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Wait for the twofer

Nick Robinson | 10:30 UK time, Monday, 4 October 2010

Tough-but-fair is how George Osborne likes to describe his cuts. So every time he announces pain for the middle classes, it is usually followed by pain for the less well off - a kind of political twofer (two-for-one, if you're not familiar with the jargon).

George Osborne

In last year's conference speech the then shadow chancellor promised to cut tax credits for those earning over £50k at the same time as a pay freeze for most public-sector workers.

In his first Budget he announced an increase in capital gains tax at the same time as cuts in the rate of benefit increases.

All that remains to be seen is what today's twofer is - but I think you can rest assured that Mr Osborne does not plan to spoil the first speech of a Tory chancellor in 14 years by only taking money away from the Tory-supporting classes.

This may not be enough to protect him from the mounting anger of those Tories who have noticed that his child benefit proposals hit traditional one-earner families hardest. A family with one worker earning £45,000 with Mum (or Dad) staying at home to care for three children will lose £2,400 whereas a couple with two people earning £40k each will lose nothing.

The losers may be tempted to remind the chancellor of his words in last year's conference speech: "We will preserve child benefit".


  • Comment number 1.

    "whereas a couple with two people earning £40k each will lose nothing"

    Of course, why penalise against 2 people working rather than just 1 person working? Who cares that the child will be raised by strangers? As long as we're all working, that's the important thing.

  • Comment number 2.

    It MUST make sense to limit state support to those who genuinely need it.

    As a priority - it MUST make sense to STOP those who are defrauding or cheating the system NOW!

    It also makes sense to STOP providing UK state benefits to the various peoples of the enlarged EU or to those who arrive here from overseas, resident here or not, legally here or not, and to do this NOW!

    However, it CANNOT take ANOTHER £7bn to do this or indeed to reform any kind of system! Can it?

    How can anyone believe / accept that you need to spend this kind of money???

    Those responsible for these projects really do need to think these things through, get back to the basics and implement the critical components with a sense of urgency!

  • Comment number 3.

    Quote: "pain for the middle classes".. ..."mounting anger"... ..."child benefit proposals hit traditional one-earner families hardest" etc.

    How do you make this nonsense up? Anyone earning over £45K does not need or deserve child benefit. It's the people earning under the national average of £21K that need it. This is a good first step to stop the massive waste that has accumulated under Labour.

    The implementation is not perfect, but it was never going to be. Introduce means testing and you introduce another hideously expensive layer of administration, that we should be trying to get rid of.

    Also since when did taking a benefit away amount to a tax increase? A benefit gives back out of tax already paid. Your analogy is classic Orwellian, "doublethink".

  • Comment number 4.

    I'll be one of those hit by this, so maybe I need to convince my employer to add my wife as an employee and split my salary between us. Not only would we retain our child benefit but we'd pay less tax overall too.

    I don't object to the basis of this change, but surely it's household income that matters rather than an arbitrary cut-off point because of the tax thresholds.

  • Comment number 5.

    'Tory supporting classes'. So the eleven million who voted Conservative are all Eton toffs.

  • Comment number 6.

    @2 "It MUST make sense to limit state support to those who genuinely need it."

    MUST it? Not if such a system is expensive to administer and produces unfair bureaucratic anomalies.

    A system of universal benefits and higher marginal tax rates would achieve the same thing, but more cheaply and fairly.

    We actually do have a social wage in this country - eg entitlements to medical care and education paid for by central and lcal taxation. These are, for the moment, universal benefits too. What we need is an industrial strategy which ensures that this country can pay for these benefits and meet its own needs, but there's no sign of that from this Liberservative government.

  • Comment number 7.

    A general lesson is that it's much easier to give money away than take it back.

    That's probably why the deficit is so big.

  • Comment number 8.

    I agree - the devil will be in the detail and in the implementation.

    Labour should support the measure focussing any suggestions/attacks on the detail/implementation. If I were Ed, in the spirit of the "new politics", I would be seeking detailed discussions with the Coalition (and the civil service).

