, will ya? Brown gave you lot - and the rest of us - a ginormous financial hangover. Sooner or later you're going to have to go cold turkey.

    Get over it.

    Get used to it.

    Or be more damned decisive about who you vote for next time. Take a real interest in politics beyond what it just does for you. Think beyond your own front door.

  • Comment number 66.

    45#

    Ah, thats why Red Ed has been so quiet then!!

  • Comment number 67.

    I'm single and childless. When do I get a tax break for funding all these married and child-producing people???

  • Comment number 68.

    27#

    Jesus Christ, I thought I was hard to please. Is there anything you wont moan at and see an "unfair" angle in???

  • Comment number 69.

    "And so it begins..."

    Yep, certainly does. The same old familiar factless, whiny, scaremongering, baseless sloganeering garbage, yet AGAIN.

    Its enough to drive anyone to drink.

  • Comment number 70.

    49. At 3:52pm on 05 Oct 2010, norwici wrote:
    Why is this political dynamite? Here's why:

    A family with an income of a single salary of £44,000 already pays £7,530 tax and another £4,198.85 in National Insurance. Thus, take home pay is £32,271.15. The family may be able to claim Child Tax Credit of about £275 but the system is so complicated I've ignored it.

    So, if this family has three children, household income will drop from £34,720.35 to £32,271.15. This is a reduction of 7% in net income, which is massive. In terms of disposable income, the impact is far greater still. The working middle classes haven't budgeted for this because David Cameron, George Osborne, Nick Clegg, Vince Cable and Gordon Brown pledged at the election that Child Benefit was safe. This is a huge tax bombshell.

    The argument that the poor shouldn't pay the Child Benefit of the rich is fatuous. A family with an income of £44,000 is already paying £11728.85 in tax and NI. Hence they are paying in far more than they receive - more than four times in fact. The reverse becomes increasingly true as families live on less.

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

    They are not recieving nothing for their tax and NI. Your argumentation is illustrative of why we are in such a god awful mess financially in this country, most people have no idea what all the services they receive actually cost in relation to the amount they actually pay into the system for them.
    I don't disagree with the net effects and why people might be upset by it but look at it slightly differently..

    Take your hypothetical family:
    paid in: 11,728 pounds.

    The amount spent on educating their 3 children is around 11500 pounds per year (more if they are all at secondary school).
    They receive free of charge health insurance for 5 people including GP visits, innoculations. No idea what private coverage would cost but if you split the cost per person spent on the NHS roughly 1500 pounds per person is spend on the NHS in this country each year - so for 5 that is 7500 pounds worth (total 19000 GBP)

    One could go on (future pension, critical injury cover(disability benefits etc)) but already your hypothetical family are out of credit on their Micawber account of money input vs money recieved back.

    This is the fact of the matter - for all the benefits and services received in return for the basic taxations, the vast majority of the population are in deficit by a substantial amount.

  • Comment number 71.

    51 - "introduced the 10% tax rate for the first £10000 of earnings in the first place.

    The withdrawal of it wasn't handled well but looking at it in the round, Brown effectively gave everybody a 10% tax cut from ten grand of their earnings for a whole decade."

    How did you engineer that? For me and the rest of the population, the 10% tax rate applied to (at most, in 2007-8) the first £2,230 of taxable income. How did you get it to apply to £10,000? I'm impressed.

  • Comment number 72.

    The whingers with 3 children losing just £20 per week Child Benefit AND still bringing home £32,215.15 (courtesy of norwiki @#49) really should grow up!

    They could be out of work claiming all the existing Social Welfare Benefits including Housing Benefits and so live in a £5m house in Kensington (because Hackney was a bit rough), house up to 10 children and receive £35,000 in benefits payments on top of that. All free of tax!

    What a great social safety net system we have when the wealthier workers whinge about losing £20 a week but we don't do anything about keeping people from ever having to work because the benefits system rewards failure to get a job.

    13 years of Labour and they never made a difference other than create a Sovereign Debt Burden that our children's children may have to pay down.

