How Ed Miliband could respond to child benefits fiasco


5:19 pm - October 6th 2010

by Don Paskini    


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This time next week, Ed Miliband will make his debut as Leader of the Opposition at Prime Minister’s Questions.

I wonder if the child benefits fiasco presents an opportunity.

Over the next week, Labour’s team could do a quick piece of policy work refining the government’s proposals to protect the people who are hit hardest by Osborne’s proposals and remove the anomalies where some families on £80,000 will get the benefits and others on £45,000 won’t.

Then at PMQs, Ed could ask Cameron whether he would agree to alter his policies to protect middle earners by accepting Labour’s improvements. If Cameron refuses, he looks like he is putting party politics ahead of sensible policies and doing what’s right for middle income families.

If he accepts, it makes it much harder to claim that Labour is just opposing every cut and won’t set out alternatives.

I think this is a better option politically than pledging to reverse these cuts and flying the flag for universalism.

Come 2015 or whenever the next election is, Labour isn’t going to go into the election pledging to spend £1 billion on giving cash handouts to the richest 15% of families, and in a fortnight there are £12 billion in welfare cuts plus untold billions more in cutting public services which will be higher priorities to oppose and pledge to reverse.

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About the author
Don Paskini is deputy-editor of LC. He also blogs at donpaskini. He is on twitter as @donpaskini
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Story Filed Under: Blog ,Fight the cuts ,Labour party ,Westminster

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Reader comments


1. astateofdenmark

Your last paragraph suggests Labour should accept the end of universality. Not sure that will go down very well.

Over the next week, Labour’s team could do a quick piece of policy work refining the government’s proposals to protect the people who are hit hardest by Osborne’s proposals and remove the anomalies where some families on £80,000 will get the benefits and others on £45,000 won’t.

If they really can do this, and do it in a way that wouldn’t mean, for example, that more is spent on means-testing household income for child benefit than is saved on removing CB for high-rate taxpayers, then I wouldn’t be surprised to see the Tories adapt it.

If there was such an easy answer though, I’d have thought it might have been mentioned by now.

@stateofdenmark

It might not go down very well, but not all benefits are universal – I think Labour needs to bite the bullet and do what makes economic sense to most people rather than stick to vague arguments that “if the rich don’t get it, they won’t want it given to the poor”

4. Chris Baldwin

“I think this is a better option politically than pledging to reverse these cuts and flying the flag for universalism.”

What the hell?!!

Seriously, that would be an utter capitulation and abandonment of even the mildest social democratic principles. I’d rather Miliband did nothing.

“Come 2015 or whenever the next election is, Labour isn’t going to go into the election pledging to spend £1 billion on giving cash handouts to the richest 15% of families”

We’d damn well better. Otherwise what’s the point of the Labour Party even existing?

[deleted]

Think Chris Baldwin is right – Ed Miliband won’t back away from universalism that early on, it’s been on the cornerstone of his policy-making. He’d depress vast swathes of the Labour party barely a week in.

He’ll have to frame it differently.

“Ed Miliband won’t back away from universalism that early on, it’s been on the cornerstone of his policy-making. He’d depress vast swathes of the Labour party barely a week in.”

79% of Labour voters and 83% of all voters back the principle of removing child benefit from the highest earners – why would they be depressed?

“Seriously, that would be an utter capitulation and abandonment of even the mildest social democratic principles…We’d damn well better. Otherwise what’s the point of the Labour Party even existing?”

We’re talking about restricting one cash benefit to 90% rather than 100% of families. Where in the Big Book of social democratic principles does it say that this is an utter capitulation?

The point about universalism as a political strategy is that you need to have enough beneficiaries in order to defend a high quality welfare state. If 90% of families get child benefit, then it would hardly end up being a residual handout for the poor with complex bureaucracy or low takeup, would it?

“If there was such an easy answer though, I’d have thought it might have been mentioned by now.”

