Should child benefit change, and how?

[MidnightPatrol]

Martin Lewis talking about the unfairness of how child benefit is applied today. Millions more are being caught up by its removal.

Key points:

• A single income household with a £60k income is eligible for £0, while a dual income household earning up to £100k gets 100%.
• The earnings threshold has not changed since 2013

Should this change, and if it does change what would be 'fair' instead?

e.g.

• Should the arbitrary cut-off be higher?
• Should it be universal?
• Should it be based on household rather than single income?

Make it universal again or at least based on household income to stop the problem that we see of two parents earning just under each and getting it but a single parent just touching the cut off not getting help.

I think we need to invest far more as a society into our families and children.

For those saying scrap it and add towards childcare- I never needed childcare (family help) but I have needed my child benefit towards clothes, school trips etc.

They could indeed, but they could also choose not to pay into private pensions. So you clearly don't think potential recipients having been able to make different choices is a reason not to 'penalise' them in general. It's a double standard.

How it is now is ridiculous. I know a millionaire who claims it. He isn’t above the income threshold - because he’s a millionaire and so doesn’t need to work.

I don’t think it should be income related at all. So so many things are income related already, even travel. Higher earners pay a huge amount of tax then are overcharged for everything else as well. If the government is wants to tax income more they should just do that, but all these confusing stealthy taxes are too arbitrary.

Child benefit should be universal, like it was until I had a child.

I'd get rid of it and make childcare tax deductible instead.

And before you say it's not fair on SAHMs, who don't use childcare (though they might when their kids go to school) I think there's a public policy reason for mums to work, at least part-time, and not rely on feckless men.

Scotland have set up their own version on top of CB. It is dependent on if you are entitled to UC or tax credits. It's £25 a week for each child no limit.

The government debated child benefit literally a few weeks ago and said they will not be changing it. It will continue to be based on individual income not household income, because they said it’s too difficult to assess household income, whereas individual income is already recorded with HMRC.

To be clear, I'm very, very, very pro universal state pension. The problem I have is with the argument the poster was making, not the state pension itself. We need there to be enough universal benefits and payments to ensure those who are at the higher end of the earning spectrum keep feeling incentivised to pay in. Additionally, like child benefit it's a good thing in itself.

As for lifestyle choices, plenty of people in the past have had no choice to work until they dropped and no doubt lots of people claiming a state pension and not working could continue to work in some capacity if they wanted to. We certainly do not limit the state pension to those whose bodies will no longer allow them to hold down a job. There are more lifestyle choices being made in this scenario than those who've decided to have DC, so we need to be consistent.

This makes no sense as they manage to check household income for universal credits. Its why they have the UC system.

I know right? Twats just making excuses so they don’t have to change it.

If someone chooses to work reduced hours so as not to be penalised with regards to child benefit that is up to them. I admit I was a bit surprised at my friends reasoning for not upping her hours due to losing child benefit. She’d earn the monthly child benefit amount in less than one shift. I don’t agree with how the govt implemented the change though, that they haven’t increased the threshold in 12 years etc. It’s like everything else, they do what is easiest and cheapest. But no, I personally would not make the benefit universal again.

I agree with this- child benefit has often paid for my food shop.

We know it's up to them. It's also up to someone if they want to claim the state pension when they don't need it because they've got a private pension they could live off. Whether it's up to the individuals in these circumstances isn't in question.

I'm surprised you're surprised at your friend though, I must say. People making decisions about whether work pays enough to bother with or not isn't unusual, and parents have a particularly narrow bottleneck in the 50-60k income bracket due to the combination of CB withdrawal and the 40% tax bracket. We may well do the same thing in our household at some point, though currently we manage the issue by making extra pension payments.

Either make it universal, and make clear it’s there to encourage people to have children and contribute towards society, or make it properly means tested. I’m sorry but a family on 60k doesn’t need benefits. It doesn’t matter how many earners there are.

To add to this, childcare isn't necessarily available even when it is needed. More money towards a service means nothing if it doesn't exist. At the moment we're staring down the barrel of millions more parents having theoretical free childcare entitlements they've no way of actually receiving. It's about as much use as a chocolate teapot. Less, actually, because at least you could eat a chocolate teapot.

Children grow into adults… adults who work, and pay taxes and contribute to the economy by producing and consuming… and paying for those universal state pensions!!
Having children is hardly buying a new handbag, it’s literally essential to the basic functioning of society.
Wealthy pensioners are not more deserving of a universal benefit than ‘wealthy’ parents.

Yes I have heard of people making extra pension payments as a work around. My friend would definitely be financially better off working full time than part, even accounting for loss of cb and 40% tax. But part time is definitely more family friendly and a better work life balance so that will play a part in the decision as well.

Absolutely

Absolutely. And if we're going to talk about lifestyle choices, claiming a state pension you could manage without because you've got a private pension falls squarely within that category. It's a double standard.

Except the single person earning £100k pays around £33k tax/NI, and the couple earning £50k each pay a total of around £24k tax/NI. So the couple already have £9k a year more from which to pay that childcare bill (which they might not even have, perhaps they have helpful parents who look after the kids), and they get child benefit.

That's a good point @NewYearNewCalendar
I still think it should be universal like the state pension. It's only about £20 a week isn't it? Surely the admin of means testing it costs more than any monies saved?

I was one of the losers when the Child Benefit policy first came out, single parent income of 60K, lost the equivalent of 5K salary overnight.

Now of course people will say oh on that income would don’t need it but why should my next door neighbours on 100K a year between them get to keep theirs? Totally unfair.

It's a bit more than £20 now but yeah, I don't think I've ever seen anything conclusively setting out the money saved to the state vs costs of administration. Then there's also the issue of opportunity costs if parents choose to work less or not go for promotions due to the combined impact of CB withdrawal and the 40% rate. That would be harder to measure though.

It should be universal.

To make it a household income the entire tax system would need to change. Just pay it to the main carer and pay for all children.

I too wonder how much has actually been saved since adding means testing to the equation. I’m not sure why they don’t just add it to UC rather than having it as a separate benefit. Perhaps they just thought outright stopping it would be unacceptable to the masses.
Personally I preferred living in a country where child benefit was for all, dentists and opticians were free, and transport/power/water were state owned. I see all of those things as more civilised.