    Thanks Labour!

  • Comment number 73.

    34 - "Just as a simple point, a bonus of say...£1 million can create how many lower level jobs?"

    Could certainly get a butler, a maid, a cook and a mistress for that sort of bonus, providing it's annual, of course. And a nice new car. And a nice holiday too. What's left over would probably go into an off-shore bank account.

    The problem with the UK is you have to wonder what imaginative way the Government will come up with to waste the £510,000 tax & NIC they take from the bonus.

  • Comment number 74.

    Actually the principle of this is fair.

    The implementation is however lunatic. Someone needs to ask a politician directly why its fair for someone to get an increase of salary of one pound and then lose a benefit of 2500.

    This will create all sorts of anomalies (and unintended consequences- eg people deciding not to work). It needs to be means tested as part of tax credits for those near the boundary to taper it. see my comments at guardian.

    Camerons idea that we should absorb one idea at a time when everything is naturally inter-related also does not bode well.

    So many politicians today digging deeper not seeing the many anomalies.

    Campbell on the telly now, uniquely talking some sense

  • Comment number 75.

    As a divorced single mother of one, earning the 'magic number' (just) I am being penalised for getting off of my backside and earning a decent wage.
    How is this fair to people like me, when a couple earning a moderate wage but a collective income more than me are still entitled to this!!

  • Comment number 76.

    @4
    "This means that a higher rate tax paying man with a wife at home looking after two children will pay the same tax as a higher rate tax payer with no family dependents at all.
    Under what logic or thinking can that be fair ?"

    Under the logic or thinking that asks why I should subsidise someone else's children?

  • Comment number 77.

    Dave 10, 44

    "I still have found nothing out about how the N.I. credits you get when in receipt of child benefits will be handled for those who lose the benefit."

    "It is the unfairness and other anomalies you deliberately try to brush under the carper or ignore completely (such as what happens to peoples N.I. credit) that has got peoples backs up..."

    Clever point about N.I. credits, kudos for your persistence with it too, but it's ultimately spurious, I suspect.

    Where a couple loses child benefit through the high income of one of them, and the stay-at-home parent loses N.I. credits, then that parent would normally be expecting to have a state old-age pension entitlement based on the working partner's N.I. record - presumably that partner will be working, and paying N.I., in order to obtain that high salary in the first place. That entitlement to a pension based on, or supplemented by, the working partner's contributions remains in place if the working partner dies or if the couple separate or divorce. Therefore the stay-at-home parent is not losing out by the loss of N.I. credits.

    Where a single parent loses child benefit through having a high income, then he or she will presumably be working, and paying N.I. anyway, and so wouldn't be benefiting from the N.I. credits in the first place. Therefore, again, the parent is not losing out through loss of the N.I. credits.

    Dave - do feel free to correct me on the above, but quote references. Likewise, if you can think of an important anomaly that might apply, where someone genuinely does lose out from the loss of these N.I. credits, then, again, feel free to let rip!

  • Comment number 78.

    You have to say that if the point of this announcement was to be seen publicly making a 'big show' of taking benefits from high end earners in order that this could be held up as an example of 'fairness' when the much larger burden is heaped on those with much less in a couple of weeks time, then simply caving in to the first sounds of criticism and promising to give back with one hand what you are taking with the other can only be seen as a failure, and will be grist to the mill of all those who will now feel that all you have to do is complain loudly enough and you'll get results.
    This was always the problem with 2-way Dave, he likes to say whatever the person in front of him at that moment wants to hear.
    That is a fair enough strategy for opposition, but not for government.
    The Tory party has shot itself in the foot, twice. Firstly the whole argument from the chancellor yesterday about 'why should those at the bottom face cuts while those at the top continue to get help' will be seen as so much hot air by those who will be losing much more over the months and years ahead. Secondly it shows that they are willing to fold up like a deckchair at the first sign of trouble. In one fell swoop the Tory party has become again the party that puts the 'well off' over and above anyone else.
    How much was this going to save again...was it £300m? A drop in the ocean. A symbolic gesture that 'we're all in this together' will now, in the minds of the general public, symbolise the exact opposite.
    This is about as big a political gaffe as you can make really...partisan and wobbly...oh dear.

