Child benefit cuts exposed as unworkable


1:09 pm - October 28th 2010

by Sunny Hundal    


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Iain Martin at the WSJ reveals that the Treasury never really thought through the cuts to child benefit.

And now, the department is desperately running around trying to figure out the best way to either withdraw the plan or make it work as intended (which is unlikely).

So, what seems to be the problem?

Child benefit is generally paid to the mother. She is under no legal obligation to tell the father that she receives it. The Treasury confirms this. It is her benefit. The father’s tax status is irrelevant. If a mother claims it there is nothing forcing her to flag up to the taxman that her husband earns above the level that Osborne stipulates should mean no child benefit.

In other words – it will become extremely hard for anyone enforcing the cut to figure out who is eligible and who isn’t, because they don’t know what the household earns.

They might be able to withdraw it from women who earn more than £44,000, but that’s about it.

I hear that ministers are considering (and tell me which part of the rest of this sentence might provide cause for concern) “a new government database” to try and match up mothers with their partners.

Well that will really go down well won’t it? And if women don’t disclose what is being earnt, will they be arrested en-masse?

I can see the Daily Telegraph and Mumsnet headlines already.

This is what happens when you make policy to try and out-manoeuvre your opponents rather than thinking it through first.

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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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Reader comments


So they are going to either resort to snooping, or punishing women for being successful to make it work. Glad I don’t have to try justifying that cut.

Genius

3. katie Palfreman

Surely introducing a data base to sort this mess out will cost a fortune? If they had stuck with their original plan of withdrawing when a child reaches 16 years, it would have saved as much money, been simpler to administer, less open to fraud and tax evaders, and avoided the awful dual income anomaly ? I am also positive that there would have been minimal objections from the stay at home mums.

I am amazed that your article has not attracted more comments and replies. The gross unfairness of this cut to single income families and of course those who are unable to minimise their tax contributions due to being P.A.Y.E has astounded me. I have also being horrified by the government’s P.R machine which has villified so called middle class mothers wth household incomes of just over £44000 a year calling them whinging and greedy yummy mummies. Yet households with incomes of £60000 are laughing all the way to the bank and of course not greedy and whinging. I wonder if any other section of society would of been subjected to such abuse ?
I also wonder why we will still continue to pay child benefit to children who don’t live in Britain, how is the government going to check upon their families tax status and whether they should still be paid the benefit? I doubt they will even bother,claiming it is too difficult to administer.
Please post your article more widely, perhaps on mumsnet to try and reopen this debate and get this benefit tcut that has to be made, implemented more fairly

Heh. Good work boys.

Option 2 looks like the winner – “the economic recovery has been such that…”

There should be a rule that polciies announced at conference will never be implemented. Cf Gulags for slags.

katie – well said,

altho, i don’t think they should be going after child benefit at all (i’m childless myself so it isn’t about my personal interest, and i don’t earn anywhere near £44000!) when vodafone et al don’t pay their taxes.

“This is what happens when you make policy to try and out-manoeuvre your opponents rather than thinking it through first.”

Not that Labour ever used to do that, of course…

7. Gaf the Horse

“Not that Labour ever used to do that, of course…”

Surely we should judge each government on its own merits, not simply resort to childish “but he did it first” outbursts.

If Osbourne had thought this through, and either suggested implementing it based on household income or removing it from the over 16s then it wouldn’t have stopped people complaining, but because there wouldn’t be such an obvious anomaly around household income it would have given these complaints less validity.

Of course there are other problems with it. I’m a higher rate taxpayer, my wife works part-time, our joint income is about £65k. We have two kids so stand to lose about £1750. I have no complaints here as long as this this £1750 goes to people who really need it, (I doubt it will in this case). However a couple with a joint income of £45K if the woman doesn’t work, £100K, £1M, £10M, £1B with two kids all stand to lose exactly the same amount. That doesn’t really seem like spreading the pain does it?

8. margin4error

I’m with CJCJC on this one.

Utter genius.

There really are aspects of politics right now that defy satire.

@8

oooh let me be the first to say “Nadine Dorries MP” 🙂

Agree with Tim J – obviously deliberate.