But this is one of the few advantages of “constructive opposition”. The government had to develop this policy while also doing the biggest and most difficult spending review ever, and without knowing what would make people most upset. Ed Miliband’s team, in contrast, have all this information and a week to decide what to do. Their solution doesn’t need to be perfect, just demonstrably fairer than what the Tories came up with.

Ed has already softened the ground for the future in a way by saying in his 1st speech as leader “some cuts will happen that we won’t be able to reverse when we’re back in power” (paraphrased) and I’m bettin this is one of them. Still should pull up the Tories on why a family with £83K coming in is entitled to CB when a family with £44K isn’t. And why it wasn’t in the manifesto. And why did Cameron and Clegg and other front-benchers pledge to protect CB pre-election. All of these questions need answers and Ed had better have some decently framed questions.

9. Chris Baldwin

Sorry Don, but this is a symbolic issue. We can compromise on all sorts of things related to the welfare state, but not on universal benefits like this. It’s about more than the immediate impact of these cuts – if we accept what the Tories are doing we’ll be letting them redefine the welfare state in a right-wing direction. I really don’t think we can afford to do this. I know it’s become a Labour tradition to accept all the terrible things the Tories have done (privatization etc.), but we don’t have to do this, so we shouldn’t.

Don –

“The point about universalism as a political strategy is that you need to have enough beneficiaries in order to defend a high quality welfare state. If 90% of families get child benefit, then it would hardly end up being a residual handout for the poor with complex bureaucracy or low takeup, would it?”

I think’s it’s 85% of families who’ll still get it, not 90%.

And the 15% who don’t are precisely the Daily Mail’s ‘hard-working, squeezed middle classes’ – the people the Tories and the right-wing press are constantly trying to whip up into a frenzy about how they’re paying through the nose to fund a bunch of scroungers.

And it’s not just about CB, over time, coming to be seen as a ‘subsidy for irresponsible people who have children they can’t afford’, and therefore fair game for further cuts; it’s also about the Mail-reading classes’ attitude to tax in general. If their perception is that they’re getting less for their taxes, they’ll start demanding lower taxes – which threatens public services in general, not just CB.

In my opinion Ed M should maybe say something about universalism, but most of all tackle the Tories on their own chosen ground of ‘fairness’. He should ask them directly why they’ve hit families – those higher-rate taxpayers whose incomes are most stretched already – with a bill for thousands of pounds, instead of asking for a much smaller contribution from *every* higher rate taxpayer (via a 2p rise in the 40p rate, most obviously) .

This would help expose the Tories’ ideological commitment to spending cuts rather than tax rises, and – very importantly – help Labour make the case that tax rises can be a fairer and equally effective way of closing the deficit.

There’s another open goal for Ed M on ‘fairness’:

The Coalition are fond of arguing that their cuts are about ‘intergenerational fairness’. It’s not fair, they say, that our children should be made to pay for a crisis of our generation’s making.

Yet pretty much every major cut so far has been targeted specifically at children: new schools & playgrounds scrapped, Child Trust Fund scrapped, free school meals extension scrapped etc., and now Child Benefit cut. So making our children pay for this crisis is *precisely* what the Coalition is doing.

If the Coalition wants our generation to bear the burden alone, why have childless people of our generation been asked to make no contribution whatsoever to this latest £1 billion of deficit reduction? Why are *only* families with children bearing the burden?

Labour really should be shining a light on this nonsense.

They might even like to point out that our children only get one childhood, and there’s nothing in the least bit irresponsible about taking on a large, manageable, low-interest debt, and repaying it slowly, in order to make it as good a childhood as possible: every family that’s ever taken out a mortgage on a family-sized house in a nice area with good schools etc., and chosen to spend money on their kids rather than making overpayments, knows that.

Don, I think you are wrong. Astateofdenmark is right. I will be blogging on this more tomorrow: the bottom-line is that we progressives/greens/lefties are living in a fool’s paradise if we think that this child benefit episode is a political disaster for the Tories. On the contrary (see http://rupertsread.blogspot.com/2010/10/why-not-remove-child-benefit-from-rich.html ), it could well be a political masterstroke. It works for them in so many ways, on so many levels.
We are on the very brink here of losing a universalist welfare state.

