Jaynehowarth’s Weblog

Journalist and writer

What’s the benefit for children?

with 11 comments

Child benefit is the sacred cow that has been slaughtered before our eyes.

I understand the need to make massive savings. The country is in the mire; we owe £900 billion and that is forecast to soar to £1.1 trillion by next year.

According to the UK Debt Bombshell , it is the equivalent of every man, woman and child paying back £15,213. UK pays £120 million debt interest every day to foreign governments.

That kind of debt is not sustainable. Everyone agrees that significant savings must be made across the board. Something has to give.

Getting rid of child benefit for high earners, those people earning over £44,000, is one idea.[picapp align=”right” wrap=”false” link=”term=george+osborne&iid=9913374″ src=”http://view2.picapp.com/pictures.photo/image/9913374/the-conservative-party/the-conservative-party.jpg?size=500&imageId=9913374″ width=”234″ height=”156″ /]

The Chancellor George Osborne, who before the election pledged to save child benefit, says it will save £1 billion a year.

While there are undoubtedly good arguments to scrapping a universal benefit for high earners – whatever they are (that depends, naturally, on whatever you earn. It’s probably £5,000-£10,000 more than what you are on) – the dichotomy comes with the mathematics.

In a one-income family, with the sole earner’s yearly salary at about £44,000, they lose their child benefit. For the oldest child in full-time education, that payment stands at £20.30 a week, with £13.40 a week subsequent youngsters. For that one-income family, it means losing £1,752.40 if there are two children in the family.

That’s a lot of money.

While some families may not even notice the money going into their bank accounts every month – see India Knight’s tweet about how she used her child benefit (she also tweeted that she didn’t claim it after 1998 when she returned to work) – for others, it is the difference between being able to keep the house warm in the winter; it is being able clothe their youngsters. It isn’t about paying for piano lessons.

But the real problem for the angry middle classes and Mumsnet and the like is the incredibly iniquitous decision to allow two parents who each earn just under the 40 per cent threshold (£40,000 each, say) to continue claiming child benefit.

How does that seem remotely reasonable? To many people, including Tory activists, high earners and those who will continue to receive child benefit when the changes come into effect in 2013, it is a monstrous policy.

Is the government sacrificing the simplicity of the system, by introducing a crude cut-off point without any regard for household income, for fairness?

All of this rather overshadowed Osborne’s next announcement to cap the amount of benefit any family can claim to £26,000. Of course, the comfy middle classes won’t be wringing their hands about that.

What next? What are the next elephants in the room to be sacrificed? Winter fuel allowance; pensioners’ bus passes; free TV licences for pensioners? More than likely. We are, as this government continues to say ad nauseam, all in this together. Unless you are super rich. Then that doesn’t apply, of course.

Written by CommonPeople

October 5, 2010 at 8:31 am

11 Responses

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  1. My heart bleeds for these people, it really does. The spectacle of people bleating that they can’t cope on one earner taking 45K a year is risible, insulting and indicative of the kind of world that calls public sector workers on £20K cosseted, yet thinks hardship is not being able to operate two cars and shop at Waitrose weekly.

    Wake up and smell the coffee. People all over are making ends meet on far less, and have been for years. The same people that think benefits claimants are vastly overpaid now see something that is effectively a perk subsidised by those less well off taken away, and are whinging for Britain. Tough. My only regret is that it’s not means tested. It’s a nonsense that two people can earn 86K before losing the payment.

    Meanwhile, plans to economically cleanse the southeast of the economically unattractive seem to be passing without a whimper, presumably because they’re the undeserving poor, unlike the middle classes vocalising on Mumsnet. At least you acknowledged the action, which is more than most have.

    I look forward to Gideon Osborne announcing his crackdown on Tax Evasion, all pigs fully fuelled and ready for takeoff.

