Attacking ‘Thatcherite’ Cameron over child benefits should be easy for Labour


9:00 am - October 5th 2010

by Sunny Hundal    


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Osborne’s big announcement yesterday is potentially a big win for Labour, as long as they get their message coordinated and aggressively pushed out there.

The trick will be to use the child benefits cut as a precusor to frame their opposition to the Coalition’s cuts more broadly. There are several charges that could stick.

It’s hypocritical
By targeting child benefits, Cameron fundamentally undermines one of his key policy planks before the election: that Labour was against ‘the family’ and didn’t do enough to help kids grow up in stable homes.

And then there’s their own statements.


via the Mail

It feeds into the ‘nasty Tories’ narrative
Michael Portill in the Financial Times earlier this week acknowledged:

Another reason for the disappointing [May] election result suggests itself. Perhaps two-thirds of the country still found the idea of voting Tory repellent. He must fear the brand is still toxic. Evidently, the coalition is finding it easier to announce unpalatable economic remedies than a purely Tory administration would. My guess is that Mr Cameron is happier leading a coalition than a Tory government because he can pose as a figure above party rather than as a re-incarnation of the Iron Lady.

The cutting of child benefits may not be as iconic as cutting free milk, but it amounts to the same thing in practice. If Labour pushes the ‘cuts worse than Thatcher’ narrative hard enough, and make the comparisons, the Conservative brand would be damaged even further.

It’s an attack on the middle-classes
If the Daily Mail is (justifiably, this time) outraged, then Labour should be happy.

Here’s what on mother said on Mumsnet:

I am very depressed about this. Dear husband earns just above the threshold and I make a measly £2-3k doing an admin job at night from home. We really depend upon the £180ish we get each month for children’s clothes, nappies, etc. I’m not sure how we’ll cope.

Moreover, the cut is not even based on total family income. A family taking home £86k a year will still receive it, while one where a husband or wife is on £45k will not.

Ed Miliband told Liberal Conspiracy readers earlier this month that he was absolutely for protecting benefits as a universal concept.

Now is the time to take action on those words and hammer the Coalition for cutting spending on children while protecting it on defence spending. That tells you all you need to know about their priorities.

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About the author
Sunny Hundal is editor of LC. Also: on Twitter, at Pickled Politics and Guardian CIF.
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Story Filed Under: Blog ,Conservative Party ,Equality ,Westminster

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Reader comments


Even Cameron was floundering somewhat on the radio this morning trying to defend this. They were the party that put “families first”, the party for “hard working families”.

The Mail & Telegraph are screaming blue murder.

Thatcher’s toxic legacy lives on.

Now Labour have to get rid of Blair’s toxic legacy (remember he supports these cuts).

There’s woman on the radio now saying she would be better off is she got divorced!

The phoney war is over.

There does seem to be quite a backlash, doesn’t there? I doubt this policy will see the light of day for a while. Will they dare to bring it back in another form, quietly tacked onto the bottom of other changes?

Its striking how badly thought out this is, just for a tough-but-fair soundbite for Osborne. Schadenfreude!

I think I made this points on another thread, but I’d add to the list:

It proves that the Tories’ cuts are ideologically motivated.

…because higher earners could have been asked to contribute £1 billion to deficit reduction through their taxes (either by putting a penny on the 40p and 50p rates, or by lowering the thresholds for one or both rates) – which obviously would have meant everyone paying a smaller share, rather than families picking up the whole bill.

But of course spending cuts are Good and tax rises are Evil – even though there’s no difference in terms of economic impact between increasing someone’s tax bill by £X and reducing their benefits by £X.

And although it’s not such a ‘quick win’ (because it’s counterintuitive), Labour should be making the case for universalism too. Many of their natural supporters think it’s socially just to cut this benefit for the rich, so if they bang on about the hard-pressed middle classes too much they risk reinforcing lower earners’ impression that they’re on the side of the rich against the ordinary working family.

(The truth, of course, is that the public are happy to spend a lot of money on the NHS, the state pension, state schools, Child Benefit etc precisely because they understand that those things are for *everyone* – high or low earners. It’s benefits and services targeted at only the poor that people are desperate to see slashed, because they perceive them as giving ‘spongers’ something for nothing at the expense of ‘hard-working families’. As I asked in another thread – once CB for higher earners goes, how long before the Daily Mail starts asking (in the context of CB) why ‘hard-pressed middle class families’ are paying ‘workshy layabouts’ to breed like rabbits?

This has been badly (if at all) thought out.

Though what is the case exactly for universalism, other than administrative cheapness?

That the well-off won’t mind paying tens of thousands in tax because – look! – you get a few quid back if you have kids….?

This article meanwhile is beyond parody:

http://www.guardian.co.uk/commentisfree/2010/oct/04/osborne-child-benfit-war-families

Guardianista complains that he might struggle with the music lessons for his FIVE children…

Needless to say the comments are a joy!

6. the a&e charge nurse

Ozzie risks setting a rather dangerous precedent if he backs down now, because any retreat is bound to be interpreted as the coalition losing it’s bottle when confronted by the sort of middle class rage we have not seen since the banking crises.

Or put another way, if Ozzie caves in to Mum’s-net how will future resistance to cuts by less cuddly social groups be framed?

I can see the headlines now – Ozzie listen’s to yummy mummys but NOT workless families?
http://www.guardian.co.uk/politics/2010/oct/04/benefit-cuts-population-movements

7. Luis Enrique

This is all making my head spin a bit.

Sunny, how do you reconcile a left-wing attack on benefit cuts for the wealthy with say the position taken by some authors on the proposed Lib Dem tax reforms, that they weren’t progressive enough.

Perhaps you didn’t agree with those criticisms, but I got the impression that the left wing view was that reforms to the tax and benefits system were evaluated by how progressive they are.

Also, I frequently read left-wing criticisms about how governments have failed to tackle inequality and do not do enough redistribution. It’s pretty standard in political economics to say that redistribution is hard because the wealthy “capture” the fiscal system for their benefit – usually left wingers oppose rather than embrace such capture.

Now there are some arguments against ending universality, like those I linked to yesterday, but these are not the arguments I’m seeing. If I was reading arguments sympathizing with the idea of cutting pay outs to the wealthy but opposing it on pragmatic grounds, I’d find that easier to swallow.

I’m used to seeing the left line up against cuts that hurt the poor the hardest, I’m a bit surprised to see everybody swing so easily into opposing cuts that only hurt the wealthy. It’s a bit rich to portray giving cash to wealth families as being about “helping kids grow up in stable homes” Don’t you feel a twinge of inconsistency?

I think the honest left wing response when faced with a wealthy family complaining about having child benefits taken away is not: “we sympathize, we wouldn’t take those benefits away from you” it is “well, we wouldn’t take those benefits away from you, but only because we think it’s better to increase the taxes you pay instead” i.e. we’re not here to help the wealthy have easier lives.

This is exactly the sort of cut that is fine by me. If Osborne had said “we will increase the tax paid by wealthy families” nobody here would object. This measure is the same thing, just expressed in different language and slightly differently administered.

5
As usual you totally miss the point, – child benefit is one part of the welfare state which serves as a common bond between all families with children, regardless of each individual family income. It may be used for music lessons in one family and put towards school-trips for another. The welfare state creates the material symbol of citizenship, so that if you collapse in the street, you will be directed towards assistance by whoever is around. And this common ownership isn’t just a selfish act, each time the blood donor service comes around, orderly queues of people from all backgrounds wait to give freely and (from the recipient’s perspective) anonymously.
Get your nose out of the books on classical economics and read something about humanism and community ffs.