The announcement has served its purpose – it helped create the (factually incorrect) ‘sharing the pain’ narrative around the SR measures and it drew Labour into protecting middle-class benefits and look irresponsible and dodging tough decisions, and now Osborne can cave-in to “popular demand” and retain the benefit after all.

PR genius from the spinmeisters – this administrations media management is impressing me a lot. Shame their class war policies are so bad for most people in the country.

“PR genius from the spinmeisters”

Given the sheer number of policies that this government – in only a few months – has announced and then when questioned on them not being able to come up with a coherent line between different Ministers on questions such as:
– what is the policy?
– who will it apply to?
– how will it work?
I find it difficult to credit “PR competence” rather than “ministerial incompetence” in this particular case.

Another thought, if they are now considering introducing a data base to track everyones tax status, then the anomaly of the dual income family should be easy to deal with and maybe the tax liability of those are are lucky enough not to be P.A.Y.E, and who under the current proposals to cut child benefit will still continue to receive it. Could this new data base also track if all these child benefit payments to children not residing in the U.K be also checked as genuine?

13. margin4error

Well played Mr S. Pill

Sevillista

Thing is – something like that can be done quite well as a rarity – and usually without significant fanfare. (small comment on the idea in a sofa interview or placed article – not major national speech)

If it is too high profile it only has to happen a couple of other times and the narrative of incompetence starts to undo any good that came from the individual stunt.

Surely we don’t need “another” database. We just need to modify the existing ones to be able to link family members to come up with a joint tax status. Of course this seems a retrograde step but a similar question is asked to people claiming a married allowance on the tax return as far as I remember.

As an aside just because your on PAYE does not mean you don’t have to fill in a tax return. The system is to complicated, if everyone contacted HMRC to fill in a tax return the system would have to be simplified as it obviously does not work!

“In other words – it will become extremely hard for anyone enforcing the cut to figure out who is eligible and who isn’t, because they don’t know what the household earns.”

Really? As you say they can work out if the mother is being taxed at a higher rate. I think father’s the wrong word to use, but they can ask the mother’s partner if they’re living in a household which includes a child on his tax return and match responses against the list of kids registered for child benefit.

16. Andrew Wilson

Classic, and they claimed this policy was thought through and not just rushed in!

17. margin4error

Oldergit

Thing is – if they do that why link it to the higher rate of tax? Why not then add up the income of the spouse’s incomes and stop payments to those earning over £50k combined?

After all – the only justification for the existing system is that it requires little new admin. If it needs new admin when why not have a sensible system?

Granted that will mean teachers and firemen losing out – but that’s the long term plan anyway. Stop it being universal and then gradually increase the definition of who “doesn’t need” state charity.

Oh well, news today is that they are going to fine any high tax rate payer who doesn’t declare this with regard to child benefit. How they will police this for the self employed and those with children who are non resident in the U.K, I don’t know? I guess it will be the poor old mugs who have tax deducted at source who lose out and pay for it all.

Most 40% tax payers are happy for child benefit to go to people who really need it.
Those with a joint income of £60 000 + are less deserving then those with a single household earner of £45 000 or those who are self employed and just splitting the income between the earner and their partner and hence still able to claim child benefit.

I just cannot understand why the government will not recognise this and admit the implementation of the proposals need looking at again, rather than resorting to threats of fines.

19. margin4error

Katie

So why not fine those who don’t declare that their joing income is £50k or £60?

Same system – fairer – no more costly –

How could the tories object?

I don’t have children, so maybe this is dense, but can someone explain the reasoning behind the idea of cutting child benefit for 16-18 year olds? Surely they eat more and grow out of shoes more than younger children. I thought the trend was to keep 16-18s in school and studying as much as possible, because there weren’t many jobs for kids.

(I’m not being snide, but I really find it odd to postulate taking money from the largest and hungriest children 😀 )

21. Shatterface

Once a ‘child’ hits 16 they are adults so they should be the recipients of benefits themselves, not their parents, just as they would be if they were unemployed.

16 year olds in full time education should not be expected to ask their parents for pocket money: it’s infantilising and demeaning.

22. margin4error

Shatterface

As some one who went out and got a job at 15 I half agree with you. But if some sort of state support can prevent kids from feeling pressure to work night shifts (illegally) while they shoulld be concentrating on A-Levels that would be progressive and of benefit to our country as a whole as less talent would be squandered.

