Child Benefit

So the Coalition Government has made its first big mistake, and it’s a pretty big one. The problem with axing Child Benefit for higher rate taxpayers isn’t the idea itself, but the planned execution. Whose idea was it to let households bringing in 2 incomes of £43k to keep the benefit, but households with a single income of £44k lose it? It seems ludicrous, and more importantly, unfair.

Why wasn’t it explained yesterday that the theory behind this is that it’s simpler and more cost-effective to administrate a system based on straight higher rate incomes than the cost of means-testing joint incomes? Revealing this today just seems like damage control, and the way that the idea of the Married Couples’ Tax Allowance was quickly rushed out again to compensate, shows the Tories’ shell-shock at the reaction to the Child Benefit announcement. That MCTA, by the way, would itself cost a fortune to administrate, almost wiping out the money saved in Child Benefit. The whole thing’s a complete clusterfuck.

Given that this is only the first cut, and such a pig’s ear has been made of it, God only knows what’s going to happen after the results of the Comprehensive Spending Review are announced in a couple of weeks. With the unions spoiling for a fight (it was beyond illuminating how union leaders sat there stony-faced in the Labour Party Conference last week when the new Leader of the Opposition, Ed Miliband, said no one should support “irresponsible strikes”. One of the union bods even shouted, “Rubbish!” Rubbish to not support irresponsible strikes? Very revealing indeed…), are the Tories going to hold their nerve when they can’t even hold the line on this opening gambit?

What’s silly is that despite the apparent unfairness the Coalition could have got away with it. A poll in tomorrow’s Sun newspaper shows that the measure actually has a large amount of support in the country – in fact, the result almost exactly reflects the balance between the percentage of people who pay higher rate tax and those who don’t (15% for the former, 85% the latter).

But more than that, the argument could be made that Child Benefit is an anachronism that has no place for better-off people in this so-called age of austerity. It’s hardly as if children aren’t supported. Free state education, hugely subsidised by childless couples as well as those with children. Free healthcare over and above what adults get. This adds up to many thousands of pounds per year for every child in this country, but because it isn’t cold, hard cash transferred into a mother’s bank account, it doesn’t seem to get talked about.

So my problems with the policy of getting rid of Child Benefit are merely with the presentation and the silly anamolies. It doesn’t seem to have been thought through particularly well (though there’s easily enough time to sort the quirks out – maybe there could be some kind of exception for single income families up to a higher threshold, for example), but the fact that that the Coalition is already flip-flopping over this one announcement doesn’t bode well for the likely dire cuts in a fortnight’s time.

The Government has a lot of thinking to do before then, as this kind of PR disaster can’t happen again.

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