10. Luis Enrique

steveb

I’m sorry, I don’t see any relation between “humanism and community” and giving tax revenues to wealthy families with children, I don’t see that the “common bond between all families with children” has anything to do with giving tax revenues to wealthy families with children. Wealthy families can pay for music lessons and school trips themselves, I don’t see that giving tax revenues to wealthy families with children has anything to do with the general willingness to assist people who collapse in the street.

@ 10

It’s the principle of universality which has underpinned the welfare state.

Child benefit is also not really a benefit, it’s an allowance it was introduced in 1945 as “family allowance” and stayed that way till 1976.

Once you get the affluent (and the not so affluent – this is a balls up) no longer with any investment in the welfare state it then becomes very easy for them to say “I’m not paying for these workshy scroungers with my taxes, I get nothing out of this system, they cut my child benefit”

And it is a benefit that largely goes to women, who we all know already will be disproportionately affected by these ideological cuts.

“Once you get the affluent (and the not so affluent – this is a balls up) no longer with any investment in the welfare state”

A family with a household income above the threshold for higher rate tax isn’t going to change their mind about the welfare state because they’ve had child benefit withdrawn. Those who didn’t agree with it will still hold their views, whilst those who did probably did so because they believe in the NHS, education etc, and thus aren’t going to all of sudden become card carrying libertarians because their child benefit is withdrawn.

How is Labour going to gain in the long term? So Labour opposes the cut. OK, but come the election will Labour propose to reverse it? I seriously doubt increasing benefits for 40% taxpayers will be a mainfesto commitment when there will still be a budget deficit and 80%+ debt to GDP. It would look like a crazy skew of priorities. Even if the governemnt has a spare £1 billion in 2015 you think it would best go to middle class parents rather than repairing cuts to SureStart or the thousand and one other things which take a hit in the next 5 years? Thought not. So on the doorstep you won’t have anything to offer those hit by this which they will have lost 2 years previously (assuming 2015 election).

So Labour could scream and shout over this and when challenged have to quitely answer “we won’t reverse it” as well as looking like they are standing up for the North London middle classes over those working on average wages. How is that an easy win?

steveb – of course, there was no fellow feeling, sympathy, community, altruism, charity or “humanism” (slightly different thing) before the welfare state.

On the other hand it is *just possible* that the state has “nationalised” (for want of a better term) such human impulses, making us less sympathetic, etc., and less likely to intervene personally. It is *just possible* that it has made us less responsible.

10
I don’t suppose you do, like @5, the universal benefits were originally implemented for a good reason – that is to promote a common owneship, and remember, Beveridge was a liberal, not everyone was in favour of the welfare state. I would wager that the many who are on a fairly high income, and think of themselves as middle-class, and are also labelled as such, but in reality they are working-class with a good job, ‘middle-Englanders’ if you like.
I hate to have to point this out to you, but behind every financial transaction there is a human, whereby the transaction has a meaning, unfortunately, your classical economics do not address that.
By taking away CB from some families and not others, it creates a sense of division, not just a material division. And then we slip down into the notion that ‘we pay more in but they are getting it all out’
Does this go some way into explaining, probably not.

16. the a&e charge nurse

[12] “A family with a household income above the threshold for higher rate tax isn’t going to change their mind about the welfare state because they’ve had child benefit withdrawn. Those who didn’t agree with it will still hold their views, whilst those who did probably did so because they believe in the NHS, education etc, and thus aren’t going to all of sudden become card carrying libertarians because their child benefit is withdrawn” – well said.

14
The Blood Donor Service – This is about anonymous and altruistic public (not personal) intervention.

18. Luis Enrique

It’s the principle of universality which has underpinned the welfare state

I don’t understand. I thought the welfare state was about helping those on low incomes, the unemployed, disabled, carers etc. That’s the opposite of “universal”.

I’m familiar with the argument that you have to shower benefits on the wealthy in order to keep them sweet, I’m just not accustomed to seeing it trotted out so readily by the left. What next, keeping bankers sweet so they remain willing to work in the UK and pay their taxes?

We are faced with the need to cut a deficit by some combination of raising taxes and cutting expenditure. The party of the right proposes cutting some expenditures on the wealthy. I think the parties of the left should be saying: “no, we wouldn’t do that, we’d raise taxes on the wealth instead” i.e. it’s not about sparing the wealthy “pain” and sympathizing with their whinges about how they no won’t be able to afford piano lessons (answer: yes you will, just buy cheaper Chardonnay) and it’s dishonest just to say “we oppose cutting benefits for the wealthy” without reminding the wealthy that’s only because we’d be hitting them via other means instead.

16: I’m sure I read somewhere that countries with universal benefits have more generous benefits than those with only targeted ones. So it suggests to remove the universal ones the number of people higher up who oppose welfare spending does increase. Of course I can’t remember the source so I could be talking though the hop of my hat.

20. the a&e charge nurse

[18] “I don’t understand. I thought the welfare state was about helping those on low incomes, the unemployed, disabled, carers etc” – yes, that is my understanding although entitlement should be UNIVERSAL should anybody fall into one of the groups mentioned?

What are you saying exactly?
That there will now be fewer blood donors?

Polly Toynbee could do with you on her scriptwriting team – she hasn’t thought of that one yet!

14
I also meant to say, that there was sympathy and altruism before the welfare state, it’s just that it was discriminately targetted – the deserving poor of the right colour, moral code and individual personal preference.

Sunny,

Let’s review your points.

It’s apparently hypocritical to cut child benefit for those who are wealthy enough not to need it (note they are given a few years warning on this) because it is an attack on families. Really? How is cutting child benefit, a payment made to parents regardless of whether they are in a family unit or not, an attack on families? Indeed, since child benefit is not dependent on household income but on whether any parent is a higher-rate tax payer, it might be suggested that this is actually pro-family, as households with combined incomes up to c. £86 000 will be able to claim child benefit. What looks like a weak point initially may cause you to walk into a sucker punch here – I think support for the family (and ease of calculating) is why this was done in this way.

As to the nasty Tories brand, I think they will turn round and ask how Labour would make the cuts? Would they target the poor (this is a gaping hole in any plan of attack on this)? Remember that there is a general consensus amongst voters that spending needs to be restrained (even if they don’t like cuts), so any attack which says don’t cut something without suggesting how to save money instead makes you look opportunistic.

And as for the attack on the Middle Classes, well yes it is. It is asking them to share some of the burdens that the poor and the rich will also bear in bringing the deficit under control. The Conservatives can legitimately claim they (and the coalition also) said that there would be pain for all, and that their supporters have to share in this. If anything this proves they are genuine and not (as Sally would have) just in it to benefit their own voters.

Ultimately though, any attack on these lines will only have purchase if Mr Milliband happens to commit to restoring child benefit to multimillionaires. Which I can’t see him doing. Universiality is not actually that saleable when presented in that way. Without this, it is just making noise, and leaving yourself open to being presented as the same party as ran up the defecit in the first place.

24. Luis Enrique

15

“hate to have to point this out to you, but behind every financial transaction there is a human … blah blah”

oh look just fuck off with that will you, you sanctimonious sod.

am I now reading left wing arguments that people earning over £45k are “in reality … working-class”? seems like I’ve read quite a few arguments saying the exact opposite on this site … you’ll forgive me if I find it hard to keep up.

