CB - alternative solutions?

[CardyMow]

If cutting CB in the way that has been outlined is unfair, how else could/ should the government save money on this benefit?

I ask this because a columnist in the Daily Fail (I ^know!) said that he would rather they stopped CB for dc at the age of 16yo, regardless of whether they are still in education or not.

I always thought that the reason CB was paid to 19 was because, if, like our family, you are caught in a cycle of very low wages (£16Kfor a FT job), the only way out is more education. If you take away CB for poor people, they will also lose their TC's, and theefore have a dc in FT education that they get NO income for, and are therefore unable to feed or clothe them. It was done because otherwise, these DC would HAVE to go out to work FT, just to have money to eat, thus them also being stuck forever in a very low paid job, with no chance of bettering themselves.

Surely education is the way OUT of the benefits trap? But many more dc will be forced to leave school at 16 to work in min wage jobs if their parents cannot feed them while they gain better qualifications.

It would make any form of further education the preserve of the rich, surely that is a step too far back in time?

While I agree that the way of administering this CB cut needs to be fairer and based on household income rather than one earners tax bracket, surely if minimum wage is £5.85 p/h, then a lot of the country earn barely more than £12,000pa for a FT job, so wherever you are, whatever you are doing, £42K is a HUGE income...Why shouldn't CB be cut for anyone with a household income of £34K pa? My family certainly wouldn't need CB if we had an income of £34Kpa.

cumfy - re the VAT question - thinking on the hoof, but to take extreme examples: say you are poor enough for your disposable income to be £20 a week, 70% would mean you are only spending £14 a week on full-VAT items. Easily done (especially considering that as described above this includes kettles, fridges etc.)

If you need to replace your fridge or cooker, you will probably economise on food, transport (walk or bus instead of tube, don't go out on day trips even into town etc), childrens clothes etc until you've saved enough for the fridge.

You won't be able to economise on full-VAT non-essentials because you aren't spending enough on them in the first place.

If your disposable income is about £200 a week, then 35% of that means you are spending about £70 a week on full-VAT items.i.e. more in actual terms than the poorer person.

That does leave £130 spent on non-VAT items which seems high - I'd guess the richer person in this example may have a higher food bill, spend more on transport (trains not buses etc, plus you are more likely tomake the trip in the first place) - even spending on childrens books & clothes is likely to be higher if you actually have the money to spend.

(I have no idea if £20 / £200 has any actual resemblance to the bottom 20% or top 20% but I think they vary enough to provide an example)

Basically, poor people have much less money to spend on anything and therefore they have to spend a much higher proportion of it to meet basic needs. Rich people don't need most of the money they have. They spend less of it.

scaryteacher.

Am I right in assuming that you don't pay much tax at the 40 percent rate. So it's fair to raise taxes on all those that do and leave you alone.

That's typical of the give me something paid for by someone else attitude that this country has developed.

Its time people learned to stand on their own feet. If you can't pay for it don't expect it,and of you can't earn it yourself don't expect someone else to give you the money.

I exclude the truly disabled from these remarks.

agree welshexpat. it also mirrors nearly's view that if you are a high earner you don't need the money so you can give it to low earners. you don't get paid a high salary for no reason. why should you do a harder/more stressful job that you have trained for years to do and give ever increasing amounts of tax away? I'm sure noone disagrees with providing a basic safety net and paying for efficient public services such as health, education etc but there are limits to how much money people should have to give away.

DH pays higher tax although at the moment does not earn over £44k. I assume that by the time 2013 comes around that he will be over that (just) and will still be paying HR.

I am obviously gutted that we won't be getting CB after that but the fact that 2 people who each earn £43k will still be able to get it despite earning almost double what DH earns really makes my blood boil.

GO keeps saying that somebody who earns £18k should not be paying for the children of someone earning £45k. But why should DH work (and most of his £45k is because he works all hours, he actually only gets £30k basic) to pay for the children of those who don't want to work and have 7+ children just to get the benefit or to those who earn almost double that he does and maybe don't even have to work the hours he does to get it.

