'Oh, so that's who Richard Morris is..." Lord Hattersley on The Daily Politics

'An influential activist' - The Guardian

'Iain Dale, without the self loathing' - Matthew Fox in The New Statesman

You are a tinker...' - Tim Farron

Tuesday, 6 March 2012

Why Child Benefit?

The news that the IFS has judged that George Osborne may have £10 billion to play with he didn't think he'd have in the budget has resulted in a lot of speculation on what he might do with it.

And the thing currently exercising minds is scrapping the proposed changes to Child Benefits.

Now, there is a lot of debate about why this is the top priority of so many Tory MPs. Primarily there is a concern that the changes affect many middle class Tory voters, that the cuts (due to take place in Jan 2013) were proposed to hit at a time when many thought the economy would be growing again, ameliorating the effect  for those voters (now an unlikely prospect) and so abandoning the changes is a cynical ploy to look after the Tory vote. And indeed, it does seem at first glance an odd place to spend the money when, say, there are cuts to disability benefits looming - shouldn't we be looking there first?

But I do wonder if actually the issue is not looking after Tory voters ( I suspect for backbench Conservative MPs, that's just a bonus) and more the practical issue  - that the proposed changes just don't work.

Currently the cut affects any household with a higher rate tax payer. But administering and policing that policy is a nightmare - the system is wide open to abuse. Plus there is a built in issue with tying in personal tax liability (through income) with a non personal benefit (household income) which means that a household with two people earning £80k between them keeps the benefit, while a household with one person earning £44k a year loses.

I'm not wedded to the principle of Universal Benefits per se. For example, the fact that a millionnaire aged over 65 gets the same winter fuel allowance as a pensioner living entirely on the state pension seems madness to me.

But in this case, when the proposed system just won't work, can't be policed (without incurring enormous costs which defeats the purpose of the change) and has a fundamental unfairness flaw built in - well, better to U-turn now.

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