By taking away CB from some families and not others, it creates a sense of division

oh no, not division!, not like class, rich and poor, or bosses and workers? quick! we’d better stop taxing inheritances of some families and not others, giving some families tax credits while taxing others at higher rates etc. etc.

25. Luis Enrique

a&e precisely, just like child benefits would be universal should you fall into the category of “not wealthy”

26. Luis Enrique

Devonchap @19 yes, that’s a good pragmatic argument

steveb,

If the point of universiality was to buy support for the welfare state, ask yourself this. Can we really afford to give rich people small amounts of money as a bribe when the alternative is cutting something that benefits the poor?

I don’t think anyone serious in politics wants to get rid of the welfare state – it is the great legacy of socialism, when it meant something, to us all. So arguing that we need to maintain bribes to ensure support for one of the key functions of the state is rather strange.

This policy has confirmed my biggest fears regarding the re-election of the Tory Party. I have always regarded the Tory party and most of its supporters as a bunch of greedy, selfish, materialistic misanthropes and this policy demonstrates these ‘qualities’.

To remove money from anyone (even the middle classes) that is provided for the upkeep of children is a direct signal to us all that the Tories have not changed their spots in regard to their distinct anti child policies. Make no mistake; this is an ideological cut which is more to do with the advance of Thacterism rather than reducing the deficit. The Tories, rightly or wrongly, do not see it as a responsibility of the State to aid parents in the job of looking after children. No-one on the Left or Centre should content themselves that this is the end point of this policy; breaking the link between this and the middle class is the start of a longer term strategy, not the end game.

Nor is this about ‘sharing the pain’ either. We are all aware of the scenario where two households with the same joint income or even a position where a second household earns double the first, lose different amounts, but consider this:

Two households, household ‘A’ with an income of sixty grand and two kids, whilst ‘B’ has a combined income of eighty grand and are childless. The first are penalised a couple of grand, whilst the second with both a higher income and arguably have less ‘need’ lose nothing. Clearly the broadest shoulders are not taking the burden. Here is the killer though, household ‘B’ then decides to buy two (one for each) top of the range hybrid cars and they receive ten grand in subsidy from the Government.

Ten fucking grand for two cars and nothing for two kids. Does anything sum up the Tory vermin any better than that?

@ 18

“I don’t understand. I thought the welfare state was about helping those on low incomes, the unemployed, disabled, carers etc. That’s the opposite of “universal”

Yeah, those on low incomes, the unemployed, disabled, carers ,i>and children, this was an allowance targeted at children.

The Beveridge report on which the welfare state was founded was based on the principles of universality and comprehensiveness.

household ‘A’ with an income of sixty grand and two kids

…is earning twice the median UK household income.

“I thought the welfare state was about helping those on low incomes, the unemployed, disabled, carers etc” – yes, that is my understanding although entitlement should be UNIVERSAL should anybody fall into one of the groups mentioned?”

As a general rule, higher rate taxpayers do not fall into those groups. Chances are if one of them becomes unemployed, disabled or has to care for a relative, then their income becomes less than high rate.

“We are faced with the need to cut a deficit by some combination of raising taxes and cutting expenditure”

Even if we didn’t have a deficit, and we were in a boom with healthy finances I would still make this cut. Why? It’s about opportunity cost. You can simply do better things with the money. Suppose child benefit for higher rate taxpayers didn’t exist, would anybody – if in government – propose to introduce it? Lets say you are a minister and the treasury gives you a billion. Would you spend it on pocket money for wealthy families or a few new schools, hospitals, or numerous shelters for women fleeing domestic violence.

It’s generally a good rule in politics that if you find yourself agreeing with a daily mail moral panic you probably need to re-consider.

Osborne has set a trap for Labour here, it’s disapointing that so many have fallen for it.

32. Shatterface

Universal child benefit is like the TV licence: its so obviously regressive that if it were suggested today the ‘Left’ would be outraged but as it’s been around for so long people don’t question it.

Fuck the rich: they’ll either have to switch off the heating in their swimming pools once in a while or Tarquin will have to get himself a paper round.

33. Luis Enrique

To remove money from anyone (even the middle classes) that is provided for the upkeep of children …

has everybody gone mad? You do know that raising tax rates on higher earners means that higher earners with children have less money to spend on their children? You do know that some of those bankers who had their bonuses super-taxed have children?

Fine, jink the tax system so there’s an allowance for having children that’s tilted towards the worst off, and fine perhaps the best way of doing that might be to give with one hand and take with the other by using a universal benefit + progressive taxation system, but for Christ’s sake let’s not pretend that doing it the other way round by having a non-universal benefit and less progressive taxation is somehow some fundamentally different an evil approach – the money you receive in benefits is the same stuff they take way in taxes.

People like Joseph Harker (the guy who wrote the Guardian article) don’t NEED this money. I want to see the money going to poorer people. It’s a shame, because Labour (Left Foot Forward, Fabian Society and others) criticised the Lib Dems’ policy of raising the tax threshold on the basis that it didn’t help the poorest. Universal child benefit doesn’t help the poorest either.

I just want to see some evidence that giving money to poor people without giving it to rich people, will somehow lead to rich people not wanting to give any money to poor people. Those in higher income brackets already pay far more into the welfare state than they get out, so they accept the principle of it.

Captain Swing,

Yeah, those on low incomes, the unemployed, disabled, carers ,i>and children, this was an allowance targeted at children.

The Beveridge report on which the welfare state was founded was based on the principles of universality and comprehensiveness.

The allowance is targetted at children, but it is not paid to them. A key difference I suspect – it just becomes more money at that point.

As to the Beveridge Report, if you want to base modern policy on sixty-plus year old reports, feel free. Personally I would be quite uneasy about say reintroducing grammar schools (the Norwood Report is of a similiar vintage). Things change you know, and one key change is that unlike Beveridge we do not have to make a universal case for benefits, as the role of benefits is universally accepted (I don’t think even UKIP suggested scrapping the system did they?).

Luis –

“I thought the welfare state was about helping those on low incomes, the unemployed, disabled, carers etc. That’s the opposite of “universal”.”

No, no, no! This view of the welfare state just feeds into the right-wing ideal of well-off people, payng low taxes, privately funding their own healthcare, education, pension etc. while the worse-off are offered a basic ‘safety net’ of poorly funded services and benefits.

Why have the Tories faced such a backlash over cutting CB? Why don’t they dare to suggest any cuts *at all* to the state pension, or the NHS budget? Because Child Benefit, the state pension and the NHS are *universal* services and benefits – for everyone, and cherished by everyone. Rich and poor, Labour and Tory alike feel that these are the things they pay their taxes for. (Meanwhile, Tory types are delighted or indifferent when *targeted* benefits for the poor get cut.)

The same logic that says “keep CB for the lower-paid, the rich don’t need it” also says “keep the NHS, state schools and state pension for the lower paid, the rich don’t need them”. Can you imagine what the NHS, state schools and state pension would look like in 50 years’ time if we took that attitude – after 50 years of Daily Mail articles screaming about the hardworking middle classes paying so much into a system that gives them nothing back?

cjcjc –

“what is the case exactly for universalism, other than administrative cheapness?

That the well-off won’t mind paying tens of thousands in tax because – look! – you get a few quid back if you have kids….?”

See above. Surely it’s not that hard to believe that you’ll be that much more willing to pay for CB (or schools, or hospitals, or the state pension or anything else) if you understand that those things are there for *you* and your family, not just some anonymous bunch of scroungers living off your taxes?

And if you want to know more about the detailed case for universalism…

DevonChap –

are you thinking of the Fabians’ ‘Solidarity Society’ research?