    Labour should adopt a strategy of (where ever possible) supporting the general thrust of spending cuts/benefit reform focussing their critique on improving fairness in the detail/implementation.

    That way Labour can over time build a coalition with the LibDems (and more importantly their supporters) on the issue of improving fairness.

    Clegg is placed in the position of:

    - showing Labour's idea's/suggestions do not improve fairness (or are unaffordable - where Labour should point to scraping - or delaying - Trident, crackdowns on tax cheats - including legislative reform - and new "fairness" and green taxes).

    - adopting Labour's ideas and trying to sell them to the Coalition (including the remnants of the old nasty right wing of the Tory Party). If Clegg succeeds it is a victory for the "new politics" and a constructive opposition. Bit hard for the Tory Press and Mr Murdoch to portray him as RedEd if the Coalition is adopting some of his suggestions. If Clegg fails to adopt Labour's suggestions to improve fairness in the detail/implementation strains are placed on both the Coalition and within the LibDems.

  • Comment number 9.

    Your missing part of the point here-what is being announced here just doesn't add up. CB is for the family, not the individual. Therefore any cut should be made on the basis of the family income, not any one individual. To say that this wasn't an option is ludicrous-the tax credit system does this already.
    The "mounting anger" that will rise through the day is that it is a cut that has not been fairly distributed-is this Govn is looking to drive a wedge between friends and neighbours, its just done it with a 4lb hammer.
    I'm all for paying more taxes but not when other families in my direct sphere earn AS A COUPLE (with children) 30K more a year!!!

  • Comment number 10.

    Immigrants (legal) arriving from outside the EU never had 'recourse to public funds' (access to benefits), atleast not over the last 23 years. Which means they stay in the country if they are earning and paying tax. If they lose thier job, they usually have 15 days to leave the country unless they show a good reason to stay. Child benefit has not been 'universal' as all seem to think. Child benefit was removed for legal immigrants from outside the EU more than a decade ago. It used to be the only benefit they were ever eligible to receive.

  • Comment number 11.

    While I understand what he is trying to do and I do not like it as I end up loosing this will affect families where parents are married and officially together and not necessarily everybody. If dad is high earner and mom is not or not working but are not married how on earth the system will work? Would it be based on home address ? I think the whole idea is there to safe money but it has too many holes and only couples that are officially married will end up paying the penalty.

  • Comment number 12.

    Maybe this is a bit off topic but the positive, optimistic, visionary stuff from the Conservatives should revolve around the production of a "corporate strategy" for UK Inc. (i.e. a re-badging of good old fashioned industry policy).

    In my view that should focus on how UK Inc is going to create the jobs of the future and the export income to pay for a decent society.

  • Comment number 13.

    "We will preserve child benefit, winter fuel payments and free TV licenses. They are valued by millions." George Osborne, Oct 2009, Conservative Party conference.

  • Comment number 14.

    At least we know now what the Coalition government's priorities are: fairness is a much lower priority than cost-effectiveness. The Tories never change.

  • Comment number 15.

    Once again, another example of how we're all in this together - only some will be more in it than others. A Government blinded by cuts.

  • Comment number 16.

    And yet another attack on the traditional family unit with one breadwinner and one homemaker to look after the children. How can it possibly be right to take away the benefit from a family with a single earner earning say £45K, and yet leave alone a couple who earn £80K between them, but at £40K each.

    You try to ensure the children always have a parent there, and then get penalised for it. Nice one David (NOT).

  • Comment number 17.

    The problem with applying this to families rather then individuals is that it adds another layer of beurocracy and opens more doors for fraud.

    How do you define a couple? Do they need to be married? Living together? Do you want to promote something which makes it more lucrative for couples to be separated (or claiming to be separated) than together?

  • Comment number 18.

    cabsandy wrote:
    Any cut should be made on the basis of the family income, not any one individual. To say that this wasn't an option is ludicrous-the tax credit system does this already.

    100% agree with you. Nothing ever seems "not a viable option" when it comes to them wanting to take money from you though.