  • Comment number 79.

    #49 has summed up our situation exactly - thank you

    I am a stay at home mum of 3 who is likely to be affected as her husband's earnings if his employer do well that year will tip him into the higher tax band by a few pounds.
    I'm not against cuts, and I don't mind losing some of the £2500 I get from the govt to bring up the kids, but it doesn't seem right to attack families with one breadwinner when the neighbours who both work and pay childcare would still be bringing home more money after tax etc. and still give them CB. Where is the sliding scale (that could start earlier) to help families plan and manage their finances better? They means-test Child tax credits, so can't they use that system to means-test CB too? It can't be that hard surely?
    As it stands, my husband would have to have a pay rise of £3k just to cover the loss of CB. Not likely to happen in this day and age.
    I will return to work when my youngest is of school age, but I am doing the govt a favour at the moment by bringing up my own children at very little cost to them - saving them a headache with early years childcare provision (woefully lacking here and expensive - more than I can get on a part-time job)!
    Incidentally, we have 2 TVs, 1 car (used when purchased), 1 house with a small garden, we don't have holidays abroad and when we do have a holiday in the UK it's not every year, we have cable tv because the reception here is poor - otherwise we would have freeview, we try to save some money for a rainy day, but we have 3 kids to feed, clothe and look after for less than £100 a week after bills - we don't have a social life as we can't get childcare and we've been forced to move over 200 miles from family for work... we're not "rich" by any means.

  • Comment number 80.

    #69 et al - Haven't we been a busy bunny Fubar. All this racing around trying to put out the all those fires created by The Dear Leader, and his faithful sidekick The Boy Wonder - your fingers must be a veritable blur.

    "There are none so blind as those who will not see, there are none so deaf as those who will not hear".

    Chin up, and don't forget to keep taking the tablets!

  • Comment number 81.

    69. At 5:04pm on 05 Oct 2010, Fubar_Saunders wrote:
    "And so it begins..."

    Yep, certainly does. The same old familiar factless, whiny, scaremongering, baseless sloganeering garbage, yet AGAIN.

    Its enough to drive anyone to drink.

    Looks like you've started already, Fubar.

  • Comment number 82.

    I must admit I wonder if the people whingeing about the 'pain' of a £44,000 household losing just an extra MAXIMUM of £20 per week realy are earners of that sort of money?

    Oh stupid me! Of course they are ...

    They will be from the ranks of all those lucrative jobs for Diversity Champions, Ethnicity Sponsors and other 'Labour-loving' non-jobsworths created in the last 13 years and all paid for out of the taxes of those working in the Private Sector (the taxes of the Public Sector simply being recycled private sector money!)

    They really should be lucky they have jobs - oh again, silly me ...

    Not for much longer will those bunch of useless mouths have jobs that do not create wealth or economic growth other than in their own minds, opinions and in their wallets!

    When that happens they really will have something to whinge about.

  • Comment number 83.

    Is this the Correspondence Course for Undergraduates at the Liam Byrne School of Economics and Money Mismanagement? It looks very like the 'Brownian Notions and Treasury Notes' module.

  • Comment number 84.

    Percy 76

    complains;

    "Under the logic or thinking that asks why I should subsidise someone else's children?"

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

    Fine, as long as you don't expect someone else's children's taxes in the future paying your pension and caring for you in your old age.

    Future generations, our children are an economic necessity and universal child benefit a small contribution towards the cost of that necessity.

  • Comment number 85.

    76. At 5:23pm on 05 Oct 2010, PercyPants wrote:
    @4
    "This means that a higher rate tax paying man with a wife at home looking after two children will pay the same tax as a higher rate tax payer with no family dependents at all.
    Under what logic or thinking can that be fair ?"

    Under the logic or thinking that asks why I should subsidise someone else's children?