So presumably Labour are going to pledge to restore Child Benefit to millionaires yes?

“Those in higher income brackets already pay far more into the welfare state than they get out, so they accept the principle of it.”

Of course they bloody do.

In spite of their eeeevil (d’oh, but legal, thanks to the lunatic complexity of the tax system) avoidance measures, the top 1% of earners pay 24% of all income tax, the next 9% pay 29%.

24
Sorry if I’ve hit a nerve.

What amazes me is that most people commenting about the welfare state appear to know fuck-all about it.
Most commenters on this thread seem to be quite happy about withdrawing CB from certain families (I think it costs about £12 billion per year, and this would save the tax-payer £1billion) but are happy to continue paying tax-credits to those who are in full-time employment costing about £20 billion. Beveridge will be spinning in his grave. How about withdrawing tax-credits for those in full-time employment and increasing the NMW to make-up the difference.
Just for information, most people on tax-credits work in the service and retail industries, such as M & S.
27 I take your argument, and in fact I would never have been in favour of the WS I believe it works in the favour of the owners (as above), but it’s here now and this particular proposal is divisive, and from a left perspective I don’t agree with it, the only division I am interested in is class.

“Most commenters on this thread seem to be quite happy about withdrawing CB from certain families (I think it costs about £12 billion per year, and this would save the tax-payer £1billion) but are happy to continue paying tax-credits to those who are in full-time employment costing about £20 billion”

Its probably because people in reciept of tax credits are generally not higher rate taxpayers, but low paid people working in shit jobs. If tax credits were paid to higher rate taxpayers, we’d all regard it as a waste of money.

Universal benefits were brought in to be, obviously, available to all, i.e. child benefit available to all families with children; free education and a free NHS. This attack on universal benefits by the Tory government is just the start. What next? Free education only for those earning less than £44k, free medical treatment only available to those earning less that £44k. Watch this space!!

I think Labour should keep relatively quiet about this for the moment (when your enemy is making a mistake, it is an error to interrupt him).

Remember that this is the first billion in welfare cuts, and in a fortnight Osborne is going to announce another £12 billion in cuts, all of which will be far nastier and less fair and popular than what we’ve heard to date.

Labour obviously isn’t going to go into the next election pledging to spend £1 billion reversing this cut, but instead will need by 2015 to put together an enticing and costed package of policies to appeal to families and middle and working class people who have been hit by the Tory cuts. That might include raising the child benefit threshold to £100,000, or finding some other kind of fix such as tapering to remove the greatest unfairnesses of the Tory policy.

Labour can’t just oppose every cut, and getting stuck into this one reduces room to respond to the real nasties in the Comprehensive Spending Review. Let the right-wing press attack the Tories over this for a couple of weeks.

Let’s have a look where those who earn £45k who apparently are in reality working-class figure on a global scale. Oh look the impoverished souls are the richest 1% on the planet. If they earn the UK median wage they are in the top 1.5%. A minimum wage earner is in the top 11% of the global rich.
http://www.globalrichlist.com/

“How about withdrawing tax-credits for those in full-time employment and increasing the NMW to make-up the difference.”

eh?

40
Well spotted, yes people on tax-credits work in low-paid jobs ,but why should the WS subsidize owners?, all people pay taxes, including the poor, I see this as the poor paying for the rich. If a product or service cannot be manufactured/produced without relying on certain workers being subsidized by public funds, the answer is that it should not be produced. And I think even classical economists would probably hold that view.

“another £12 billion in cuts, all of which will be far nastier and less fair and popular than what we’ve heard to date.”

And this is exactly why Osborne wants his opponents to attack him and get hysterical over this. He wants to be able to portray labour as economic illiterates who oppose every cut for the sake of it. It’s far more likely to be a succesful strategy for labour if they say “ok that one over there is fair enough, but this one here is going to cause great hardship”. It’s always a wise strategy to pick your battles in areas where you can win, which is more likely to be over cuts that have horrendous consequences.

43
You are mistaking class with income.

48. Luis Enrique

G.O. @36

yes, I strongly agree. That’s the “keeping the wealthy sweet” pragmatic argument I’ve repeatedly mentioned, it’s got sod all to do with hallowed principles of leftism, it’s pure politics. There’s also the efficiency argument I linked to in my first comment. The implications of all this is that, as I’ve said, if we want to cut the deficit and/or increase progressiveness of the tax/benefit, we have to be saying we’d raise taxes on the wealthy, not merely that we wouldn’t cut benefits. Just saying the latter is dishonest.

Perhaps there’s some ambiguity here over the phrase “the welfare state” – the things you mention, the NHS, pensions etc. are universal and available to all irrespecitve of income, whereas you must admit many elements of the welfare state are most definitely not universal (and to be honest I hadn’t included the NHS, pensions etc. in what I meant by the welfare state, which I should have done, which explains why I described it has non-universal). It’s too much of a stretch to say unemployment benefits are a job-loss insurance scheme offered equally to all citizens, because too many benefits vary with the wealth of the recipient.

Steve, I suspect those people getting tax credits would continue to be employed if they were withdrawn, and i doubt their wages would increase either. They would just be worse off.

“why should the WS subsidize owners?”

It shouldn’t, just as it shouldn’t subsidise wealthy families.

“That’s the “keeping the wealthy sweet” pragmatic argument I’ve repeatedly mentioned, it’s got sod all to do with hallowed principles of leftism, it’s pure politics. ”

It’s also crap politics, as the wealthy on the whole continue to attack public services via voting for right wing parties etc. The few who don’t aren’t going to change their mind because child benefit is withdrawn. All things considered, child benefit for wealthy families has proven to be a pretty crap bribe.

An interesting article but I’m a little confused ? These cuts are Labour’s cuts. The difference is, they did not tell us what or how they were going to cut the deficit. Has anyone got any idea how we get the welfare bill down from nearly £200, 000, 000, 000 per year ?

52. Luis Enrique

Planeshift @50

I’m not so sure – you think the current situation is bad, I think it would only get worse if state provision moved further towards being something given only to the poor paid for only by the wealthy

I found a link to that Fabian ‘Solidarity Society’ research on universalism etc:

http://www.fabians.org.uk/publications/books/the-solidarity-society

The ‘in a nutshell’ finding on universalism is expressed in their letter to David Cameron:

“Another key finding from international research is that universalism matters. Over time, welfare states which target resources on the poorest – like those of the US and Australia – are less successful at helping the poor get out of poverty than those welfare states which provide universal benefits and services.

Targeting on those who are poorest sounds like a common sense and fair approach, but the evidence shows why this tends to fail the long-term interests of the worst-off, since the two-tier systems that develop lead to much worse provision for those who need it most. That is what lies behind the famous Fabian argument of Richard Titmuss that “services for the poor will always be poor services”. “

Don @ 42,

I think you are correct Labour should stay quiet, but more because I think this is a wonderful trap. This announcement drew all the attention whilst another one about the maximum amount of housing benefit slipped under the radar – so score one to the Conservatives.

Labour have no real room to attack in on the headline measure – they either have to deny cuts need to be made (not sensible) or pledge to support benefits for the rich (making them look silly – universiality is not saleable to the electorate).

And the anger of the right-wing press is drawn way before the spending review, when measures they can support will be announced, so making them broadly supportive in first reviews and not allowing there to be a united media front against the cuts.

