Dear Mr Cameron…

Dear Mr Cameron

I would like to talk to you about my Child Benefit (as I still like to call it, though of course, in the very near future, it will be nothing of the kind).

You may have perspicaciously (ask Boris) guessed at some motive of self interest. You’d be quite right. From next year, our household income will decrease by £188 a month, which means that for every pound my husband earns above the threshold for higher-rate income tax, he’s taxed at approximately 70% (forgive me the lack of precision; maths really isn’t my thing. Perhaps it isn’t yours, either?)

My husband, yes. You see, I’m that should-be Tory poster-girl: the career woman who put it all on hold in order to focus on raising children and running a home while her other half does his bit supporting The Economy. Unfortunately, despite the suburban-box-home, law-abiding, high-achieving gloss, I never really was a Tory poster girl. I’m afraid to say that I doubt I ever will be. I never quibbled about paying higher-rate tax (even when I did); never resented that we were ineligible for the various credits aimed at supporting working families, because we were ok without them and I saw how much they helped those who weren’t. But this? This has me tearing off my apron, and ransacking Boden for barricades.

You will tell me that times are hard, and choices have to be made. I’ll assume that you know best, and that cutting the top rate of tax for earnings over £150k but pulling benefits from disabled people really is in all of our interests. Perhaps universal Child Benefit has to go too, and the days of means testing are here. In which case, may I make the radical suggestion that you…test means?

It’s not a fashionable cause célèbre, I know. No household with a higher-rate taxpayer is likely to be actively struggling to feed and adequately house their children. Nor, however, I would argue, is their neighbouring household, earning almost twice as much (and with two personal allowances to boot). Nor those downsizers, who live mortgage-free, with savings, but who have compromised on monthly income accordingly. Nor, indeed, those fortunate enough to have partners, families or careers flexible enough to accommodate different working patterns.

Surely “Child Benefit” should be paid according to the needs of a particular child, not according to one crude and simplistic marker? Perhaps you are actively discouraging parents who stay at home, or, to give you the benefit of the doubt, actively encouraging two-income families? Perhaps it’s a clever move to stop wage inflation – after all, who would accept promotion and payrises, only to find that the additional responsibility and workload rewards them with exactly the same take-home pay as those earning £20k less? In which case, I’m sure one of those clever people with whom you surround yourself could think of a better name for it than the misnomer “Child Benefit”.

Thank you for your time, Mr Cameron. I doubt you’ll listen, but it’s good to talk. Do you know, it’s not even the money we stand to lose which has made me so cross. It’s the reinforcement of the fact that you either don’t understand the effect of your policies, or that you don’t care. That makes me angry and frightened for those much more vulnerable than I am.

Yours sincerely

Head in Book

Postscript – 23 October

A couple of further thoughts, Mr Cameron.

We’re waiting for the letter which will, I understand, ask me to disclose my husband’s name and earnings. Luckily for me, I know what he earns, and there are none of those nasty fluctuating commissions or bonuses to worry about.

I understand the letter will suggest that I spare everyone the trouble and stop claiming. I hope, but somehow doubt, that it will point out that I will lose my NIC contributions if I do so. I will, regretfully, decline this kind offer.

So my husband, in addition to his increased higher-rate tax, will be taxed back at the exact rate of Child Benefit paid. Plus interest, if there’s a time delay? Who knows. Since we’re being taxed as a family now, I wonder if that means I can enjoy his tax advantages in terms of pension contributions or gift aid donations? No, silly me.

It’s all supposition, of course, because we still don’t know quite how it will work when it kicks in. In two months.

Not impressed, Mr Cameron. The scant consolation is that I imagine it’s causing you just as many headaches as it is us.

HiB

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4 thoughts on “Dear Mr Cameron…

  1. Thank you for this eloquently written piece, I often feel irate and angry about what goes on in government, but simply cannot put it into words.

  2. I doubt he is losing much sleep over it, thought admittedly it is not the most elegant piece of policy making. I am in the same boat (a SAHM with a husband earning (not that much) above the threshold), and it easy to get carried away basking in the “unfairness” of it all. However, the taxation and benefit system is riddled with anomalies such as this, so don’t feel too persecuted. Also, it may comfort you to consider that if we were to return to work and inevitably use a large chunk of those earnings to purchase childcare, we would be thrown way above the income threshold for CB anyway… and at least we don’t need to pay tax on the money we haven’t earnt :).