  • Comment number 19.

    I suspect this gamble will not pay off.

    The idea seems to be something like this. The Conservatives are keen to demonstrate that they are a party of fairness and social justice, at least more so than Labour was in government. One way to show this is to announce policies that remove benefits from the better off.

    The problem with this is that even if we are all "in it together" cuts like these may be more likely to turn voters away. Many people are already under increased pressure at their work or even facing unemployment. At a time where cuts in benefit allowance are widely expected soon, the anxiety amongst voters may only increase.

    I suspect this will cause more harm than good for the party. Instead, they should look at structural changes that are more impersonal.

    Surely, it's odd for the party that wants tax breaks to support marriage to also argue we should remove tax credits for families with children?

  • Comment number 20.

    Can I ask one thing of our BBC luminaries?-ask the question tonight on Newsnight if the number of families earning 44K or above is greater than the 15% with one or more persons in a family earning 44K or more.
    I bet its a damned sight more than 15% and would claw back a lot more than £1 billion-but we couldn't do that now, could we?

  • Comment number 21.

    "It means we're all in this together. Each part of society is going to be making a contribution"

    This is one big confidence trick.

    Can't anyone see that the poorest and most vulnerable in society are going to be hit the hardest.

    Every one pays Tax of some sort no matter if you are on benefits, a low wage, old age pension.

    It is not generally realised that incapacity benefit is taxable even though the Government make out it is not, it is.

    We pay tax on practically everything. With VAT going up, tax on fuel going up etc.

    Without the general price increases of every thing we buy.

    Therefore the poor in our society are going to be paying out more on less income.

    All this while the richer in society can find loopholes to prevent paying these extra taxes.

    The ones who created the situation the country is in ( the Bankers and the Governments ) are not the ones who will be sharing the pain we are all supposedly having to share.

    They can cushion the effect, the poorer people can’t.

    In general their contribution as compared to their income will be far far greater. Therefore we will not be in it together, that is a deceitful and disingenuous lie.

  • Comment number 22.

    Well of course this is more unfair to families that have one single high earner, compared to two slightly less high paid earners. But then the tax system is not 'fair' and never will be. If it has to be done this way to avoid the administration costs (which would wipe out any savings made by the cuts) then so be it.

    I find it hard to understand why people think they are entitled to child benefit at all. Having children is a choice, and whilst it is a nice idea in a prosperous economy to help with the costs, with the country in the financial mess that it is people must accept that these handouts need to stop.

    It should not be the taxpayers responsibility to pay for raising children, people need to think whether they can afford it before having children. I would suggest scrapping child benefit completely, and give additional out of work benefits for those that are temporarily out of work that have children to raise. My other (perhaps controversial) suggestion would be those that are permanently out of work need to raise children out of their own pockets, not the taxpayers, and that those that continue to have children and can't afford them should have the children taken into care.

  • Comment number 23.

    @ #19 Thom Brooks

    You're probably right, voters may not like it and turn against the party. Though perhaps it's about time a government stuck their neck out and made changes that would enure long term benefit to the country, rather than operating purely to make sure they win votes next time around. It's the short term vote winning policies employed by Labour that resulted in them spending this country into poverty.

  • Comment number 24.

    Are we all missing a trick here?-is this what the Lib Dems demanded as payback for being in a coalition?
    I really cant see how the Conservatives gain anything in this.

  • Comment number 25.

    @14 Dean "...fairness is a much lower priority than cost-effectiveness. ..."

    - with respect you are wrong. The policies announced this-morning are neither fair, nor cost-effective. These "reforms" are driven by economically illiterate right-wing class war dogma.

  • Comment number 26.

    Cheers for the £4k+ pay cut George! My three kids thank you warmly.
    The unfairness of this has already been well commented upon.
    I'm all for a fair contribution from all towards the resolution of the deficit but this seems another family bashing exercise from another party proporting to support family values.
    Let's hope this saving isn't swallowed up by some typically useless future governmental procurement exercise where a few administrative inefficiencies negate the money saved.
    Still if the worst comes to the worst I can always transfer to banking and ask my boss to add my shortfall onto my bonus.
    Anyone heard anything about public sector pensions??? All very quiet on that front.