I say either only pay CB for the first 2 children in any family or scrap CB altogether and pay it in with the tax credits. Even if I still lose the CB at least it will be fair.

genuine question to all those on minimum wage/ generally badly paid jobs. Do you think it would help you and your children if schemes such as apprenticeships were more widely used? Yes all jobs need someone to do them but surely the idea that you start off on a low wage but being trained means you get to increase your skills and so move on to a higher level/ more money thus opening up your original position for someone else to do the same?
my ds is only small so i have not the challenge of seeing him through further/ higher education yet but if he were not to be able to stay on at school or go to university I would be seriously encouraging him to find out more about schemes like this, surely it makes sense?
personally i think the way they are targetting who loses cb is wrong but if it goes, we all need a plan to help us and our children maintain skills and learn new ones in order to get out of the poverty trap.
i don't think that begrudging those who earn more than you the salary that they have and therefore assuming they are wealthy is anything more than a futile and pointless waste of energy. surely we should be looking as a society at ways to improve our collective lot?

Duchesse, I have just followed the link and discovered that I am living in Poverty What do I do now, will Georgy Peorgy be interested to know this.

I agree with previous posts, CB should be scrapped and amalgamated with the CTC. This would ensure that it was fairly distributed more in line with actual income and personal circumstances.

What is the cap on Tax credits? I read somewhere that household income of £50,000 still entitled famillies to the basic child payment, is this correct?

Actually at 17 I had a part time job (in a nightclub that was not too picky) worked Friday 8-3am Sat 8-3.30am and Sun 7-1am and earned £100 take home pay a week. Because even with CB we didn't have enough money for me to study this didn't interfere with my studies.

However we were so hard up on cash if I hadn't been able to do that I would not have studied so I don't think it should be taken from all 16yos.

sorry I posted this earlier on the wrong page. Does anyone know what will happen to stay at home mums pension? I believe that at the moment Mums get pension credits for looking after the children and this is done via CB. Are we now saying as a country that being a mum is a job no longer worthy of a state pension? Whilst I intend to contribute to my pension further when I go back to work I do think being a mum should be valued.

Another question from another thread - if a banker earns £35K but gets a 7 figure bonus what tax band is he/she in?

What % of people are bankers? What if as a one off the gov claimed the full 7bn to be paid in bonuses as a "we are all in it together thanks for help sorting out the mess you made" kind of gesture? just an idea wonder what the polls would make of that one?

Maybe DC and his buddies could live on £45k for a year and get some idea of reality.

There is a big hole in the policy. It costs money to go to work, and that isn't taken into account in this crude system of means testing.

Let's take the notional higher rate taxpayer on £45k. If you have a couple of young kids in nursery, and live in a rural area or have to commute to London, for example, it is not unusual to spend £20-22,000 a year just covering the costs of getting out of the house. That leaves £650-ish per calendar month out of taxed income to cover housing, food, etc, or around £8000 a year. You won't be entitled to much in the way of other benefits. Therefore you are probably worse off than the person on the minimum wage whose mum is available to offer free childcare on demand, and who works within walking distance of the home. That person might even get housing benefit and council tax contributions, free prescriptions, Child Tax Credit and so on.

The whole thrust of Tory policy was supposed to be how it should pay for people to go out work. For many women, it simply doesn't, even though their headline incomes might look huge. Therefore it is a vote loser.

Until the real costs of work are taken into account, this policy will never be fair.

This post sums up the problem as well, I think.

www.mumsnet.com/Talk/in_the_news/1055236-pound-25-000-benefits-cap

claricebeansmum Wed 06-Oct-10 12:29:07

As I see it the crux of the problem is this:

our tax system is independent ie it is personal and bears no relation to household income

but

our benefits system is based on the whole around household income

So as far as I can see any changes to benefit or taxation system can't be fair until both systems work on the same principles

I don't know what all the fuss is about -I've been saying this should be done for years !!. We have 2 kids at home, I'm earning £16500 pa and my other half is unemployed with jobseekers of £65 pw, and we manage OK, I would love to have an income of £44k + and think that anyone who can't manage must surely be living beyond their means. If we had this much money coming in we certainly wouldn't need cb.

This country is in a terrible mess and we all have to tighten our belts. I do think, though, that the household income should be taken into account instead of one income over £44K

i am sorry but can someone tell me why we will not be getting cb as my husband makes 47k but the couple who live down the street making 80k will? does that sound right?? i guess if i put my two little ones in nursery at about £780 a month and never see them as much then i guess i would. i don't want to. i want to raise mine at home. why should i be punished for that? my husband makes 47k but that is not what is being brought home. minus 10k for taxes and nhs. so what happens to his taxes? who do they pay for? i am tired of hear people say "if you can't afford kids then don't have them" or don't whine about your income. sorry but we do not go abroad and live the life of celebrity on 37k net. where do these people come from that think that. we live in a country that pay the lowest in the west and the little cb we get helps with nappies and little treats for the little ones. good grief!