I love it.

Is it coup or cock up?

It’s blindingly obvious it’s a cock up.
Still I am in awe of Rupert “we had it coming” Read’s analysis.
The “rich” won’t mind being taxed more so long as they get a few “universal” pounds back.

Right.

An attack on immigrants (the swine) would be my bet.

5,4,3,2 . . .

donpaskini – it’s worth reading more into the Sun poll you cited. I don’t think it’s that clear cut.

http://ukpollingreport.co.uk/blog/archives/2827

cjcjc –

“Is it coup or cock up?

It’s blindingly obvious it’s a cock up.”

Not if the Tories can win over two swing voters for every core voter they piss off.

If they can convince left-leaning people that ‘it’s only fair’ to restrict rich people’s entitlement to hitherto-universal services and benefits, they will have taken an important step towards the right-wing dream of better-off people using private services while charitably preserving a stripped-down ‘safety net’ welfare state for the poor.

Guido Fawkes made the following comment on this over at Left Foot Forward:

““A blow to the principle of universalism” is a feature [of the policy], not a bug. That is a the game plan, to liberate the middle-classes from being welfare recipients and eventually reduce their tax burden…. This progressive obsession with welfare universalism is a dead end.”

So there’s at least one indiscreet right-winger who’s prepared to admit this is not a cock-up – *if* they can get away with it, of course.

Perhaps someone should tell the Mail and Telegraph!

There are not that many universal cash benefits, are there?

And which universal services are going to be denied to those who are paying for them?

This is just paranoia…

‘Universal’ benefits should be abolished completely. Means test everything as it’s the only way of ensuring the genuine needy will be protected. What has emerged from the tory conference is pure nimbyism by the better off whilst happily pigging it at the national benefits trough for years. Surprisingly, the tories appear happy to bash their own voters.

cjcjc –

“This is just paranoia…”

Seriously? You think the right wing *don’t*, in the long term, want better-off people to rely on private rather than taxpayer-funded benefits and services; don’t want to cut taxes for the better-off; and don’t want a smaller, cheaper welfare state that’s more targeted at the poor? What do you think ‘right wing’ means?

Of course the Tories can’t just come right out and say we should switch over to a US-style, private-sector-based welfare system tomorrow: we’re too attached, culturally, to the idea of universal public provision. But they are starting to chip away at that attachment with this proposal.

This year it seems ‘fair’ that better-off people don’t get Child Benefit or the Winter Fuel Allowance.

Five years from now it seems ‘fair’ that people who pay for private healthcare or education should get a tax break to thank them for ‘reducing the burden on the state’. (And *of course* the NHS and education budgets are falling – silly Mr Miliband! That’s just because those services are now ‘more efficiently targeted’ at those who really need them.)

Ten years from now it seems ‘fair’ that if your private pension is worth £44,000 or more, you get a smaller state pension (meaning we can cut taxes for high earners again). (And *of course* the welfare budget is falling – silly Mr Miliband!)

And what happens to the ‘targeted’ public services left behind, once the Mail-reading classes have no further interest in them and can’t see why they should be paying so much into a system that gives them nothing back? Hmm… maybe the same thing that’s happened to ‘targeted’ public services everywhere else in the world?

Look – I get that this is counterintuitive, up to a point. But if none of this changes your intuitions, go and look at the evidence on the success of universal vs targeted benefits and services when it comes to getting help to those who need it. (Google ‘Fabian Solidarity Society’.) It’s no use just sticking stubbornly with the first common-sense intuition that pops into your head (‘Of course help should be targeted at those who need it!)

OK folks, here’s what I think Ed M should be saying at the dispatch box next week:

“We agree with the Coalition that higher-rate taxpayers must make a contribution to deficit reduction. The Right Honourable Gentleman is right when he says that it’s only fair for those with broader shoulders to bear a greater load.

“But that is precisely why this one billion pounds should not be taken *only* from those with children. Among higher earners, these are the people who can *least* afford to lose several thousand pounds a year from their income.

