I knew Osborne was an idiot, but…

Yesterday I saw the news about the Child Benefit changes and thought of an instant reaction. However, I decided to leave it a bit and think about it before posting.

In the meantime, of course, the middle classes are in outcry (strangely it’s overshadowed the £500 pw maximum for all benefits), and the Mail and Telegraph have followed their readers in outrage.

So the Tories have added insult to injury and restated their intention to have transferable allowances for married couples, with the implicit idea that it would be extended to balance out the Child Benefit changes. Which is itself also a clumsy idea and isn’t immediately clearly fair.

Basically, single parents on over £44,000 will lose out the most. Married childless couples where one earns loads and the other doesn’t work at all will gain the most. In between will be all sorts of situations where whether you gain or lose will depend less on household income and more on how close you are to the ‘traditional family’ ideal.

The oddest thing is that Child Benefit will still be being paid to the same people as before. All that will happen is that people above and around the threshold for the 40% Income Tax band will have their PAYE code altered in all sorts of ways to claw the money back. And as we saw last month, HMRC doesn’t have any problems with the PAYE system.

Oh. Well, apart from all the problems they have with the PAYE system resulting in loads of over- and under- payments going back years.

I thought that the removal of the 10% band by Gordon Brown in his 2007 budget was cack-handed, but this is ridiculous.

Posted in Politics. Tags: , , , . 5 Comments »

5 Responses to “I knew Osborne was an idiot, but…”

  1. mrswormwood Says:

    As a single parent (admittedly earning less than £44K) I honestly think it’s not that bad an idea. I mean, DC keeps saying that we’ve all got to make sacrifices and this is one sacrifice that will only effect the well paid. Which is something I’d never thought this government would implement.
    (it’s true you get more right wing when you have kids apparently).

  2. Danivon Says:

    Yes, but it only affects some of the well paid – those with children. I’m not sure that’s particularly ‘fair’ to be honest. A more fair approach would be to increase tax on the higher earners. Or to reduce the threshold for the 40% band.

    And the universality of the benefit is a pretty solid principle. We don’t check the income level of people when they use the NHS, or send their kids to the local school, or borrow a book from the library do we? But rich people can afford private healthcare and education and could go to Waterstones.

    Why not?

    Well it’s part of the overall package deal for the country – everyone pays tax, the rich pay more. Everyone gets some things regardless of income. The poor get targeted welfare. Strip away some of that, or ask people to pay twice for it, and you undermine the principle. Then certain things become ‘for the poor’, and despised by the better off.

    Beware the slippery slope.

  3. mrswormwood Says:

    Slippery slope yes, which is why I’m glad that they are doing on higher rate tax rather than household income. They could say if the household income is more than say £60K, then that would slowly get reduced (either by changing the number or inflation) until it would only be the poor.

    My income is less than £44K and I’m a single parent, so that is my household income too. I would in no way describe myself as poor…….

  4. Danivon Says:

    I would in no way describe myself as poor

    So, fancy having Child Benefit taken from you on that basis?

    The point of the slippery slope is that they start with what you think are reasonable measures and then slowly ratchet them up. It’s not just Child Benefit that is a universal provision, for a start. And once they split everything into some kind of means tested benefit, then it’s easier to remove it completely because many (the richer, and so more vocal and influential) will already not have it and will resent paying taxes for others to.

    Besides which, it’s unnecessary – it’s about 1% of what they want to cut, it won’t happen for 2 and a half years, and they could more easily have raised the same amount from taxation on the rich, or through the banking levy.

    That is if you accept the argument that there’s a drastic need to cut the deficit so quickly that it harms the economic recovery. I don’t.

  5. mrswormwood Says:

    I agree with your last point. I don’t see how making people unemployed is going to help economic recovery.

    My point was they are not taking it away from me, even though I am not poor.

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