    Hi Percypants,

    So are you particularly unhappy at subsidising the children of a family with a joint income of c.£80,000?

    Or do you just recent your tax money going to help children enjoy a basic standard of upbringing, in the hope that their taxes (and efforts) will help support you in old age?

  • Comment number 86.

    75 Hardworking

    "As a divorced single mother of one, earning the 'magic number' (just) I am being penalised for getting off of my backside and earning a decent wage. How is this fair to people like me, when a couple earning a moderate wage but a collective income more than me are still entitled to this!!"

    Let's be kind, and assume your story is genuine, rather than made-up blogging propaganda, like a proportion of the other posts up the thread. The Big Thing you have to understand is that, in simple terms...

    the nation has run out of money!

    There simply isn't enough money left to pay all the benefits that the current government has inherited. That means some benefits have to be cut. Given that as a civilised nation, there is a strong case for prioritising payments to those in genuine need, that means that the knife has to fall on benefits to those who, relatively speaking, can manage without them. And that, perhaps sadly, includes you.

    Get used to it.

    Benefits are there to keep those in genuine need from destitution. They are not intended as supplementary pocket money for the middle classes.

  • Comment number 87.

    So..... We must be tough, resolute, fair. Even if it means punishing our own dear middle class supporters.
    Next day. We must introduce new tax breaks to compensate those who lost out (from us being tough yesterday)
    And they think the previous Government were clowns!
    Under new management but the same old farce.

  • Comment number 88.

    I do think the policy is ill-conceived...and may backfire. Perhaps we've already seen evidence of this in the quick declarations that we can expect some kind of marriage tax break legislation soon.

    I say more about this here, at the Brooks Blog:
    http://the-brooks-blog.blogspot.com/2010/10/george-osbournes-first-roll-of-dice.html

  • Comment number 89.

    13. At 1:46pm on 05 Oct 2010, Andy Vincent wrote:
    Since this is to be based on any earner in a household earning over the threshold it does beg the question of how HMRC will connect up individual taxpayers into a 'household' in the absence of any connection via a married persons allowance. It cant simply be based on address since that would penalise single mothers where a lodger earns over the threshold. This looks like an another implementation nightmare for the tax system.
    ==================

    "A single Mother with a Lodger who earns over the threshold" - sorry Ed, but if the Mail is correct the single Mother who you lodge with earns a packet so she wouldn't get the child allowance whether you claim to be the Lodger or not. Whilst on the subject, what is it with all you Labour Politicians that you all Lodge or live in back rooms with the relatives - it doesn't strike me as healthy, with all the expenses, donations and wages you get, surely you can afford one home of your own?

  • Comment number 90.

    Nick - I'm a big fan of your blog but in your excitement to jump on this (important) story you (and many fellow journalists) are getting sloppy. This issue doesn't just impact stay at home mums. It impacts stay at home parents or more accurately low or no income parents.
    On the issue, hell will freeze over before the married couples allowance actually comes in. How much does Cameron think that will cost to administer?

  • Comment number 91.

    Re: 22, 29 & 30.

    The IMF praised Eire's austerity programme when it was proposed - they have also advocated similar programmes to other countries and their economies were then driven them off a cliff too - so the IMF has a pretty checkered track record.

    I accept the property bubble is Ireland - I accept there's a lot less of them than us - and I agree that their Euro membership locks them in to more restrictive rules than the UK.

    No replies however to my points have explained how taking £1Tn of demand out of the economy whilst our main export markets are in such poor shape is going to result in millions of new jobs, investment and an export-led recovery. IMHO it won't happen - and if it doesn't, then all the cuts will have achieved is to shrink the UK economy and dig us deeper into debt - public and private.

    Indeed, rather than seeing our differences from Eire as a plus, to my mind I'd suggest that given the scale of the British banking industry, the addage that "the bigger they are, the harder they fall" would seem to be more appropriate.

    As to the property market, we are HUGE compared to Eire - residential and commercial property - and the OECD assesses UK prices to be overvalued by 40%.