“So will the Prime Minister now agree to replace this deeply unfair, ideological cut in child benefit with a simpler, fairer, and less bureaucratic 2 pence rise in the top rate of tax?

That would spread the cost fairly among *all* top rate taxpayers, not just those with children.

“It would mean most families losing a few hundred pounds each year rather than a few thousand pounds.

“It would send out a clear message that the welfare state in this country is there for *all* its citizens, including those on higher incomes who pay for it through their taxes like everyone else.

“And as well as making the same £1 billion contribution to reducing the deficit, it would raise an additional £400 million pounds that would allow the Government to reverse another of its attacks on all our children – the abolition of the Child Trust Fund.”

“Boo!” “Hurrah!” “Order, Order!” etc.

I’m rather pleased with that. Anyone got Ed’s phone number?

That’s very much how I would put it G.O.

If, as people say, it is right that higher earners should lose their CB, why then should they receive any state maternity benefits? Why should their children get free NHS dentistry? Why, in fact, should they receive any NHS treatment, if they can afford to go private? etc. OK, the high earner may say, but I’ll be damned if you think I am going to pay so much tax, and yet receive nothing in return. It’s only fair if top rate tax is reduced.

And there you have it, the real reason for this. By ending Universality, you can justify reducing top rate tax. You can also justify giving tax breaks to top rate earners if they opt out of public services. This is the true aim of the Tory government.

“They might even like to point out that our children only get one childhood, and there’s nothing in the least bit irresponsible about taking on a large, manageable, low-interest debt, and repaying it slowly, in order to make it as good a childhood as possible: every family that’s ever taken out a mortgage on a family-sized house in a nice area with good schools etc., and chosen to spend money on their kids rather than making overpayments, knows that.”

I like this a lot.

“By ending Universality, you can justify reducing top rate tax.”

Not really. Something like 80% of people support the principle of taking benefits away from the rich, and 80% of people support more taxes for the rich such as mansion tax, higher taxes on the banks.

The majority of people want the rich to contribute more and receive less from the state. So they won’t think “oh well, now they don’t get child benefit they should get a tax cut which I don’t benefit from”.

Don –

Why thank you! Beat them at their own game I say. I know these analogies with household budgets are a bit dubious, but a mortage taken out in order to enjoy a decent quality of life in the medium term as well as investing for the long term is far more analogous to the national debt than the credit card bills we keep hearing about.

I would love to see the Tories challenged on this, because by their logic anyone who doesn’t make their children live like paupers in order to pay off their mortgage early is insane.

Don –

“The majority of people want the rich to contribute more and receive less from the state. So they won’t think “oh well, now they don’t get child benefit they should get a tax cut which I don’t benefit from”.”

Yes, but surely the Tories have never needed a *majority* of people to be in favour of tax cuts for the rich in order to push them through. They just need the ‘Angry Middle’ – the Mail-reading top 15% of earners who are the ones losing their Child Benefit – to be in favour, because they wield so much power both in electoral terms and in terms of the framing and driving these debates.

(And a large group of people on incomes around £35-43000, just short of the top rate threshold, will always be in favour of lowering the top rate too – especially now they face losing CB once they get over that £44,000 threshold.)

“Yes, but surely the Tories have never needed a *majority* of people to be in favour of tax cuts for the rich in order to push them through. They just need the ‘Angry Middle’ – the Mail-reading top 15% of earners who are the ones losing their Child Benefit – to be in favour”

But I’m pretty sure that most Mail readers are not in the top 15% of earners.

The Tories can do tax cuts for the rich if they want (particularly as the Lib Dems seem inclined to let them do what they want on economic policy). But unless they make sure that middle income voters also benefit, then these tax cuts will be very unpopular, as people who feel that they are struggling financially see other people who are richer getting help from government.

Labour needs to unite middle and lower income earners – pointing out that the Tories are putting up taxes for most people but cutting taxes for the rich is a good way of doing this.