  • Comment number 27.

    I agree that this child benefit cut is simple but in terms of fairness....

    Can't he tell us how much it would cost to administer such a task?
    Can't he tell us how much would be saved by telling us different options because so far we have been told that individuals being penalised for earning more than £40k is the only option (somehow I don't quite believe it)?

    Then people can decide how fair it is.

    I'm sure George has had time to do research on this area but instead of providing a justified argument by debating the various options we get told that this is just the way it is. Does it have to be?

    I agree that higher earners should be willing to admit that they don't need such benefits compared to lower earners. However, let us also remember that there are poor families out there that shouldn't be having children in the first place due to their circumstances and this also leads to an unnecessary drain on benefits. After all, the greatest benefit trap is where children are born to poor and deprived families, suffer from a poor upbringing and end up on the same path as their parents and higher earners may not want to subsidise certain areas of our society through the tax and benefits system because of those bad choices made by such people to bring children in to a world where they will end up with a poor quality of life, a poor family environment and where the opportunities for the future aren't as easily available.

    However, whatever happens, let us not forget that it is not a child's choice to be born and to what type of family they are born in to and because of that we must make sure that children are not unfairly penalised for the choices their parents made.

  • Comment number 28.

    Twofer? BOGOF, more like (Buy One, get One Free)...

  • Comment number 29.

    "A family with one worker earning £45,000 with Mum (or Dad) staying at home to care for three children will lose £2,400 whereas a couple with two people earning £40k each will lose nothing."

    Nick, are you not aware that we already have a tax system awash with anomolies?

    A married person, with a spouse at home looking after the kids and earning £80,000 will pay £21,930 in income tax.

    If that same couple both work and both earn £40,000, together they pay £13,410 in tax. That's a difference of £8,520 on the same family income!

    Never mind paying for a childminder, they could get a live in nanny and still be better off!

  • Comment number 30.


    My point precisely! We need to simplify what we have and realign policies, processes and systems accordingly based on the critical and fundemental needs of this nation's citizens. The problem is that no one really knows who these people are!

    Universal benefits are, by definition, untargeted and wasteful. Tough choices have to be made, so make a start here.

    There are of course plenty of other opportunities across government, both national and local, to reshape the scope and nature of government activity, to improve how it is delivered, to eliminate waste and to reduce what it costs.

    The pension schemes of senior civil servants might be a very good place to start. No doubt with the spectre of redundancy on the horizon, plenty of cash has been tucked away in various budgets to help ease the pain.

    On an industrial strategy - I fear that it's too late - and what do politicians know about industry?

    So much of our industry has been sold off to international corporate raiders - championed by management and financiers with little vision and much vested interest - that ownership, investment priorities, emerging market location, economies of scale, domestic capabilities, skills and cost base might put a spanner in the works!

    Still we always have The Apprentice to look forward to!

  • Comment number 31.

    What's the odds that the scroungers claiming more than £45K p/a in benefits don't see a cut though. So much for the family friendly party.

  • Comment number 32.

    As a family living on less than 20k a year, I would happily give up child benefit if we had a 40k income. But, I absolutely refuse to work whilst my children are so young. Both my husband and I were latch key kids, we both had siblings to care for before and after school so neither of us want that for ours. Our situation is complicated anyway, but if a family really has 40k to live on with both parents working then where are the children? in child care? that costs more than staying home and taking a wage drop. (that applies to both parents not just the mother) The idea of tax credits was an honourable one, to make sure families were not out of pocket because one stayed home to take care of the children, although I agree with todays decision in theory, the government has to be careful and not make this the thin edge of the wedge because the one thing we have in our democracy is a high regard for childrens rights and parenting,(down largely to the previous government) and if the new austerity measures are to work, they have to be seen to be working and not just penny pinching or turning us back into a two tiered social class society again.
    I am wondering whats next on Osbournes hit list, thats benefit claiments and now child benefit..these things go in threes...

