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 much fairer to put tax up and keep CB universal. Means testing = stigma.

yet Hazie Doll the government wasn't allowed to cap benefits at 26K. doesn't make any sense

A salary of 12k and a salary of 42k do not give you a similar take home pay. I was on around 18k now on around 30k, with two children. I bring home considerably more now than I did then, thank god. Now between 12k and 18k I think the argument is probably sound.

By "bring home" I mean including tax credits and CB, obviously.

However that doesn't mean I don't think the policy is dreadfully unfair.Just that people must be very careful not to insult those who truly truly need the money by attempting to compare someone on £43k with someone earning a third as much or less.

I am against the policy because CB is supposed to be a universal benefit, paid to the stay at home parent, and I am very uncomfortable with that changing. Do I think someone earning £43k really needs that benefit? No I don't. Needing it and being used to it are two different things.

gaelicsheep, I forget which calculator came up with that - and of course with the reforms I guess things can change - but I do think that people often assume that people on about 40-45k are a LOT better off than they actually are.

40k gives you a take home pay of about 29.7k (and you can add child benefit onto that). Just going onto a 'what are you entitled to?' benefits calculator suggests that a salary of 12k (I've done it split between 2 parents, as that's our working pattern), gives you a benefits allowance of 17k;

That's; 13.1k tax credits (CTC and WTC)
1.065 Council Tax Benefit
3.1k child benefit (based on our family pattern)

Total; 17.3k - so total take home pay, if assume 6k per partner, of 29.3k.

Difference is not so great.

You're absolutely right it's not a great argument, but I do get really fed up of people saying that 'people on HRT don't deserve Child benefit because they're loaded'.

It's simply not true.

Lily - probably as fed up as i am for being vilified, blamed for the financial woes of the country, expected to tip up more etc. etc. when i do spend 43% of my time at work, which is 60+ hours per week, 50 weeks per year, contributing to the tax pot of the country.

I also create well paid jobs, helping with the UK balance of payments. thats enough of a contribution.

I think the problem with the country and the politics of the country is that you, undoubtedly contribute lots, according to what you say, and you have decided that's enough.

Fine.

But where does the shortfall come from then? Should it really come from people who work massively hard, but somehow fall between the 'too poor to be helped' and the 'rich enough to be ok' stalls? Because that is how it feels.

We work our guts out, pay lots of tax, and every day it feels like there is some new way of taking ever more money off us, and the child benefit cut is such a HUGE cut, and as a proportion of income it is enormous - 10% in one fell swoop - that it cannot be fair. Not to mention all the blatant unfairnesses already described on here.

have you looked a salary sacrifice to help your own situation?

generally speaking, i dont know anyone who has a good work/life balance together with enough money so it stops being a source of stress. you seem to be able to have one or the other.

YoYoYo - yes, it depends on what happens in the budget. If the threshold was raised to 50k then it 'might' be worthwhile, but otherwise it isn't really, would be too much of a cost.

I think you may well be right about the work/life balance - I sometimes think we have both sides of it wrong though - we work all hours and still only just break even! (And we really do work all hours, and have no childcare, because it is ££££ so I am constantly juggling children and work at the same time, am self-employed from home daytime, and out of the home evenings/weekends).

So when the Government announces the child benefit policy, it is just a kick in the teeth. And then they are talking about;
i) raising council tax bands for houses worth over £350k - we live in a very high-cost housing area, so that would be another hit, even though we didn't choose for our house to be worth that. Can't move, because all my work is based here, as is dh's, and would be instantly hit by massive stamp duty
ii) removing pension tax relief for HRT payers - so pensions would be taxed twice
there is also a National Insurance rise
loss of child tax credits etc (though that won't affect us as we get zilch anyway)

And I filled up the car with diesel yesterday, paid £32 for the fuel, and then a further £50 in tax to George Osborne......including VAT ON THE TAX.....

Now just isn't the time to be taking child benefit away. I know it's hard for everyone, but it is not the time to be targetting families in this way.

But where does the shortfall come from then?

And that's the million dollar question.

We can only get out of our current situation with a combination of tax rises AND spending cuts. Anyone who says otherwise is deluded or lying.

We are making spending cuts, they aren't popular because naturally they will hurt the poor and vulnerable. But as a nation we have to face reality and accept there's only so much we can afford to do. Of course I don't want to see people struggle but at the same time we can't afford to give them more. Look at it another way. If your brother/sister was struggling. You may take out a loan to lend them some money. That's fine. But how long can you keep doing that for before you end up struggling yourself? And that's the problem isn't it? It's ok to say we need to support the poor but we cannot keep borrowing to do that. At some point we have to say "Sorry but this is all we can afford"

We also need tax rises which will hurt the middle/rich classes. The problem I have is not the principle of a tax rise but the stupid way this CB change is being implemented.

Nice guy I do agree with you, and one reason the child benefit cut will hit so hard is because of the stupid implementation - thought through properly it wouldn't impact one group of people so toughly.

I also do think aside from all the politics in purely economic terms it will have a stifling effect on the economy because it will impose a 'brake' on incomes , who will accept a pay rise that will cost them thousands? Who can go for a promotion that will make them materially worse off? As such it is a cap on aspiration. And, getting divorced becomes financially advantageous.

where part of the system went wrong IMO, was paying benefits beyond a token payment to high income households. The point of the token would be to encourage buy-in to the concept of the welfare state, not actually provide significant financial help.

average income is £26k - pretty much that means that anyone around that income supports themselves & pays for their share of the country's services, and anyone over that, supports themselves, pays for their share of the country's services and starts to over pay for others.

so IMO we need to stop those payments to get back to a sustainable model of households at the bottom of the income scale getting support & the rest of us, contributing & getting the non cash benefits of healthcare, education etc etc.

a 1% increase in taxation to better fund schools/NHS, is a completely different prospect than a 1% to continue to fund an unsustainable system.

I was astounded (being old) that when all these tax credits were introduced under Labour the income level to get them was so high. I agree with you YoYo; for me it was a cynical creation of a client state for Labour.

Its what politicians frequently do at the end of a boom to try to extend it (Tories did it too) spend more than they take in, because its heads they win (and get elected again) or tails we lose (have to pick up their bill, while they move into companies recently benefited govt contracts and regulation).

Not sure about the deliberate creation of a client state. What benefit would that really bring to the government? Seems to me it was more about propping up the economy by allowing employers to pay effectively lower than market rates for their employees' labour.

i doubt the family on 70k are being paid lower than market rates:

Working tax credit eligibility
Maximum household income
No of kids 2011/12 2012/13
1 £41,300 £41,200
2 £58,200 £58,900
3 £64,500 £65,300
4 £70,700 £72,000

i don't get WTC and we earn nowhere near that top figure. it went last year and I have 3 kids.

Is it because i don't have any childcare costs?

TBH our amount of tax credit only replaced the married man's allowance so we never gained anything anyway.

anyway why should people who work a full week always have to have their take home pay equated effectively to someone who only works 16 hours but gets topped up by the government?

i think it is to help with childcare costs. IMO someone are on high income like the figures above needs to be able to fund their own life or how are we ever going to balance UK finances?