Sunder has a good article on the attitudes of the Angry Middle – they dislike free-riders on high incomes just as much as they dislike people on benefits:

http://www.tribunemagazine.co.uk/2009/07/selling-equality-to-mail-readers/

Spot on again G.O.

The whole Tory ideology is about a smaller state, low tax economy. The USA being its model. It would be very easy for them to bring in a flat rate tax, under the guise of fairness. It would be very easy for them to introduce their much loved Patient Passport, under the guise of fairness. I suppose people would also support the removal of the State Pension from top rate taxpayers, all in the name of fairness, of course. And then what next?

It’s not just what is being done that should concern people. Equal, if not greater concern should be given to who is doing it, and what their real motives are. That should always be the case with anything.

Don, although you are right that not all DM readers are in the top 15% income bracket, the vast majority of them aspire to be so. That is why they are so easy to whip up into a frenzy, when anything can be seen to be an attack on that aspiration, however incremental. Likewise when they see the position they aspire to, being attacked. We witnessed this frenzy many times under New Labour, whenever they tried to raise taxes on higher rate earners.

The Angry Middle disliking free-riders on high incomes just as much as they dislike people on benefits should not come as comfort to anyone but the rightwing.

“We witnessed this frenzy many times under New Labour, whenever they tried to raise taxes on higher rate earners.”

When was that? Labour hardly ever tried to raise taxes on higher earners.

The Daily Mail got cross about higher taxes for the rich (because it is owned by very wealthy people and wealthy people write its articles), but 68% of people backed the 50% top rate, and even the Tories pledged to keep it. This will include a clear majority of Daily Mail readers.

G.O.

Much as I can understand your reasoning, I think your proposed speech would be verging on electoral suicide.

“We agree with the Coalition that higher-rate taxpayers must make a contribution to deficit reduction. The Right Honourable Gentleman is right when he says that it’s only fair for those with broader shoulders to bear a greater load.

“But that is precisely why this one billion pounds should not be taken *only* from those with children. Among higher earners, these are the people who can *least* afford to lose several thousand pounds a year from their income.

A bit difficult to justify for a party elected to make cuts not raise taxes – especially when there is evidence that raising the top rate tax any further might reduce tax revenues.

But more importantly, you should perhaps consider the problem of being labelled a tax and spend party – which would be the immediate response of Mr Cameron – to accuse Mr Milliband of being ‘red’ to the bone, and believing taxing and spending was the answer to every problem. You might agree it is, but the electorate have not agreed with that as a policy for over thirty years.

“So will the Prime Minister now agree to replace this deeply unfair, ideological cut in child benefit with a simpler, fairer, and less bureaucratic 2 pence rise in the top rate of tax?

I think you’ll find that the reason they’ve targetted higher rate payers is that it is much simpler for them to identify who to pay benefits to – the exact same information as would raise higher taxes can. It is easy to miss the fact that there has been some thinking going on here – just because we’re used to unthoughtout measures by government does not mean that is normal.

That would spread the cost fairly among *all* top rate taxpayers, not just those with children.

“It would mean most families losing a few hundred pounds each year rather than a few thousand pounds.

“It would send out a clear message that the welfare state in this country is there for *all* its citizens, including those on higher incomes who pay for it through their taxes like everyone else.

Ah, but it does not address the key point that the state is paying rich people money they don’t need. If David Cameron can’t make political capital out of Ed Milliband basically saying the state should do that, I would be shocked. Again – tax and spend here – Mr Milliband would be advocating pointless (in most people’s eyes) spending.

“And as well as making the same £1 billion contribution to reducing the deficit, it would raise an additional £400 million pounds that would allow the Government to reverse another of its attacks on all our children – the abolition of the Child Trust Fund.”

Alas, this just plays into the same error – another benefit applied regardless of background (or, in this case, probable outcome). Whilst your speech would set out a viewpoint, it is the viewpoint of tax and spend that the Conservatives (and Liberal Democrats) linked to Labour and the economic downturn during the election, and have managed to keep linking ever since. Mr Milliband could not start by adopting a line leaving him wide open to being accused of being Gordon Brown’s natural successor and ‘red’ to the heart – that would truly be giving up the iniative to the government. Unless he wants to actually be a tax and spend socialist of course, but I doubt that’ll win elections.

