Tag Archives: Child Benefit

Nick’s Fag Packets & Their Role in Your Future

There’s a reason why Nick Clegg has admitted to his smoking habit. It’s because littered throughout Whitehall are packets of Lambert & Butler with the government’s policies scratched on the back and someone was getting suspicious. Admittedly, they are piling up in the Department for Work and Pensions in particular, but turn a corner and you are just as likely to find them scattered in the Justice Department, the Home Office, the Defence Department and all around Michael Gove’s desk in education.

Let’s take a few examples found recently:

Discovered at the Tory Party Conference: “Cut Child Benefit for rich – ANNOUNCE FAST!!!”

Dropped outside IDS’s front door: “Housing Benefit – Check D. Mail for facts about claimants”

And standing to attention at the Defence Department – “NO PLANES!! Speak to Sarko (nb strikes!!)”

I estimate Nick must be on at least 40 a day, the rate the badly thought-through policies are emerging from this government.

The cut in Child Benefit for richer parents sounds like a sensible idea in a time of austerity. Why should better of people receive money they don’t need? Well, I support the principle of universality because it offers everyone a stake in our welfare state and if it’s eroded, then people begin to question why they should contribute at all. However, aside from this, it’s cheap and easy to administer. If you have kids, you get the support.

The coalition’s first run at changing this wouldn’t even have required a pack of 20 to sketch out, so flimsy and rushed was the announcement. The plan was to cut CB for families where there was single higher rate tax payer in the household. The press leapt on the fact that two earners with salaries below the higher rate threshold, but with a combined income far in excess of a single earner family, would retain the benefit, whereas the other family would lose out. “It’s too complicated to do it any other way”, we were told.

Now in transpires that not only is the new system unfair and frankly, a touch ridiculous, but it’s almost certainly unenforceable. Why? Because usually the woman claims the CB, and this new approach would require her to declare if her partner was a higher rate tax payer. The benefit is not linked to the salary of the higher earner and so HMRC doesn’t know who should get it and who shouldn’t.

Never fear, Nick chained another pack and Danny Alexander (fast becoming the poster boy for promotion above one’s abilities) sketched an idea to write to everyone to ask them if the partner earns higher rate. Poor Danny, more at home among the spruces of the Cairngorms, forgot that a) people lie, b) it’s virtually impossible to force people to ask their partners to disclose information and c) people’s incomes change over time.

The only effective way to administer this is through a wholesale change in the way income tax is calculated for couples, which would undoubtedly cost much more than the cut will save. It also rather begs the question why, if you are effectively means testing the benefit anyway, you don’t take the opportunity to iron out the mad inconsistencies in the policy as it was originally devised.

So, by all means debate universality and what we can and can’t afford, but perhaps Nick can do us all a favour and take up smoking Havanas, which would at least give his bumbling colleagues a little more space to plan their announcements before they are made.

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Filed under Coalition, Economy

Coalition of the Incompetent Will Regret its Haste

Imagine the scene. Labour has just about managed to form a government with the Lib Dems, after missing the widest electoral open goal in the history of modern politics. Despite the lack of a clear mandate, the party is paranoid about missing its chance and embarks on a series of upheavals, routinely labelled “the biggest shake-up since 1945”. Building enormous, wide-ranging policy blocks on a flimsy pillar of “it’s all the last lot’s fault”, the new government launches into the following initiatives in its first five months:

1) Cancels Building Schools for the Future, a vital source of income and employment for the private construction sector. In the process of this hurried cancellation, list after list of the schools affected is issued and reissued and within weeks, protesters are marching on Westminister, led by the government’s own MPs.

2) Uses parliamentary protocols usually reserved for emergency terror legislation to rush through a dramatic centralisation of power in education. New “Free Schools” can be established with no local authority control, no requirement to co-operate with existing schools and the ability to implicitly select pupils (through religion or catchment area). So popular are these new schools, accountable only to the Education Secretary, despite being paid for by the tax payer, that the grand total of 16 are approved.

3) Embarks upon the biggest ever top-down reorganisation of the NHS, despite explicitly stating that the new government would not embark on any top-down reorganisations of the NHS. The new policy, which opens the way to a private healthcare system, was not in any manifesto, will cost over £2bn to implement, is attacked by healthcare professionals, industry experts and patients groups as risky, expensive and badly thought-out.

4) Cites Ireland as a shining example of how to tackle a deficit, with savage spending cuts praised as “brave and necessary” by the IMF. This shining light is quickly extinguished, however, when the government notices that because of the excessive austerity measures, Ireland has fallen into a double-dip recession, its deficit remains high, thousands of people are suffering and those gods of the markets, the ratings agencies (“triple A” for a junk US mortgage CDO, anyone?) have downgraded Ireland’s government bonds because of the cuts and the complete lack of growth in the economy.

5) Announces at its annual conference that in order to tackle the deficit, Child Benefit for high earners is to be scrapped. In the haste to launch this policy, no-one considers the blindingly obvious problem of the considerable unfairness of hitting higher paid single earner families with a stay at home parent, versus two working parents on a much higher combined salary.

6) Following uproar amongst its own supporters, the government desperately tries to cover its tracks on Child Benefit by announcing a tax break for married couples, thus completely destroying the argument that the benefit cut was made in order to address the deficit. People search the conference hall for the fag packet on which the policy was devised and senior ministers admit they had no idea the policy was due to be announced.

7) The new PM apologises for not including the Child Benefit cut in its manifesto, but goes ahead and does it anyway. He cites something about new politics and parades his new baby in front of the cameras in a bid to ease the pressure on him and his government.

All this comes before the new government has got round to announcing the biggest cuts in public spending in living memory, while the economy remains desperately fragile and there are five people applying for every job. They have been repeatedly leaking rumours of cuts to the press though – £4bn of cuts to welfare here, a devastation of the armed forces there.

Now imagine, if you will, the press reaction to the Labour government’s actions. The newspapers are frothing at the mouth in anger. “We didn’t vote for this coalition of the incompetent!”, they cry. “Is this the worst start to a government in history?” questions The Times editorial. Sky News is running a clock estimating how long it will be before the government is forced to go back to the country. The Lib Dems are annihilated as a party, support slipping to a historic low.

Have you spotted those headlines (apart from the last one, that one’s true)? No? Funny that, isn’t it.

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Filed under Coalition, Economy, General