    House prices are already falling - mainstream experts suggest a 20% fall is now on the cards by spring 2011. If unemployment rises sharply and the cuts programme damages market sentiment, this could well be a lot worse - it was 35% in Eire - why should it be less here?

    A steep fall in property prices would create massive negative equity - and guess who is going to be left with the loss? you & me in the first instance, but as with the sub-prime meltdown in the USA, it's going to be the overexposed UK banks that end up holding defaulted mortgages and repossessed property worth a lot less than was lent on it.

    In this scenario, we end up with a BIGGER debt - AND are faced with a second bank bailout bill which - going on Eire's experience - is likely to be several times the "savings" made by the austerity package that caused it in the first place. That's if we can afford it at all - wich I doubt - the banks may well have to be completely nationalised.

    The problem with our economy is not that our public sector is too big - granted it might not always be doing the right things - if this were true, then the German economy would be in a much worse state than the UK because their public sector is even bigger than ours in % terms.

    The problem is that we have allowed our manufacturing base to be asset stripped, to be abused by unfair foreign competition and completely neglected so we don't produce enough of what we consume, we don't have enough decent jobs for our people and we have allowed ourselves to be seduced by the City into believing that "metal bashing" doesn't matter and that the Masters of the Universe would generate enough foreign exchange and taxes so nothing else matters.

    I see far too many Masters of the Universe at the Conservative Conference - and I see too many of them in the ranks of Tory MPs.

    Before the election the British people have lost faith in both the Bankers and their elected representatives - yet they seem to have elected the Banker's Party to govern them.

    To return to the subject of this blog, children are quite literally the future of our society and we should all take our responsibility to protect, nuture and develop their talents very seriously. Having children and taking responsibility for them is the job of parents.

    If were are serious about supporting parents in bringing up the next generation, we should recognise their financial burden in the tax system in raising children, not just the fact that they chare a bed as husband & wife - then the money should follow the child, not the marriage certificate.

    And as a progressive, fair society, we should tax people according to their incomes. Therefore it is right that if you earn more, you pay more.

    So a high earner should pay more tax - but if they have children, they should get a tax allowance - or a tax credit if they don't have the income to benefit from a tax allowance.

    So if you don't like the idea of rich people getting a tax break - simple - put up the rate of tax at the higher end of the distribution - those without children don't get the allowance - those with children do - and the system still recognises the need to support parents financially.

  • Comment number 92.

    79. At 5:37pm on 05 Oct 2010, U896350 wrote:

    I will return to work when my youngest is of school age, but I am doing the govt a favour at the moment by bringing up my own children at very little cost to them

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

    Since when were your children automatically the responsibility of society as a whole unless you choose otherwise?

  • Comment number 93.

    At 5:17pm on 05 Oct 2010, AndyC555 wrote:
    34 - "Just as a simple point, a bonus of say...£1 million can create how many lower level jobs?"

    Could certainly get a butler, a maid, a cook and a mistress for that sort of bonus, providing it's annual, of course. And a nice new car. And a nice holiday too. What's left over would probably go into an off-shore bank account.

    The problem with the UK is you have to wonder what imaginative way the Government will come up with to waste the £510,000 tax & NIC they take from the bonus.
    -------------------------------------------------------------------
    Still not to worry. Apparently you can manage quite well on 45k pa. You don't need/deserve any extra. So that's .....£465,000 left that we can tax and NIC away from them! Oh, and I forgot, that's just their bonus. We can do the same to their salary. After all if you've got 45K you've got everything you need. George Osborne said so.
    MPs - pay cut to 45K. Bankers - pay cut to 45k. FTSE directors etc - pay cut to 45k. Anyone earning over 45k - pay cut to 45k. I know it seems harsh to use the tax system this way but needs must where the deficit drives. Super thinking George!
    Who needs socialism? Give me that Osbornism every time. Might even vote Tory if they keep this up.

  • Comment number 94.