Don –

“The Tories can do tax cuts for the rich if they want (particularly as the Lib Dems seem inclined to let them do what they want on economic policy). But unless they make sure that middle income voters also benefit, then these tax cuts will be very unpopular, as people who feel that they are struggling financially see other people who are richer getting help from government.”

But that just makes matters worse! It means that any downward pressure on top-rate taxes created by withdrawing benefits and services from the better-off has the knock-on effect of creating downward pressure on taxes paid by the worse-off – potentially reducing the overall tax take still further.

“But that just makes matters worse! It means that any downward pressure on top-rate taxes created by withdrawing benefits and services from the better-off has the knock-on effect of creating downward pressure on taxes paid by the worse-off”

But I don’t believe that withdrawing benefits and services from the better-off creates a downward pressure on top-rate taxes. The people at the top will complain that their taxes are too high, but they’d do that whether or not they get child benefit. The majority of middle and lower income earners think that the people at the top should get less benefits and pay more taxes. I think the Labour Party should be on the side of the majority on this one, and if the Tories want to cut taxes for their rich chums while cutting services for the rest of us, that can be the dividing line.

Watchman –

I see where you’re coming from on tax and spending, but I doubt that it has even struck most ordinary people that there’s a principled distinction between taking money away from families through the benefits system, and taking it away from them through the tax system. This *is* a tax rise in all but name as far as those on the receiving end are concerned – just a particularly crude, ill-targeted and unfair one.

On the point about raising the top rate potentially reducing revenues: as I suggested in an earlier thread, I suspect the CB cut is *more* likely to reduce revenues than a 2p tax rise. A small hike in your taxes is one thing, but facing a £2000+ bill the moment your taxable income tops £38,000ish creates massive incentives for people to keep their taxable income below that level (whether by asking for a pay cut or using some avoidance measure).

I’d be inclined to argue what’s basically the opposite position from yours – that this is a prime opportunity to demonstrate pretty much irrefutably that sometimes taxing more can be fairer to everyone, including those being taxed, than spending less.

Don –

“But I don’t believe that withdrawing benefits and services from the better-off creates a downward pressure on top-rate taxes. The people at the top will complain that their taxes are too high, but they’d do that whether or not they get child benefit”

OK – look at David Cameron’s pet project, the marriage tax break. That was always supposed to be for basic rate taxpayers.

Within hours of the announcement on CB, so widespread was the sense that the losers were owed some sort of compensation, there were hints that the marriage tax break might be extended to top-rate taxpayers.

Surely that’s a clear-cut example of ‘downward pressure on top-rate taxes’ created by withdrawing a benefit from the better-off?

35. Joshua Fenton-Glynn

DP,

I usually aggree with you on these issues but on this one I’m afraid I think we need to protect the principle of Universality.

If you’re interested please look at my views here.

http://www.labourlist.org/we-are-all-in-this-together-but-some-of-us-more-in-than-others

Josh

What would be really clever would be for Ed to find an overseas engagement which would require Clegg to take PMQs.


Reactions: Twitter, blogs
  1. Liberal Conspiracy

    How Ed Miliband could respond to child benefits fiasco http://bit.ly/afnCXe

  2. Don Paskini

    RT @libcon: How Ed Miliband could respond to child benefits fiasco http://bit.ly/afnCXe

  3. RaisingKids

    How Ed Miliband could respond to child benefits fiasco | Liberal …: If they really can do this, and do it in a w… http://bit.ly/aF2Ek7

  4. Strategy and tactics- Child benefit edition « Hopi Sen

    […] We could point to proposals to tax child benefit, or to reform it to a Tax Credit, to demonstrate that while we understood the need to reduce spending, our way of doing it would were more sensitive to family needs, more considered in our approach and less harmful to working families than George Osborne’s politically driven cuts. Sunder Katwala has suggested a number of routes, as has Dan Paskins. […]





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