I’m very much against these cuts because they are so unfair and as it turns out not quite as easy to implement as the government made out. It’s irritating that the governement is ‘sticking to it’s guns’ when all the logical and justification is falling to bits (yes hoping for option 2.)
Oh and beware…from april next year the 40% HRT tax bracket will start from £42,375 which will put approximately 800,000 more tax payers in the HRT bracket!
http://www.ipetitions.com/petition/unfair-childbenefit-cuts/

@21

Which is why it’s a shame the gvmt is cutting (abolishing I think) the EMA (educational maintenence allowance) A few of my younger friends – and Bridget Phillipson MP – who received it say it was a godsend.

25. Georgina Bowman

I thought this article was great. I was on Jeremy Vine show, the Tuesday after the announcement of the cut. I am a stay at home mum and not happy. I’ve set up a facebook Group ‘March through London against -‘Fairness of Child Benefit cuts’. I can only organise a March once I’ve got more support on my facebook Group – so come on join it!!!


Reactions: Twitter, blogs
  1. Liberal Conspiracy

    How child benefit cuts could blow up in Osborne's face http://bit.ly/cnp12c

  2. Denny

    RT @libcon: How child benefit cuts could blow up in Osborne's face http://bit.ly/cnp12c

  3. Graham Jeffery

    RT @libcon: How child benefit cuts could blow up in Osborne's face http://bit.ly/cnp12c

  4. Anni Cox-Hynd

    Child benefit cuts unenforcable http://bit.ly/98uecA

  5. Aegir Hallmundur

    Whoops, glorious, whoops! RT @libcon: How child benefit cuts could blow up in Osborne's face http://bit.ly/cnp12c

  6. CathElliott

    Hate to say I told you so, but….RT @libcon: How child benefit cuts could blow up in Osborne's face http://bit.ly/cnp12c

  7. jon heslop

    Whoops, glorious, whoops! RT @libcon: How child benefit cuts could blow up in Osborne's face http://bit.ly/cnp12c (via @aegirthor)

  8. Ilya Romaine

    RT @jonheslop: Whoops, glorious, whoops! RT @libcon: How child benefit cuts could blow up in Osborne's face http://bit.ly/cnp12c (via @a …

  9. Alun Jones

    RT @jonheslop: Whoops, glorious, whoops! RT @libcon: How child benefit cuts could blow up in Osborne's face http://bit.ly/cnp12c (via @a …

  10. John West

    RT @CathElliott: Hate to say I told you so, but….RT @libcon: How child benefit cuts could blow up in Osborne's face http://bit.ly/cnp12c

  11. Neil MacLeod

    RT @jonheslop: Whoops, glorious, whoops! RT @libcon: How child benefit cuts could blow up in Osborne's face http://bit.ly/cnp12c (via @a …

  12. Martin Ballantine

    Genius news. RT @jonheslop: Whoops! RT @libcon: How child benefit cuts could blow up in Osborne's face http://bit.ly/cnp12c (via @aegirthor)

  13. sianushka

    ha! http://liberalconspiracy.org/2010/10/28/how-child-benefit-cuts-could-blow-up-in-osbornes-face/

  14. Will Stevens

    RT @CathElliott: Hate to say I told you so, but….RT @libcon: How child benefit cuts could blow up in Osborne's face http://bit.ly/cnp12c

  15. feminister

    RT @sianushka: ha! http://liberalconspiracy.org/2010/10/28/how-child-benefit-cuts-could-blow-up-in-osbornes-face/

  16. Sam Cleary

    RT @libcon: How child benefit cuts could blow up in Osborne's face http://bit.ly/cnp12c

  17. Andrew Ducker

    Child benefit cuts exposed as unworkable http://bit.ly/bjIgql

  18. Pete Stuart

    RT @jonheslop RT @libcon: How child benefit cuts could blow up in Osborne's face http://bit.ly/cnp12c /via @aegirthor

  19. Pucci Dellanno

    RT @libcon: How child benefit cuts could blow up in Osborne's face http://bit.ly/cnp12c

  20. John Ruddy

    Child benefit cuts exposed as unworkable http://t.co/51vDZUg





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