This is actually pretty good strategy (although the Conservatives may be panicing a bit now for some reason I can’t grasp – this strategy should obviously always have been unpopular). I think the other mistake Labour could make now, other than jumping in with both feet (probably in their own mouth) would be to assume that Mr Osborne is not going to try and control the way the spending review decisions come out and try to force their hand. So far, to Labour’s credit, they have not fallen into a trap.

“If a product or service cannot be manufactured/produced without relying on certain workers being subsidized by public funds, the answer is that it should not be produced. And I think even classical economists would probably hold that view.”

No, they wouldn’t. In fact almost all economists (“almost” for you can find at least one economist who will agree with absolutely anything) would describe that view as insane.

The value of peoples’ labour is, just as with the value of anything else, determined by the market. That is, the aggregated, sometimes arbitrary, always subjective, views of all the people in the country.

If the labour used to pick cockles is worth £1 an hour that’s because that is the value that consumers put upon cockles and thus the labour used to pick them.

Now, we might (in fact, we do) say that whiloe we value the product of that labour at whatever it is, and thus value the labour at what it gets paid, we also say that peeps should have enough to live upon. We consider it a mark of a decent society that even if cockles are only worth £1 an hour to pick, that those who pick cockles should in fact be able to eat, clothe and shelter themselves and even procreate.

But this is us wearing our hats as decent citizens, not us wearing our hats as cockle eaters (or not, to taste). Thus this financing of the ability of cockle pickers to eat, shelter and shag needs to be done by us wearing our hats as decent citizens, not as consumers (or not) of cockles.

That is, that funding of the ability to e, s n’s, needs to be done through the tax and welfare system, not by some entirely lunatic attempt to insist that the labour used for picking cockles is worth anything other than what it is: £1 an hour.

In short, we’ll all do a great deal better by recognising reality, the relative value of various forms of labour, and then compensating for the bits of reality we don’t like, than we will by attempting to outlaw reality though making up fairy stories about the relative value of various forms of labour.

Has anyone else thought that the outcry over the unfairness in cutting CB for 40% taxpayers where there is one wage earner against two earners, neither on 40% but together earning £45-80k might be a clever tactic by Osborne to allow him to bring out transferable tax allowances as a ‘solution’ to the problem of his creation?

57. James from Durham

When it comes to class, let’s stick with a good old-fashioned marxist definition. If you work for a living and don’t own capital, you are working class from an economic viewpoint. And your home is not capital – you need a place to live. It becomes capital when your kids inherit it.

Other definitions of middle class tend to be cultural and that is just irrelevant.

58. Shatterface

“How about withdrawing tax-credits for those in full-time employment and increasing the NMW to make-up the difference.”

Increase the NMW FIRST then you won’t need tax credits so much.

Tax credits – or tax payers – subsidise jobs employers arent willing to pay a living wage for.

Tax credits should be a means for helping people back to work not a permanent subsidy for greedy employers.

“This announcement drew all the attention whilst another one about the maximum amount of housing benefit slipped under the radar”

Although Tories might be a bit disappointed about that, given that most people support capping housing benefit, whereas opinion is more equally divided on child benefit. The housing benefit reforms are a cruel attack on the poorest, but popular politically.

I think Yvette Cooper’s response so far has been spot on – letting the Tories fight each other, pointing out that it is a poorly thought through announcement which is unravelling without committing Labour to anything specific.

@ Tim Worstall

You are getting quite famous, Timmy. I noticed you being cited by Tyler Cowen the other day.

Sorry, I forgot.

“If a product or service cannot be manufactured/produced without relying on certain workers being subsidized by public funds, the answer is that it should not be produced.”

Given that The Guardian’s assitant comment editor (fairly high up the structure, that job, middle to upper management) is stating that he cannot raise his children without such subsidy, you do realise that you are calling for The Guardian to be shut down as, well, things which require public subsidy should not be produced, should they?

“I noticed you being cited by Tyler Cowen the other day.”

Indeed, not for the first time either. Although, to be fair, the citation was with me wearing my hat as an expert in rare earths (which I am) rather than concerning my, how to put this, rather more “minority” views on matters economic.

Hoping for rather more citations when the book comes out next month too……maybe I should ask Sunny to review it?

Luis –

“if we want to cut the deficit and/or increase progressiveness of the tax/benefit, we have to be saying we’d raise taxes on the wealthy, not merely that we wouldn’t cut benefits. Just saying the latter is dishonest.”

Agreed – and it’s a quick win in terms of challenging the Tories on fairness. The difference between cutting CB by £1bn for higher earners and raising taxes by £1bn for higher earners is just that the tax rise would mean those who can afford to contribute more, do contribute more.

Planeshift –

“the wealthy on the whole continue to attack public services via voting for right wing parties etc. The few who don’t aren’t going to change their mind because child benefit is withdrawn. All things considered, child benefit for wealthy families has proven to be a pretty crap bribe.”

But the wealthy typically vote for attacks on benefits and services *targeted at the poor*. They don’t typically vote to slash universal services and benefits like NHS spending or the state pension, and up till now they haven’t voted to slash CB.

But how long now before we start seeing calls from the Daily Mail brigade for CB to be paid only for the first child, say?

And how long now before we start hearing people ask why the rich, who can afford private healthcare and education, are still entitled to use the NHS and state schools? Wouldn’t it be ‘progressive’ to make them go private so that the state can spend more on those who really need it? Makes just as much sense as cutting their CB, on the face of it – but then the wealthy really *would* be queuing up to attack public services and demand tax cuts.

64. Luis Enrique

GO if you haven’t seen it you might be interested in efficiency argument I link to @7 summarized as “if you take standard optimal tax theory, and just add in an assumption that some people have additional expenses (kids, glasses, whatever), you get universality as a feature of the optimal tax system”.

“It’s an attack on the middle-classes”

The hypocrisy of this statement is unbelievable.

http://liberalconspiracy.org/2009/12/11/right-wing-notions-of-middle-class/
http://liberalconspiracy.org/2009/05/28/where-is-middle-britain/

I thought one of the biggest complaints the brown shirts had about the last Labour govt was that they kept announcing policy outside of Parliament. “they are showing no respect to parliament” they cried.

Why are they making these announcements away from parliament if they feel so strongly about it. Typical brown shirts, do what I say not what I do.

sally,

I despise your choice of language, but that’s a bloody good point.

66/67 – I don’t know if you’ve noticed, but Parliament isn’t actually sitting at the moment. It’s hardly revolutionary for policies to be announced at patry conference.

69. Planeshift

“But how long now before we start seeing calls from the Daily Mail brigade for CB to be paid only for the first child, say?”

Seeing as the daily mail are being outraged and hysterical over the end of CB for higher rate tax payers, I think its unlikely they’ll be calling for further cuts in it.

68

Well then they shut the fuck up when they are in opposition then.

70 – I think you’ve misunderstood. The Tories were complaining (as all oppositions do) that the last Govt were announcing policy developments (as all Governments do, or did) on the GMTV sofa/the front page of the Sun and not in Parliament. It is, fairly obviously, impossible to make policy announcements to Parliament when it isn’t sitting.

The thing is, you very nearly have a nice little gotcha. But actually you don’t. Sorry.

Anyone got a copy of the Coalition Agreement to hand to see if this cut is mentioned anywhere? I don’t recall it being in either the Con or LD manifestos pre-election. In fact I distinctly remember Cameron calling Labour “liars” for saying that the Tories would cut CB.

Ooops – the main image didn’t work earlier – have sorted it now.

That underlines my point about hypocrisy of the Tories and Libdems.

The fact that parliament is not sitting is a red herring of giant size. It is always not sitting at this time of year. It will re open soon, and they can announce their policies then.

