Sour Grapes?

So, it’s nearly midnight and I can’t sleep. Levity aside, I know I should stop thinking about child benefit, but the sad truth is that I can’t.

Saying it till I’m blue in the face doesn’t matter, I know, but it really isn’t the money. If universal benefits are to be means tested, I can live with that. I can see lots of arguments in favour of retaining universal Child Benefit, and wanting to keep that not insignificant part of our family’s income is of course one of them, but I can also see why it rankles and why, perhaps, a line should be drawn.

I can’t get my head around the sheer unfairness of it, though. Nor can I stop myself being so upset by the blatant schadenfreude and apparent unwillingness to accept how nasty and inequitable this policy is.

Maths really isn’t my thing, but I did some small calculations.

Imagine Family A. They have one income of £60,000. Of that, £8,105 is tax free. After income tax and NI contributions, their net take home pay is £41,556.

Now take Family B. Their income is also £60,000, but they each (handily) earn £30,000. They have a combined personal allowance of £16,210 and pay no higher rate tax. If they have two children, they will get an additional £1752.40 Child Benefit. Their disposable income is £47,528.

Two households earning exactly the same. The first, which already pays more in tax, loses the benefit. The difference is £5972.

Childcare? Family A may be a single parent with preschool children and no family nearby. Family B may work part time, or have granny living next door. Outgoings? Family A might be struggling to pay London rents, whereas Family B may be living mortgage free. Of course, the reverse might be true, but if we’re introducing means testing for Child Benefit – would it not make more sense to look at the family’s means as a whole and implement decisions fairly?

None of these figures apply directly to my family. I don’t feel inclined to set out my own particular circumstances, because frankly they are irrelevant. This is about principles, not stories or even figures. Yes, £60k is a huge amount to some. But do we really want to smirk as means-testing is brought in which pays benefits to those wealthier by far than those who are ineligible?

There is much more at stake here than yummy mummies losing the wherewithal to fund their latte habits, and those who should know better have failed to hold the government to account, dismissing the chaos as technicalities or minor hiccups. Imagine if there was a proposal to half someone’s personal allowance based on their partner’s earning above a certain threshold? Or removal of state pension from couples where one person’s occupational pension is deemed too high? In both cases, those affected could doubtless “afford” to lose the money, I can’t see it happening, somehow, though.

If someone can look at those figures above (remembering that each adult in Family B could earn an additional £29,999 and still keep some of their Child Benefit) and then honestly maintain that I’m upset purely because I’m a rich ninny, a fiscal nimby, an entitled mummy or any other of the choice terms I’ve seen used – well, actually I’m sure plenty would, and that’s the saddest thing.

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One thought on “Sour Grapes?

  1. I recently wrote this to my MP, I suggest that readers of this blog do the same

    With regards to child benefit, please could you explain or help seek answers to the following questions.

    1) Why are the cuts in child benefit described as fair[1], when they affect a family with one earner, earning over £50,000 while a family with two earners earning £49,000 are unaffected? 
     

    2) Why are the cuts said to affect the top 15% of families[2] when this, according to the Institute of Fiscal Studies[3] is simply not true.  After tax, a single earner with an adjusted net income of £60,000 (approx £3,464.89  per month) and with a hypothetical monthly council tax of £100 would fit into the income distribution as follows:
    a) With no partner or children, is in the 95th percentile.

    b) With partner, but no children, is in the 86th percentile.

    c) With 1 child (0-13) and an unemployed partner, is in the 77th percentile.  For comparison, a household with two adults on £49,000 would place in the 95th percentile yet still receive child benefit (See point 1 above).

    d) With 3 children (0-13) and an unemployed partner, is in the 68th percentile.
    With 3 children (0-13) and an unemployed partner, is in the 58th percentile.

    Clearly the oft quoted 15% figure is misleading in the context of households. 

    3) Little has been stated about the impact to state pensions with regards to National Insurance contributions should a mother opt out of child benefit, yet this could have serious consequences at retirement. When will this be addressed or highlighted in documented HMRC guidance?
     

    4) Planning to introduce child care allowances[4]  for mothers who wish to work, while not providing care allowances for ‘stay and home’ mothers with a partner earning in excess of £50,000 seems to suggest that as a society, we value mothers in the workplace more than we do mothers raising their own children. If this is not the case, what is planned to help stay-at-home mothers impacted by these cuts?
     

    The argument that means testing is too costly appears shaky when considering the numbers who will move to self-assessment or offset the loss in child benefit with additional contributions to pensions.  I will therefore be surprised if these cuts raise the £2bn headline figure and question the value in pushing ahead with these cuts while not tackling tax evasion and extreme versions of tax avoidance.

     

    Many thanks for your time and consideration in addressing my questions.

     

     

    Bob

     

    [1] E.g. http://www.bbc.co.uk/news/uk-politics-11473609

    [2] http://www.bbc.co.uk/news/uk-20119514

    [3] http://www.ifs.org.uk/wheredoyoufitin/

    [4] http://www.telegraph.co.uk/news/9654710/Clegg-plans-to-subsidise-nightmare-costs-of-child-care.html

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