    I know a couple of people who earn in the £30,000 bracket (just one of each couple). Their partner is earning a bit less and they have said that they don't need child benefit, but they are given it,so they take it! It is saved for holidays and treats! I wish I could go on holiday!!!!

    I agree with the idea in principle. But feel that it should be considered on households as well. I do also feel that though the ideas are good, maybe this government is still a little green in how to put their policies across to such an angry nation, no thanks to labour!

  • Comment number 95.

    Clearly it is not fair that a family with two working parents (two tax allowances) earning £43k each (20% tax) can keep their child benefit where a single earner family on £46k (one tax allowance and 40% tax) looses their child benefit. Its not exactly fair that our first two earner family are about £6k per year better off than a single earner on £86k.

    What about Pension Credits ? These are currently available to stay at home mothers through the Child Benefit System. Do we now have to sign on the dole even though we are not entitled to any benefit?

    The Benefit Family on £26k that we keep hearing about would need to ear £36k to break even, and £46k to make working worthwhile - but then they'd loose their Child Benefit so not much incentive there.

    This little whisper that maybe there will be a tax break for married couples, or better yet the opportunity ti transfer the non-working partner's allowance to the working partner - all scotch mist, Nick! These were initially aimed at Basic Rate tax payers so no help there. And Cameron is not considering their introduction until 2015 - just in time for the next election and a cynical attempt to buy back the votes lost in the last 24 hours.

    Anyway - didn't we already decide the "rich" were the new 50% taxers, earning over £150k per annum?

  • Comment number 96.

    Not sure everyone has grasped that two £40k earners are about £5k per year better off than one £80k earner. This is because of the existing tax system. But the £80k single earner is being further penalised by the loss of Child Benefit whereas the "£80k joint income" family are able to keep their Child Benefit. So it does not pay to work hard and get promoted. We re always being told when pensions or benefits are being discussed that "two can live as cheaply as one" and yet here we are giving more to the two-earner family and less to the one earner family. This is why everyone is so mad. It is blatentley unfair. And the excuse that this is because it would be very complicated to do it differently is laughable.

  • Comment number 97.

    94 menustandby (whatever)

    "maybe this government is still a little green in how to put their policies across to such an angry nation, no thanks to labour!"

    =========

    So not only is the world banking crisis the fault of Labour, but Camron's incomptence is also their fault........now that is an interesting take

  • Comment number 98.

    Statistically how likely is it that both partners would earn just below the tax treshold? this has the feel of a totally artifical row.I've just watched a report on Look North in which your intrepid reporter courageously braved the mean streets of Kirk Ella looking for millionaires who would be losing out. This is allegedly a news program. Like most people in this part of the country I can only dream of earning £45K and would be ashamed to claim benifts if I was lucky enough to do so.

  • Comment number 99.

    #92
    I don't suppose you're wanting to retire with a state pension then?

    How else is this country going to support the ever-increasing elderly population without young people to take the place of those who retire? Children are one day going to pay tax and help support us all in our retirement! How can it not be part of society's responsibility to make sure that children are cared for so they grow up to be healthy, happy individuals, living longer than their parents?
    I take my parental responsibility seriously, but parents need support too. My parents had this support and so did theirs. In our fragmented society where families are forced to live miles apart because of the job market, where no job is for life, we rely on support from society to help bring up the children to compensate. If you don't move with the work, you don't work (and live with help from benefits, adding to the burden on everyone else).
    As it is, I won't be retiring until I'm at least 70 to help people over 50 retire comfortably..

  • Comment number 100.

    @85

    "So are you particularly unhappy at subsidising the children of a family with a joint income of c.£80,000?

    Or do you just recent your tax money going to help children enjoy a basic standard of upbringing, in the hope that their taxes (and efforts) will help support you in old age?"

    What a bizarre and mean-spirited response! I'm unhappy that *anyone's* tax is used to incentivise breeding. It's not like we're running out of babies, is it?

    I'm content that my tax contribution is used to fight need and poverty, and to fund education and child welfare - but child benefit for the well off is a pretty lousy delivery mechanism for help and takes money away from others that actually need support.

 

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