And why do reporters not push the issue of unfairness in regard to the £44k (one earner) don't get the benefit and £86 (two earners) do. They seem to ask the question, get an answer that doesn't actually answer the question and then go onto another point. The dinnertime news had the party chairman on and she answered this question by saying that those with broader shoulder should pay but surely the 2 earners who get £86k have broader shoulders than the 1 earner with 44k.

WTF!!!!! I could do a better job of reporting I'm sure.

minimaths- I discovered from those links that we were living in fuel poverty! Which is blatantly laughable. We just wince, and have the heating on very little even in the depths of winter (and 10C indoors for 18 hours of the day is not much fun when you work from home...). Afaic my neighbours who had to have their gas tank capped b/c they couldn't afford to have it refilled are living in fuel poverty, not us.

I'm finding it difficult to understand how some families are struggling on 44k per annum, when the average wage in some rural areas is more like 22k, and many families are existing on an income below that.

redding - its because they live in the south. if your mortgage is 1k a month and council tax 200 then thats nearly 20k before tax. and that wouldn't be for a palace either.

I guess it depends whether you believe in universal benefits in principle (If not then we should be prepared to see and end to others in particular old age pension, winter fuel allowances, same tuition fee subsidy etc)

if we are prepared to let the universality go then it would be better to scrap entirely and focus on means tested benefits with some overall cap on the level of benefit available (eg only 2 or 3 children) we can then decide which household income levels need to receive it eg £45k and over

In addition removing the upper earning limit on national insurance to stop the regressive nature (better still scrap NI and focus on income tax as losing universal benefits will weaken the link with NI)

Boffinmum I like your concise explanation about benefits and tax - hit the nail on the head.

And i get why some people cannot understand why people paying 40% tax are worried about losing CB.
I earn £45k a year but when i started FT employment in 1990, I earnt £6,400 a year and even 10 years ago wasn't even hitting £30k, so £45k seemed a huge amount. (I worked my arse off for the last 10 years - studying and working at the same time)

Problem is, working FT I have mortgage costs of £1,200 a month and DD is in nursery which costs me up to £700 a month. After taking tax off at 40% and bills etc, we are just about scraping by. DP earns £16k as he's self employed.
Yes, it was out choice to buy our home and yes, I suppose we could manage if DP became a SAHD to reduce nursery costs...but, wait a minute - we'd still lose CB as I pay 40% tax.

The point I am trying to make (badly i think!) is that we will miss the CB but not as much as others and yes, it is fair to share the debt burden.
However it is grossly unfair that other families whose take home income is way more than us will still be able to claim CB (eg £40k x 2 incomes). It also also very unfair on single parents who pay 40% tax but only have one income (and no partner to share their tax codes, if that's what the tories will do).

£45k is alot of money but when you're right at the cusp of the 40% tax bracket, cuts often hit hardest as you pay a hell of a lot of tax!

dreamingofsun i live in the north and my mortgage is more than £1k a month. It's nowhere near a palace!

I can kind of understand the point that withdrawing CB from HRTs is the simplest way of doing it. But for this to be at all palatable it needs to be ALL benefits, not just CB. So no JSA for the partner of a HRT, no winter fuel allowance, no free bus pass, nothing. Then it might be seen as a new universal principle (even if sometimes unfair) rather than an attack on families with children.

but gaelicsheep what happens to all the people currently living on or below the poverty line. how many elderly people will be found frozen to death in their homes because they couldn't afford to put the heating on because their pension won't cover that and food?
i agree that all benefits need a shake up but surely benefits should be given out judged on one set of criteria for all? I think that is where the problem lies. each benefit given is based on a different set of information and so sometimes becomes grossly unfair.

I meant none of those benefits for households with a higher rate taxpayer, ie those with a big fat pension/investment income in the case of pensioners.

mrsarch - not saying there aren't expensive areas in the north - only that redding was saying she couldn't understand how some people struggled on 44k a year - 20k for mortgage and council tax, plus childcare of say 15k before tax thats 35k before you even start to eat or drive.