They are showing themselves up to be the lying hypocritical scum that we know them to be.

75. James from Durham

Interesting point at 55, Tim but don’t you think that the existence of benefits is going to have any impact on the wages that the cockle-buyers pay?
In which case the pickers may accept lower wages because of the benefits and the wage-payers are indeed getting a subsidy.

Your example presupposes a market in which there are only two parties (consumer/worker) rather than a capitalist system (consumer/capitalist/worker) and the market is going to be affected by the benefits system. It is likely to impact on the profit-sharing between worker and capitalist.

I am not using “capitalist” in a derogatory sense here merely a descriptive one.

76. the a&e charge nurse

[72] probably not – but then again they couldn’t be arsed to mention the £1.7 billion NHS reform either;
http://www.healthsystemsrc.org/2010/07/21/17-billion-set-aside-for-nhs-reform/

Perhaps they are simply making it up as they go along?

@Sunny

Ah! Yep that image makes the point a whole lot clearer. Interesting to see attacks from the right and the left on this issue… be more interesting to see what the polls look like in 3 or 4 days (post-conf, anyway).

@76

Perhaps they are simply making it up as they go along?

We have a winner!

“Anyone got a copy of the Coalition Agreement to hand to see if this cut is mentioned anywhere? I don’t recall it being in either the Con or LD manifestos pre-election. In fact I distinctly remember Cameron calling Labour “liars” for saying that the Tories would cut CB.”

I am afraid we are seeing world record times for broken promises and lies with this govt. Bolt the 100 metre champion could not go as fast as the lies keep coming.

Remember we now know that Clegg was running against his own policies during the election. When he put up those posters with ‘beware the VAT tax bombshell’ little could we have known that he was warning us against himself.

The Joseph Rowntree Foundation also have an interesting blog post on this:

The proposed changes to eligibility for Child Benefit – restricting it to families where no one earns more than £44,000 per year – also do not take into account the different composition and needs of families.

Our research on a Minimum Income Standard for the UK in 2010 shows that earnings needed for an acceptable standard of living for a couple with four children and one earner is £41,300. This is only just short of the proposed £44k limit and shows that having a flat rate figure applied to all family types risks leading to unfair outcomes.

http://www.jrf.org.uk/focus-issue/cuts-spending-and-society

TORY IN OPPOSITION ….. “The children, the children, what about the children?”

TORY IN GOVT………… ‘ who gives a shit about the children? .’

How did this government come up with a polcy which gives child benefit to a couple earning upto £86K (provided each partner earns under £43k) but stops a one earner family from getting the benefit if the sole earner is paid £44000. How can anyone define this as fair?

My husband earns £46K and I bring in a small amount working as an invigilator to support my great local comprehensive school( about £1500 a year, and I have just had my pay cut by 7.9%).I also help at my local chuch and do a soup run for the homeless. Part of Camerons Big Society!

We pay £100 a week contribution to help fund my eldest daughters accommodation and books whilst she is at University. We also have a13 year old.

The loss of this benefit will hurt.

I am angry that such an about turn on policy by the Cons and Libs has been put foreward.

Planeshift –

“Seeing as the daily mail are being outraged and hysterical over the end of CB for higher rate tax payers, I think its unlikely they’ll be calling for further cuts in it.”

Well – not this week, maybe; it’d be too obviously hypocritical. Though to be honest I wouldn’t be that surprised to see them arguing that since high earners are losing *all* their Child Benefit, it’s only fair if lower earners lose *some* of theirs too.

But the real problem is how this changes attitudes long-term. In 10 years’ time, when Child Benefit is just another one of those ‘handouts’ that low earners get, are the Mail going to be fighting tooth and nail to ensure that their beloved ‘middle classes’ (i.e. the top 10%-20% of earners) keep subsidising that handout through their taxes?

Hardly. More likely they’ll be asking why ‘hard-working families, who are responsible enough only to have children if they can afford to look after them, should have to subsidise state handouts for less responsible families?’.

@83 – indeed.

I mean once we start talking about personal responsibility who knows where it might lead?!

sally –

“TORY IN OPPOSITION ….. “The children, the children, what about the children?”

TORY IN GOVT………… ‘ who gives a shit about the children? .’”

You’ve missed the best bit – the bit where they explain that slashing every imaginable form of spending on children, from building schools and playgrounds, to free school meals, to Child Benefit, Tax Credits and the Child Trust Fund, is all about ‘intergenerational fairness’.

Our kids may grow up in poverty, learning in crumbling, understaffed schools, relying on piss-poor public services and with no university place or job at the end of it, but they’ll thank us for it eventually because the national debt, and along with it their tax bills, will be a bit lower.

Yes Mr Osborne – and if I moved my children into a grotty one-bed flat, clothed them in rags and fed them on gruel for the next ten years, they’d be thrilled to bits when I announced I’d paid off the mortgage early and would therefore be able to help them out with their student loan payments.

@75.

Let me put the point in simpler terms so that we get around this “structure of the economy” thing.

The claim is that people living on £1 an hour would be “unfair”.

Maybe it is, maybe it isn’t: but those making that claim have the duty to pay for the resolution of their perceived unfairness. Since as society we are indeed saying that this is unfair, we as society have to pay for the remedy.

@83
In the third para you make a valid point and then ruin it with the nonsense in para four.

My (working) parents had five children, we were well fed, clothed etc and had holidays. They didn’t have a (owned) house, phone, car or central heating before the youngest was a teenager; it’s about choices, it’s about personal responsibility.

My husband earns £46K and I bring in a small amount working as an invigilator to support my great local comprehensive school( about £1500 a year, and I have just had my pay cut by 7.9%).I also help at my local chuch and do a soup run for the homeless. Part of Camerons Big Society!

Congratulations! You have a higher income than around 75% of the population – equivalent to about 44.9 million individuals.

Our research on a Minimum Income Standard for the UK in 2010 shows that earnings needed for an acceptable standard of living for a couple with four children and one earner is £41,300.

Earning that level with that many children would put this household more or less bang on the median household income in the UK.

http://www.ifs.org.uk/wheredoyoufitin/welcome.php?x=40&y=11

Hah! Even the Telegraph leader writer is scathing and full of contempt:

Out of the smouldering wreckage of the child benefit announcement is emerging a view of the Tory leadership that will, if it takes hold, be immensely damaging. It is that they are so well-heeled that they simply do not have a clue about how most people live their lives. David Cameron and George Osborne have never had to worry about money, ever. It has never impinged on their charmed existences. Lucky them. But that imposes a particular responsibility on the two to try to understand the everyday experiences of the overwhelming majority of people in this country who do, at some time or other, have money troubles.

Their handling of the child benefit announcement – sternly lecturing Middle Britain that it is “the right thing to do” while clearly not appreciating (or caring about) its unfairness in the way it targets stay-at-home mothers – showed a staggering lack of empathy. The sharp-as-a-tack Yvette Cooper has spotted this: “They have clearly been taken aback by the reaction of parents across the country. George Osborne and David Cameron obviously don’t understand what it means for families on middle incomes to lose thousands of pounds a year”. Cooper is absolutely right. They’d better start learning, fast – nobless oblige and all that.

http://blogs.telegraph.co.uk/news/davidhughes/100057164/are-cameron-and-osborne-too-rich-to-know-how-the-middle-classes-feel-about-child-benefit/

Planeshift –

See comment 84. This cut only happened yesterday, and already a parody of Daily Mail 2020 thinking is enough to soften people up to the idea that Child Benefit merely licenses irresponsible oiks to breed like rabbits.

