Child Benefit takes a slicing.

Okay, Stan, What’s the Plan?

The Prime Minister is amid rising anger at the Coalition’s plan to cut child benefit.  Why am I not surprised?  Because they told us they would be cutting these benefits.  People who wanted benefits cut for those they deemed ‘scroungers’ voted for the Tories without a thought that depriving a few ‘lay-abouts’ would result in a substantial loss of income for those who were not.  People who fancied a ‘change’ because they were ‘bored’ with the Labour government (as if it were a simple redecoration of a room) voted for the Tories.  The Conservative Party laid their plans down very clearly in their manifesto and voters were warned well in advance during the General Election campaigns by both Labour and the Liberal Democrats that these credits would be cut so I’m afraid very little sympathy is due to those who ARE shocked.  In summary if people did not vote at all (Not voting was their choice but they were given ample opportunity to take part in the electoral process.), or voted for either the Conservative Party or Liberal democrats then they have exactly what they asked for and they have no business to complain about their chosen party’s plans. Voters were also warned that a vote for the Liberal Democrats was a waste and would end up going to the Tories in a coalition.   They may well express their regret but their collective choices are something the rest of us must live with for the next four and a half years.

The plan is to cut child benefit to individuals who earn £44,000 or more a year.  The cut will mean that families with a joint income can earn up to £87,999 and keep their benefits while those with a single income will lose all of their benefits if that income exceeds £44,000.  What has sparked controversy is not the cut itself but the fact is that this will favour families where both adults work and their joint income exceeds the threshold, over single income families where one parent also provides the childcare.  What Cameron and Osborne fail to realise is that by setting the threshold at that level and only accounting for individual incomes (how many households function with ‘individual’ incomes?), will equally and unfairly penalise parents who both work and be an even greater attack on the finances of middle-income families.  It is true that cuts need to be made but to insist on the this income threshold would be an attempt at legislating a needless social change by artificially engineering both quantity and quality of the choices available to parents. Unless this is what the angered ‘think-tank’ (I hate that term) members want?

One Tom Loughton suggested that thresholds may need revision to correct inconsistencies.  Mr Cameron has stated that the a joint threshold would add a complication of a means testing system and thus cause an unnecessary level of bureaucracy which would be highly unpopular.  It doesn’t matter that this initial move is against single income families.

“Under this change, child benefit will go on being paid to the 85% of people who don’t pay top-rate tax, and I think that is fair and right.” – David Cameron

I fail to see how.  He has also given Mr Osborne his full backing on his plan to pick apart the welfare system.  These plans go as far as placing a £26000 cap on the total benefits received by households without an adult in employment.

“We have to ask the question ‘Is it right to pay child benefit to top-rate taxpayers when we have such big debts and such a big deficit and when we obviously want to protect the poorest families?’ – Speaking on ITV1’s Daybreak, Mr Cameron

However, Mr Osborne (The Chancellor of the Exchequer for the benefit of my international readers.), has risked a backlash by announcing that child benefit entitlement will be removed from those households with an income of £44,000 from 2013.  This looks like a plan to enact social changes eventually.  Changes that will cost middle-income families between £1055 – £ 2500 or over per year.  It is fair enough that the individual pay threshold is in-line with the threshold for the higher rate of tax, but it is wrong to cut it off entirely and it is equally wrong to penalise only the families on a single income which either meets or exceeds the individual threshold.  Yvette Cooper, the Shadow work and Pensions Secretary has also stated that the decision to remove this assistance is unfair.

Further weight is lent to my suspicion that detrimental social changes are being enacted by this drive to only eventually end benefit entitlement families who live on £44,000 or more a year, is the fact that they plan to then sweeten the blow to stay-at-home mothers with a transferable tax-credit.  So it goes a bit like this, “If your household income is more than £44k then we’ll remove your child benefits.  But if your little woman graciously realises her place -stays at home to raise the children and wash and cook and clean for you and the kids like a good girl – then we’ll pat her on the head and give her a bit of pocket-money.” Pardon me for sounding cynical but I can’t be the only one who finds the whole idea insultingly patronising.  In 1999 when the Labour Party brought in a national minimum wage they were castigated by the traditional Conservatives for ‘social-engineering’.  Well it’s the same thing here folks and they are trying to take us backwards to the 1950s while getting us to pay for the ‘privilege’.

What About Students?

Surprise surprise, the ‘graduate tax’ isn’t turning out to be quite such a hot idea either.   I shouldn’t really gloat on this because I thought that it was a fairly good idea to get around exorbitant tuition fees and horrifying levels of student debt.  We can’t all be right all the time.  After having another think on it, it seems that this graduate tax will ONLY apply to new students.  This will mean leaving those leaving university to find a distinct shortage of graduate jobs will still have to repay their original loans and fees out of their ordinary incomes.  This will still mean putting off being properly independent for another five to ten years while they work to repay their debts in average paying jobs which either don’t specifically require a degree or even have anything in common with their years of study.   Somehow I am extremely relieved that I DIDN’T go to university: I might still be broke but I do have something to show for it.

“A pure and simple graduate tax on its own has real problems – I think it would probably benefit universities in other parts of the world as our young people start to go to them.”

Shall we take a short trip to Tory Cop-out City?

Mr Cameron faced a grilling from Adam Boulton on Sky News about pensioners’ benefits such as winter fuel allowances, television licences and bus passes.  In hindsight, we can all see that Mr Cameron – born into ‘old-money’ – is trying to look after the ‘rich’ while attempting to appear magnanimous to we lesser mortals.

“I made some very clear promises to Britain’s pensioners during the election, I want to keep those promises but I cannot pre-empt everything in the Chancellor’s statement he will be making in the spending round.”

He has at least acknowledged that a household income of £44,000 a year is not “rich”.  He has refrained, however, from explaining how it is fair to put the cap on £44k individual incomes without applying a similar cap to joint incomes. Thus allowing joint income families on over £86,000 a year to retain their benefits while they are having so much trouble justifying why a single income family on less than £45,000 shouldn’t lose all of them.

Pressed on why the government had opted to cut child benefit instead of free bus passes and winter fuel allowances, which benefit rich pensioners as well as the less well off, Cameron denied that it was because he had personally vowed to keep the pensioner benefits in place during the election campaign.

“I think a good welfare system is a mixture of some things that are universal … but also making sure we have a welfare system that helps people out of dependency. What [work and pensions secretary] Iain Duncan Smith’s reforms are all about with the universal credit is making sure that it’s always better off for people to be in work. What you are asking me to do is say you either have a totally means tested or totally universal system and what I am saying is in a modern world an effective welfare system needs elements of both.” – To the Guardian.

I would very much like to understand

  1. Why Mr Cameron is being so evasive over his Chancellor’s planned cuts to which he has given his full support in advance for?
  2. What is the single ‘universal’ payment that Mr Duncan Smith plans to reveal to the conference today and exactly how WILL it simplify the system?



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