Government to review child benefit cuts

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Was on lunchtime news (on phone so can't do link) that the government have confirmed that they will review the plans to cut child benefit. Sounds like they will still do something - what do people think we will end up with?

It's unusual that on MN that a govt policy manages to unite both left & right wing regulars yet this one has managed it.

In that context it must clearer be a shit policy.

I think it's because it's such a blatantly unfair policy - it's not hitting the top 15%, it's the top x%, and then a gap of some families who don't get hit, and then some middle earners who fall into an unfortunate hole of circumstances.

It was so clearly not thought out, and is so patently unfair, that I don't think anyone could defend it! (Though idiots like Ken Clarke try).

The principle of making higher earners pay more than lower earners is a good one. This doesn't achieve that, because it leaves swathes of people untouched, whilst hammering people on lower incomes, within the same policy.

And I suspect that, through stubborn-ness, Gideon will not do anything effective, and will blame the Labour party....

He should scrap the policy altogether, and if he wants to hit this group, put HRT up to 41p, thereby spreading the pain across the whole group.

Or maybe he will do that as well......

This is quite funny

Hmm, just had this reply from the Treasury. Not impressed - note the argument I have highlighted....

"The Government's first priority is to tackle the deficit in order to manage a return to sustainable growth for the benefit of all. Our approach is that the impact should be widely shared, but that the most vulnerable members of society should be safeguarded. With this in mind, it is not fair that people on low incomes should go on being taxed to pay for the Child Benefit of those earning much more.

The Chancellor considered a number of different options relating to Child Benefit including how any change should be delivered. The Chancellor wanted to avoid creating a complex new means test for household income that would have fundamentally changed the nature of Child Benefit.

I appreciate your concerns about this policy, and would like to take this opportunity to assure you that the Government is committed to finding a sensible way forward. The Chancellor of the Exchequer will give an update in his forthcoming Budget on 21 March."

Haha, yes, that is really quite amusing (tries to sit on feminist scruples re bit about George Clooney)

"It's unusual that on MN that a govt policy manages to unite both left & right wing regulars yet this one has managed it.

In that context it must clearer be a shit policy."

On the other hand it's a fantastically effective tool for distracting the most vocal section of the population (or the chattering classes as we used to be known) from the suffering that is being caused elsewhere by cuts to the poorest.

If there is one thing Cameron has a genius for it's PR

I find at HMT statement completely nonsensical. High earners are net contributors, lower earners net recipients.

The higher earning family (or rather some higher earning families given the unfairness of the proposal) is receiving back some of its taxed income, and paying for the CB of the lower earning (or in some cases higher earning!) family through the progressive tax system (the top 1% of earners provide about 28% of income tax revenue).

I have replied;
"Thank you very much for your reply, I will await the Budget with interest.

One thing I would like to correct though - it is not accurate to say that people on low incomes are being taxed to pay for the Child Benefit of those earning much more. This is inaccurate for two reasons;

i) the Child Benefit replaced the Family Allowance - a tax allowance. Someone paying HRT is paying a lot more into the system than someone on low income, and taking a lot less out. They are subsidising the lower income person massively, and this is as it should be. If they are then allowed to keep a little bit of the tax they themselves have paid, to help with the cost of children, then this is in no way the 'lower income person' paying for their child benefit. This argument is losing ground with the public, as everybody can see the fallacy of it.

ii) the new system as proposed will indeed CREATE the system the Chancellor says is unfair - as the benefit is taken away from families on 43k - and this is probably the only benefit such a family currently gets - whilst a family on 80k will keep it. So far from alleviating an unfairness, it is creating a far worse one - as it stands, all families get child benefit, under the new system, some families lose it whilst wealthier ones keep it.

One further inaccuracy that is widely used by the Chancellor and his colleagues in the Treasury - they claim it is the 'wealthiest 15% of families who are hit' - this cannot be true, unless somehow a family earning 80k is less wealthy than a family earning 45k. "

yy the 'lower earners are paying for higher earners' argument if logically continued would mean that if higher-earners use public services (NHS, bin collections, schools, libraries) then they are being supported by lower-earners.