  • Comment number 33.

    I am disgusted with the government and cannot understand such poorly considered ideas which touted as policy. I have no idea why the household income cannot be tested rather than penalising a family if one person earns more than 45K, when this information is available from HMRC and other government sources.
    I have to say that my wife and I have 4 adopted children (under 8) and earn approx. £48 K. I have a car and a mortgage. We are not a rich/well off family and my wife looks after our children at home as they are mainly pre-school age.
    This type of ‘policy’ strikes at the heart of Tory ‘family’ values and Lib-Dem 'fairness' policy and will undoubtedly will lead to the failure of this coalition government.
    Sadly it is likely to hit children the hardest, families second, while the ‘rich’ and 'non-contributing' elements of society will again be totally unaffected by this policy and any so far announced by the government.

  • Comment number 34.

    So all us middle income (?? doesn't feel like much right now) idiots voted this conservative government in. Just like in the eighties we actually lose out under the conservatives although they managed to convince us that they would support us when we voted for them. I'm not sure many of us will be voting for them next time!

  • Comment number 35.

    Ken @ 31

    "What's the odds that the scroungers claiming more than £45K p/a in benefits don't see a cut though. So much for the family friendly party"

    It concerns me that there are people out there who seriously think there are people on benefits receiving more than £45K. That is just la la land stuff.

    Seems to me there are a lot of people on here in favour of cuts provided it does not impact upon them. Talk about a "I'm alright Jack" society

  • Comment number 36.

    "34. At 2:43pm on 04 Oct 2010, sophiecardiff wrote:
    So all us middle income (?? doesn't feel like much right now) idiots voted this conservative government in. Just like in the eighties we actually lose out under the conservatives"

    The top rate of tax fell under the last Conservative administration from 83% to 40%. Other rates of 75%, 65%, 55% disapearred. Were you not better off after that?

  • Comment number 37.

    "35 - 35. At 3:39pm on 04 Oct 2010, Cassandra wrote:

    It concerns me that there are people out there who seriously think there are people on benefits receiving more than £45K. That is just la la land stuff."

    Benefits includes housing benefit. The maximum currently payable is £2,000 a week and whilst only a few recievie this, you'd 'only' need to be benefiting from one-third of that to comfortably exceed £45k once all the other benefits were included.

    If it is La-La land, then we are living in La-La land.

    The huge sums paid in housing benefits are just as much a benefit as any other. If I were earning £50k a year and paying £20k a year in rent, I wouldn't say I was 'only earning £30k a year' because I was paying rent, would I?

    It concerns me that there are people out there who don't understand this.

  • Comment number 38.

    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 39.

    Many will be more familiar with

    BOGOF rather than TWOFER Nick

    Buy one, get one free

  • Comment number 40.

    AndyC555 @ 37 - it is a fair cop.

    If there are people getting benifits over 45K or even average household income of those who are in work, I for one (barring some extraordinary circumstances) am entirely comfortable with this announcement.

    But do you really think that limiting benefits to average household income of those who are in work will save significant amounts? Surely it is more a statement of general policy/ideology designed to generate approving headlines in the Tory and Murdoch press. Thereby pacifying the rump that is the old right wing of the Tory party.

    One of the things I find funny about the RedEd tag is that it is David Cameron who has gained most by shifting his party to the left. I hate to admit it but it is precisely this fact which attests to the success of New Labour. Hence David's heir to Blair comment.

  • Comment number 41.


    "Cheers for the £4k+ pay cut George! My three kids thank you warmly."

    Did someone force you to have three kids? Were you relying on me to pay for them through my tax?

  • Comment number 42.

    "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."

    Ah. Slight problem there. Owned and operated by the outsourcer. I dont think the revenue own their own systems any more. NI is done by Accenture, PAYE was done by EDS (now Cap Gemini) and I think, but I could be mistaken, that IBM are in there somewhere as well.


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