Abolish it I say! If these sexually incontinent spongers want food for their plebeian spawn, they can bally well pay for it themselves through simple, honest HARD WORK – just like we in the squeezed middle classes [read: top rate taxpayers] already have to!

(What’s that you say? They’re already working hard, but some of them earn a quarter of what I do and can’t afford to raise children well without a modest contribution from the state? Well then they should bally well buy a hamster or something!)

Well I don’t think LC will be linking to this latest piece from Chris Dillow.

“Child benefit is spent, at the margin, on adult-assignable goods…it is parents who benefit from unanticipated variation in child benefit.

They estimate that for a couple not on other benefits with one child, a £1 rise in child benefit is associated with a 49p rise in spending on alchohol, a 40p rise in spending on adult’s clothing, but only a 1.4p rise in spending on children’s clothes.
For lone parents, 70p of a £1 rise in child benefit is spent on women’s clothing and 21p on alcohol.”

Ooops.

http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2010/10/who-really-gets-child-benefit.html

@ sl (87) –

I think you may have misunderstood me; the position expressed in paragraph 4 was in quotes and was supposed to be a parody of a Daily Mail-type view. Same goes for the comments I just made (90) incidentally!

chris dillow is contradicted by this piece of research (as I point out in his comments)

http://www.psi.org.uk/publications/publication.asp?publication_id=158

cjcjc –

Interesting link!

Still, though: I don’t think anyone on here is arguing primarily that better-off people *need* child benefit so their kids get a decent start in life.

The point about universalism is just that better-off people are happier about paying into a system that they also get something out of – whether that’s in the form of CB, a state pension, NHS treatment, or state education. Therefore if we want better-off people to stump up £1 billion for deficit reduction, the thing to do is increase their taxes – not restrict their access to universal services and benefits (turning those things into ‘safety nets’ for the poor; somebody else’s problem).

I know I’m labouring this point, but – there’s a reason why the Daily Mail and the Coalition are happy enough to attack unemployment benefit, housing benefit, free school meals etc but won’t touch the state pension or the NHS.

Just cos the Telegraph says it, doesn’t mean it’s true..

I will say that this is clumsy but in principle correct. It should be withdrawn for those with a COMBINED household income of around 50k…

96. Planeshift

“Hah! Even the Telegraph leader writer is scathing and full of contempt:”

When the Daily Mail, and the torygraph both agree on something, my instinct tells me I should probably explore the opposing view. Although this:

“It is that they are so well-heeled that they simply do not have a clue about how most people live their lives. David Cameron and George Osborne have never had to worry about money, ever.”

Is something that clearly needs to be emphasised. And probably when fighting the right battle, rather than on this.

It is that they are so well-heeled that they simply do not have a clue about how most people live their lives. David Cameron and George Osborne have never had to worry about money, ever.

Hmm. Unlike those horny-handed sons of toil Ed Miliband and Ed Balls?

I don’t see why the gov can’t just put up tax on higher-rate earners. They are more numerous than those who have children, surely, so there is a bigger pot of deficit-bustin’ good stuff to get out of it. Hell, we might even be able to keep funding for playgrounds.

Is it just easier to take money from mums and kids?

“I don’t see why the gov can’t just put up tax on higher-rate earners.”

Yeah, those top 10% bastards only contribute 53% of all income tax.

The more obvious answer might have been to make CB taxable, but that wouldn’t have saved as much!

100. Planeshift

“I don’t see why the gov can’t just put up tax on higher-rate earners.”

I’d like to see that one as well.

“I don’t see why the gov can’t just put up tax on higher-rate earners.”

Because there really is this thing called the Laffer Curve and there really is a tax rate where, if you raise it further, you don’t actually get any more revenue. Indeed, you might even get less.

Now of course, the really interesting argument is what is that rate? And there are good and honest economists (so no, not just talking about “my side” or anything) who argue that the current 50% top rate, when you add in employers’ NI, the withdrawal of the personal allowance, the ease of moving inside the EU and so on, is about where that peak of the Laffer Curve on income is.

Certainly, it’s not sure that raising the tax rate again will actually lead to more revenue.

Planeshift –

“When the Daily Mail, and the torygraph both agree on something, my instinct tells me I should probably explore the opposing view.”

Sure – but I’d look at it like this:

Yes, right-wing commentators have to recognise, grudgingly, that many well-off people appreciate things like Child Benefit, the NHS, the state pension and state schools, and don’t mind paying higher taxes to cover the costs of these things.

But the idea that everyone should pay what they can afford in order to cover the cost of universal services and benefits, for rich and poor alike, is still a basically left-wing idea. The alternative – a ‘safety net’ welfare state for the poor, and private services for those who can afford them – is a right-wing idea. In this country it seems like a prety *far*-right idea, such is our attachment to a universal welfare state.

So the left would be foolish to make enemies of the Mail-reading right over the issue of universal services and benefits: it’s an area where the ‘centre ground’ is so far to the left that your typical Mail reader is actually on the left’s side of the debate.

(Compare the spectrum of views on healthcare in the UK to that in the US, say: your typical Mail-reading, Tory defender of excellent, free, universal care would look like a rabid communist in the US.)

Pragmatic arguments about appeal to Middle England aside, though: the real reason the left should defend universalism is just that all the evidence suggests that, in the long term, the poor will be better off in a society that keeps universal services and benefits than they will in a society where services are targeted at the poor.

@99 cjcjc

Well us poor sods at the bottom of the pile are having to do our bit by looking forward to underfunded services, job cuts, wage freezes, etc – why shouldn’t the rich pay a little extra ?

@101 Tim W

I’m aware of the theory of the Laffer curve. I’m also aware that when the last government raised the higher rate of tax there was a lot of hysteria that people would leave the country to avoid paying it, and I don’t think that has happened (or if it has, nowhere near on the scale that was predicted). Besides, I’m not arguing for a 99p in the £ tax on income above £50K or whatever. A small rise of a few pence extra would bring in billions.

Also: taking away the CB allowance is the equivalent of raising tax for some rich earners but not all. Aside from the inequity of a two-earners family with a combined income of £86K still qualifying for CB under these new rules, there are the numerous single men and women earning £44K+ who are not going to be paying extra at all.

I thought we were all in this together?

But a few pence on hte higher rate wouldn’t raise billions. The 50% rate is exopected only to raise a billion or two and we’re not even certain, as yet, that it will raise anything at all.

“Currently Sugar the Pill is under the authorship Mr S. Pill himself, an unemployed layabout with far too much time on his hands.”

Get those hands working!

@105

Arf! I need to update that since becoming gainfully employed… now merely a part-time layabout 😉

Tim

” the current 50% top rate, when you add in employers’ NI, the withdrawal of the personal allowance, the ease of moving inside the EU and so on, is about where that peak of the Laffer Curve on income is.”

But if that’s right, the governent could still easily have got at least £1 billion in extra taxes out of people who aren’t already being taxed at the 50p rate. They could have reduced the threshold for that rate, or the 40p rate, or both; they could have put 2p on the 40p rate.

The fact that they’ve chosen to cut CB instead is purely about being able to say they’ve cut spending rather than raising taxes. 2p on the top rate of tax would have easly made the same contribution to deficit reduction, and the cost would have been spread fairly rather than being borne wholly by families.

(Quick estimate of revenue raised by dropping the 50p threshold to £100,000 and putting 5p on the 40p tax rate: £6 billion. Universal CB protected, an extra £5bn for deficit reduction, most of those affected losing hundreds rather than thousands of pounds, and the Laffer curve doesn’t come into it.)