@doghasfleas. Yes except it's distracting in the wrong way and a PR disaster, not a nightmare.

It's alienating the core Tory voters and getting nothing in return. I don't think the low earners are likely to become Tory voters on the back of this policy.

So it's a disaster and I'd have more respect for them if they admitted on balance it wasn't fair rather than some political fudge to save face.

'yy the 'lower earners are paying for higher earners' argument if logically continued would mean that if higher-earners use public services (NHS, bin collections, schools, libraries) then they are being supported by lower-earners.'

Nope, as bins are paid for vis CTAX, and I expect an HRT would be in a higher band house than a lower earner, plus the lower earner may be getting ctb which the hrt is paying for. Same for libraries and schools; the higher earner may be paying for education through tax, but paying also to educate privately.

I'd like someone to explain how an HRT paying £22k + in tax is being subsidised by someone earning £15k who gets tax credits, hb and ctb.

I attach my thoughts sent recently to my MP, presumably MumsNet have influence, please can they use it.

Thank you for your email dated 22 February which contained the Minister?s response (attached) to Mr Lidington MP regarding my email of 19 January.

Whilst the Minster?s response was informative, I regret to advise that I do not consider it addressed the primary thrust of my concern.

The Minister states that the Government will not alter their proposal to withdraw Child Benefit from families who have a higher rate (40% +) taxpayer, from January 2013. She states that households with such a taxpayer are to make the greatest contribution to achieve the Government?s aim to reduce the Deficit as these have the greater ability to do so, when compared to lower income households.

Yet the government?s proposal affects only those households with such a taxpayer and which have children of a school age or younger and not those households with such a taxpayer which do not have such children. The proposal therefore disadvantages these households with such children. These households obviously have greater financial commitments than those households with a 40% + taxpayer which do not have such children.

Furthermore the recent disquiet covered in the media after Christmas identified the unfairness of the Government?s proposal upon a family with a single earner whose salary just exceeds the 40% tax threshold when compared to a family who has two earners whose individual incomes fall below the 40% threshold.

I endorse and wholly agree with the principle that the most wealthy should contribute the most towards the Deficit. My proposal is in line with Government policy. It recommends that Child Benefit be withdrawn from households only where there are two higher rate (40% +) taxpayers with the consequential reduction in savings the Government was looking to achieve, being obtained by reducing the 50% tax bracket threshold (or increasing any new mansion tax), thereby ensuring those even wealthier will contribute, whether they have children of a school age or younger, or not.

The implementation of my proposal avoids the creation of a complicated new means test and will demonstrate to the Nation that the Government considers that the most wealthy should contribute most to the Deficit and that the Government will achieve this in the fairest manner possible.

I would be grateful if the Minister could advise how my proposal does not improve the Government?s current proposal.

Best and kind regards,

Shalom, good luck. I suspect you won't get a reply! lol

scaryteacher - I may not have explained my point very well, but I'm actually agreeing with you! It doesn't make any sense to argue that HRT payers are being subsidised by those on lower incomes! My point was that if the government argue that tax from lower earners support higher earners to receive child benefit, that it can't logically stop at child benefit and they must therefore be subsiding their use of others services. Which they clearly can't and don't!

My feeling with a lot of these big headlines (and I include NHS reforms etc) is that it is a lot of spin. Terrible scary headlines from Gideon and his cohorts are meant to shock and then later on they will moderate their original announcement and make it look as if they have listened/consulted and made a fairer decision - mostly it is bullshit. It is designed so that by the time we arrive at the actual implementation of a new policy we will feel it was fairer even though it is still harsh and the will look like they give a fuck - which they don't. They will crop CB but they will do it for large families so they do not alienate their hardcore voters - and we can all think that is right and fair - they will do this in time for the next election.

And no they cannot properly means test family income for CB purposes (which is why it has always been a universal benefit - the amounts of monies involved are so small individually that it is not worth means testing for it) which is why they blandly pick on HRT payers because it is easy and cheap to administrate. The whole thing is a massive smokescreen so we can all get fired up while they commit the real sins against families with disabled children etc. They will also change the definition of disabled and the rhetoric about disabled testing and cheats will be accelerated to justify denying so many DLA etc. Carers Allowance is already means tested re. income but not capital.