    Best wishes

    Bob

    BrownhillsBob

    October 5, 2010 at 8:48 am

  2. Thanks for commenting, Bob.
    It may be unedifying to see comfortably-off people bleating (and I’m not saying whether or not this affects me or if it angers me to see people on high incomes claiming the benefit. That is not the point of the post), it’s the inequality of how it is to be distributed.
    The only – really ONLY – things that has annoyed me to the point of screaming about this announcement is how two people on very good incomes can continue to snaffle the benefit, while one person on a very good salary but in a two-parent household has to be sacrificed for the greater good. It is a nonsense.
    I do recall a similar cut-off point for one of the means-tested child tax credits a few years ago. I saw people whose joint incomes went over £50k getting it, while others,who were in a much worse position, couldn’t.

    jaynehowarth

    October 5, 2010 at 9:59 am

  3. Personally, I think it should be means tested an the rule applied fairly – at least then the middle classes might actually find out how dehumanising the state system actually is.
    I just don’t buy the concept that a household taking in 45K is going to be destitute because of the loss of child benefit. I suppose it’s predictable that these people expect everyone else to make the sacrifices.
    It never ceases to amaze me that those who think that benefits are so generous get an utter shock when they have to depend on them themselves. I’m not a claimant now, and haven’t been for years, but my childhood would have been vastly different without the welfare state. We must protect it fully, and if that means not subsidising people on nearly twice what the government claims to be the ‘median income’, then so be it.

    Best wishes

    Bob

    BrownhillsBob

    October 5, 2010 at 10:12 am

  4. I’ve been on benefits, too. No – they are not generous, even if the Daily Mail thinks it is!

    jaynehowarth

    October 5, 2010 at 12:31 pm

  5. I think it would cost so much to administer if you were to take into account two incomes, that it’s worth putting up the inequity in the scenario you describe. I’d rather than the simpler system with the anomaly that a fairer system with the bureaucracy – given that people earning between £20,000 and £40,000 a year are bloody lucky to have a benefit anyway.

    Jo Ind

    October 5, 2010 at 3:38 pm

  6. Thanks for commenting, Jo.
    I’m not an economist, obviously, and I do appreciate the costliness of means testing (not to mention complexities in the application process that would undoubtedly mean that fewer would apply) but something has to be done to ensure it is at least fairer.
    A sliding scale, perhaps, based on one’s tax code? Of course, then you’d have arguments about the financial power taken away from the main carer …
    It’s not easy, government won’t please everyone, but I can’t imagine for one moment it will leave it like this. It’d be political suicide.

    jaynehowarth

    October 5, 2010 at 3:46 pm

  7. Nice comment JH. The real issue is not so much the principle of universal benefit being challenged, but the cack-handed, duplicitous way they have gone about it. The party that promised to reward marriage with a tax break of less than 50p a day is punishing some families over 20 quid a week. That sounds uncannily like the kind of stealth ‘tax bombshell’ that the same upholders of family values would have jumped to the barricades about until… well last week really.

    Chris B

    October 5, 2010 at 10:12 pm

  8. I’ve come late to this one. As I’ve said before here, I don’t have kids. I live in a dual-income household, both of us what I’d consider fairly well paid, but a good wedge less than 44k. If we did have children, well then maybe we’d have to go on holiday less or run an older car, maybe cut out the eating out and pub visits: but it’s hardly poverty, is it?

    I have to say I agree with most of the comments: the idea that we’re paying out of a hard-pressed benefit system to people on well above average wage seems ridiculous, but the implementation of the cut seems clumsy and ill-conceived. I’d have to agree with Bob’s comments about means-testing.

    I know of a couple with a young child that claim to *need* their child benefit despite a household income of £60k or more: If they do need it, then that’s because they have over-commited themselves, not because they’re on a sink estate earning minimum wage…

    The Plastic Hippo covered this as well– worth a read.

    stymaster

    October 10, 2010 at 4:28 pm

  9. Thanks for reading and responding.
    I will take a look at Plastic Hippo’s piece, too.

    Jayne Howarth

    October 11, 2010 at 9:56 am

  10. I think whether the benefits are “generous” or not depends on your circumstances. I know two different people who worked full-time for not very much money. They both quit their jobs to have babies, split up with their partners and the welfare state handed them the full rent for homes that would require a household income of £30k to afford to live in. I would say that’s fairly generous. The catch is that you have to have a child and be single to feel the full generosity of the state.

    Ron

    November 8, 2010 at 11:22 am

  11. Thank you for commenting, Ron.
    I know the argument has moved on a little since I posted this piece originally, but the dichotomy remains.
    It’s interesting on how the media portrays the benefits system: you have one side that will inevitably call the majority of those without jobs and/or on benefits as “scroungers” (no guessing for which newspaper that might be) and for other media outlets, these same people are championed.
    I don’t have the answers – if I did I’d be in a very well paid Government job earning far more than I am at the moment, the result of which would be that I wouldn’t give two hoots about losing my child benefit.

    CommonPeople

    November 8, 2010 at 1:55 pm


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