    1. Oh, the sleepless nights were a figure of speech (I have a toddler who is *much* better at that than any politician could ever be…

      It really isn’t the money I mind, so much as the blatant cynicism of gesture politics, which ends up with something unfair and an administrative nightmare. Also agree that it isn’t an isolated example of an anomaly in our labyrinthine tax system.

      I take your point about childcare, but on the other hand I do have a lot of friends who have minimal childcare costs (between school, family & flexible working) and who will keep their CB, though having much higher take home pay than we do.

  3. This is a wonderful post. I’d like to add a summary of my concerns about this and the broader issues encapsulated in it.

    1. Obviously the proposed implementation of the Child Benefit cuts are unfair, as you and others have already stated. That one family, with one person earning £60,000 loses all of the benefit while another family bringing in (together) £98,000 keeps the lot is by definition unfair. While I understand (sort of) the need to draw a line somewhere, what irritates me the most is the politicians claiming it to be “fair” when it clearly is not.

    2. There’s often mention of child benefit being taken away from the top 15% of families. As a comment in this post (http://www.moneywise.co.uk/work-wages/salary-benefits/child-benefit-the-next-scandal-the-making) highlights…. “If you go to the Institute of Fiscal Studies website, you’ll find a calculator that shows you where you are, income-wise, relative to the rest of the population:
    http://www.ifs.org.uk/wheredoyoufitin/
    If you’ve got 3 kids and one earner, like my family, then it’s pretty depressing:
    - An income of £50K puts you about the 45th percentile (i.e. just below average)
    - An income of £60K puts you about the 55th percentile (i.e. just below average)
    And yet, the government keep saying that this change will only affect the richest 15% of families. It won’t – it might affect the richest 15% of earners but that’s a very different thing. ”

    3. There’s the recent Child Care report from the Resolution Foundation http://www.resolutionfoundation.org/publications/counting-costs-childcare/ which appears to proposes that up to 10 hours of additional childcare be made available for £1 an hour. Should the government adopt this approach, it’s in danger of sending the message that stay-at-home-parents are less desirable in society than working parents (mums usually). it also appears that the cost of implementing this sort of proposal is roughly the same as the savings forecast from Child Benefit cuts.

    4. There’s some confusion as to whether (and in what circumstances) failing to accept ‘Child Benefit’ and pay it back through self assessment will impact state pension contributions. Here’s the HMRC site, titled (amusingly enough) “How claiming Child Benefit can protect your State Pension” http://www.hmrc.gov.uk/childbenefit/start/claiming/protect-pension.htm

    5. The political approach seems to be one of pitching one group of people against another. In this case people with no children and those with partners earning under £50k against others. We saw this with student tuition fees too. One possible conclusion of such thinking is arguably most evident on the other side of the Atlantic and can lead to the sort of thinking that suggests “everyone has the same opportunity in life” (they do not) and “why should I pay for X”. A recent Radio 4 show, The Public Philosopher, does a nice job of showing where pitching one group of people against another could end up. You can listen again at this link http://www.bbc.co.uk/programmes/b01nl6h6 . i.e. People should have healthcare choices (I assume, that means no choices for the poorest). However you slice it, while the government mantra is “we’re all in it together”, it appears to be putting person against person in an ugly way. I’m sure most people affected by Child Benefit cuts would be happier with them if they were implemented fairly, but since they’re not implemented fairly, the government approach appears to be one of making those affected appear greedy; A socially unacceptable stance, however, also largely inaccurate and completely missing the point.

    6. Child Benefit cuts penalizes PAYE earners the most. Contractors and other company owners can simply pay themselves less or distribute their income. Such, legal, tax avoidance (or tax planning) approaches are left untouched. So it is not those with the “broadest shoulders” bearing the burden, it is “those who are easiest to catch” who are bearing the burden. It’s easy to catch PAYE earners, students (in the case of tuition fees) and people claiming disability benefit; it is not easy (given the current system) to prevent “tax avoidance”. So the playing field is not level to begin with and we are certainly not “all in it together”.

    The implications of this policy and the appearance of the “Why should I pay for X”/”Why should X get Y” style thinking in society doesn’t not bode well at all.

    Finally, for the record, I can appreciate and support that benefits should be withdrawn from those who need it the least, but that is not happening with these cuts (see point 6 above). The sad thing is that the issues on this page are not being discussed. If anyone attempts to bring them up, they’re met with being labeled ‘greedy’ or a barrage of rhetoric. Since those affected as a minority, who really cares?

    Where does this end though?

    Cheers
    S

    PS. I’m happy to be set straight on any of the points raised, especially if points are supported with data. Through discussion, I hope to educate myself better, but these are some thoughts based on what I’ve read and observed thus far.

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