Re that last post: by 2p on top rate I mean 2p on the 40p rate.

@104 Tim

See G.O @107

I’m off to do some research.

Tim J @ 30

So what? The point still stands. Osborne is removing a subsidy from parents on smaller incomes, whilst people on higher incomes are being left alone. Not only that, but he is retaining a bigger subsidy on the rich if they by certain types of car. How can it be fair to provide people a huge five grand subsidy for buying a top of the range car by Osborne’s own criteria?

If we want to use the higher tax rate for a cut off point for benefits, then why not, restict farm subsidies to those on less than 44 grand?

I begin to think I am living in a parallel universe.

1) Did Osbourne not announce a proposed change to take money from the rich (by inference leaving more for the poor)?

2) Do the Left not support the redistribution of wealth from the rich to the poor?

3) Is this not a Left supporting website?

4) Then why is everyone here moaning?

I mean I know the hardcore tribalists are programmed to moan whenever someone on the other side does anything but even so………

What would you have said if he’d proposed axeing child benefit but only for basic rate tax payers and those claiming benefits?

@111
I think you need to re-read the previous posts.

pagar –

Whether you agree with it or not, surely you can appreciate that Liberals and the Left have generally defended the universality of key benefits and services since the very beginning of the welfare state? The NHS, the state pension, state education, and Child Benefit have always been there for everyone, rich or poor – and that’s exactly why they’re so fiercely defended by all sections of society.

I have never, ever heard someone on the Left argue that NHS money shouldn’t be wasted on people rich enough to afford private healthcare, or that the state pension shouldn’t be paid to people who don’t need it. It’s the *Right* who have traditionally argued that the welfare state should consist of a safety net of benefits and services targeted at the poor, while the better off should pay their own way without state help.

So I share your sense of bafflement about some of the comments being made, but for just the opposite reason!

If the logic that says we should cut Child Benefit for the better off is correct, there’s no mystery about how the Left should be looking to tackle the deficit and make society fairer: we should simply restrict the entitlement of wealthy people to services and benefits such as the state pension, the NHS and state schools. Such public services should be reserved for those who really need them, and those who can afford it should pay for private healthcare, education and pensions…

…and hey presto! As if by magic, we’ve become the far right. Public services and benefits wither away while the rich enjoy their private schools and tax cuts.

No, I’ll stick with my crazy universal benefits and services funded through progressive taxation, thanks.

114. Chaise Guevara

@102

“Compare the spectrum of views on healthcare in the UK to that in the US, say: your typical Mail-reading, Tory defender of excellent, free, universal care would look like a rabid communist in the US”

And did you see those Mail articles being taken out of context and quoted in the American press when the healthcare debate was heating up? They were quoting our most right-wing national paper on UHC and they STILL had to fudge the issue: the Mail wasn’t complaining that we have an NHS, it was complaining that the NHS isn’t good enough. Hardly on side with your average Republican.

Basically, we’re so pro-NHS in this country (and long may that last) that even the right-wing press isn’t against it in principle; rather, it plays on readers’ sense of entitlement (an even more powerful force at the Mail than elsewhere).

Pagar @ 111

Let me explain my position on this.

First of all, let me declare my interest. I am not a parent, nor am I likely to become one, my partner is almost past child bearing age (I hope she never reads this), but I am de-facto a grandfather to the children of her grown up married daughter. To be honest, I do not think I have the paternal gene. I am unlikely to be in a position to earn £44,000 in the near future either.

Having said that, when I first heard this policy announced, my first reaction was to wince and think that this move was profoundly unfair. Don’t get me wrong, I think that it perfectly legitimate to expect the better off in society to shoulder the burden of austerity moves, and, in my opinion, I think the poorest people have been forced to carry a disproportionate amount of the damage.

It appears to me that the ‘deficit’ is being used as a convenient smokescreen to push through ideological cuts. In this instance, I think severing the link between the middle classes and child benefit is an ideological move designed to undermine the concept of child benefit. Where does it stop? Do higher tax rate payers stop getting NHS prescriptions, for example? Eye tests? Complete access to the NHS?

On a more pragmatic note, I do not see this cut as particularly ‘fair’ either. It cannot be right to take money from people when others on better incomes lose nothing. Or when richer people receive far better subsidy, like the subsidy on hybrid cars, for example. Five grand is ‘unaffordable’ when compared to the loss of child benefit. To take away three grand from one family and potentially at least, give ten grand to a couple of people on, say, sixty grand a year, when they buy a top of the range car seems a pretty shoddy way of working.

If the Tories wanted to ‘share the pain’, perhaps they could increase VAT on schools fees to 25%, stop subsidising Covent Garden?

Hi Jim

I think severing the link between the middle classes and child benefit is an ideological move designed to undermine the concept of child benefit.

Actually, I support universal benefits. Not because they create some mystical attachment of the populace to the welfare state but because they are simple, honest and cheap to administer.

The state should provide all its citizens with the guarantee of a basic income then get rid of means tested benefits forever. I think this is where the single benefit IDS is proposing will ultimately lead.

I also agree with you on abolishing the Arts Council.

@jojo

I think you need to re-read the previous posts.

Frankly, I’d rather eat my arm with a rusty spoon.

pagar –

“Actually, I support universal benefits… The state should provide all its citizens with the guarantee of a basic income then get rid of means tested benefits forever.”

Could you clarify what you mean?

Giving citizens a ‘guarantee of a basic income’ would suggest to me that you means test everyone and then top up their incomes if necessary, by as much as necessary, so that everyone gets at least that basic amount. But you also say you want to ‘get rid of means tested benefits’, so presumably that’s not what you mean.

Are you suggesting that everyone gets a non-means-tested basic income from the state, a bit like Child Benefit but not just for those with kids – what they call a ‘Citizen’s Income’?

(http://www.citizensincome.org/)

If so, I don’t see why you support well-off people getting a Citizen’s Income but not Child Benefit? (The same arguments re focusing on the poor/redistribution would seem to apply.)

(Oh, and rusty spoon aversion aside, I wish you’d at least read my last post at 113 in response to your questions – it distills a lot of what I’ve been wittering on about and tries to explain why defending benefits & services for the rich is, traditionally at least, a left-wing thing to do.)

pagar –

Apparently the Greens support a Citizens’ Income. (I didn’t know that.) Maybe that’s the policy you’re thinking of?

(Still don’t understand – based on your comments re CB I’d have thought you’d see such a policy as right-wing, since it involves giving money collected through general taxation to the rich?)

@GO

I do advocate the introduction of CBI and the end of all means tested benefits. Child benefit should be part of the scheme and also universal (you can always recover it from those too rich to need it by means of progressive taxation).

Pagar –

Ah, OK. I’m still a bit confused, though, about how someone who said about the withdrawal of Child Benefit from the rich: “Did Osbourne not announce a proposed change to take money from the rich (by inference leaving more for the poor? Do the Left not support the redistribution of wealth from the rich to the poor?”, could also be in favour of much larger non-means-tested payments for the rich. (I understand those payments could be offset by increases in their taxes, but then so could CB payments).

@28

“Two households, household ‘A’ with an income of sixty grand and two kids, whilst ‘B’ has a combined income of eighty grand and are childless. The first are penalised a couple of grand, whilst the second with both a higher income and arguably have less ‘need’ lose nothing.”

But… if they’re childless they weren’t getting anything in the first place. What do you mean they “lose” nothing?


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