I really don't like the fact that people think if they don't have children that they should not contribute to others who do - surely these sorts of things are all part of being part of a society. We all need to support one another (and yes there will always be those who take the piss) because in the long term those children and their industry will pay for the upkeep of the elderly (whether they have covered their costs within their lifetime)

I think those without children who moan about paying for those that do need to remember this. Those people with children who are such a drain on the taxpayer are bringing up the future citizens who will pay for their care and hospital treatment in old age. Who are the selfish ones here? The ones who nurture the future generation, or those who choose not to?

(Recognising of course that some couples are not childless out of choice).

I also think it is a very dangerous game to price one particular group out of having children - the idea that middle income people can not afford to have children will lead to big holes in our society, and, generalising HUGELY, this group of people do tend to bring their children up to be productive members of society.

That's an interesting argument lily - families who don't work will have more children, outnumbering the children who have been brought with work modelled? That has implications for the longevity of funding unemployment if it's true.

that is a massive generalisation Lily. Really.
And lack of social mobility/poor schools/povrty should be addressed if there's any truth in it.

I don't think it's right to say that this proposal would price one particular group out of having children. They still will have much more money than many others who bring up children just fine. It is blatantly unfair, that's for sure, and they will have to get used to a lower standard of living than they would have had otherwise, but I doubt very much they will be priced out.

I think the idea of limiting it to the first 3 children is a good one. I read somewhere that this idea was mentioned by politicians.

i am glad mine are nearly of the age where it will be stopped. They stopped giving me the £545 tax credit last year. This was my DH's married man's allowance originally. Why shouldn't the middle classes get something back. They pay enough tax etc.

The £42 is not a great deal and the amount needs raising. Also I still don't agree with people claiming CB for non residential children of the UK and how are these children being verified. Do they even exist?

"that is a massive generalisation Lily. Really."

Yes, I know, and I think I said that in the post.

I do think though that there is a problem with a system that deals with children of different income groups differently, because you do end up with unintended social engineering.

I also don't think it's true to say "They still will have much more money than many others who bring up children just fine. " because often someone just inside the 43k band will have massive costs associated with going to work - eg childcare costs, travel costs, plus may have a huge mortgage etc. Granted, people on lower wages may also have these costs, but they will often be helped with tax credits etc. And remember, the benefits cap, derided as 'pushing people into poverty' is set at the equivalent of a salary of 35k.

It's not the best argument about this unfair cut, it's more of a thinking about the implications and effects. And along with the CB cut, I don't agree with the raising of the hours for the WTC.

Unfortunately this government seems to have decided that it is families with children who will bear the absolute brunt of this deficit reduction plan. Not the wealthy.

Lily - I accept what you say but unless they are going to differentiate benefits regionally then it isn't relevant to the argument, as it applies to any cut off figure. Obviously taken at face value my point is equally irrelevant, but I suppose what I'm saying is that someone on that income probably has a few more choices.

If you add up how much my children are contributing to the deficit reduction, it is staggering.

I have 4 kids. Neither they nor I, nor dh did ANYTHING to create the deficit, we don't have credit card bills, or an unreasonable mortgage, we don't play the stock market, we don't claim welfare (apart from child benefit), never have done, even when dh was made redundant we managed, and he was lucky to find a new job before too long.

So; Child benefit lost; 8 years for ds1 - £8320
10 years for dd - £10400
13 years for ds2 - £10140
16 years for ds3 - £12246

  University fee rises; Just looking at the RISE, not the total fee, we can assume £6k per child per year, so that is an extra £72k, just in fees.

Three of them also lost £250 top up for the Child Trust Fund, so a further £750.

So, without considering NI increases, VAT increase etc our family is contributing £113,856 just in penalties for having children.

It's not right.

I totally think benefits should be differentiated regionally. And long term, they need to build a load of social housing to be let by the council, on a basis of need, as that is a much better way of solving the housing benefit bill, rather than just cutting the money and hoping the landlords drop the rent. And a building program might encourage a bit more economic growth.