High earners can afford benefit cut
On Monday, more than one million families will lose all or part of their child benefit. Many of them will have simply decided to stop claiming it in the knowledge that they have somebody in the household whose income exceeds the £60,000 level which means they are not entitled to anything.
Those with salaries between £50,000 and £60,000 are entitled to some of the benefit and will continue to claim it, with the difference being clawed back through self-assessment.
The Government has been heavily criticised over this measure.
The Institute for Fiscal Studies, an economic research institute, has highlighted some problems with the system.
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And Labour has pointed out (again) the unfairness of a situation in which a household with two earners on £50,000 gets to keep its child benefit while one with a single earner on £60,000 gets nothing.
The first thing to say is that the Government is basically right about the withdrawal of child benefit from people on higher income levels.
At a time of austerity it cannot be right to pay a benefit to people who are better-off than most and who do not need this money.
The country is saddled with a crippling budget deficit which has to be addressed and this is a significant measure – saving £1.5 billion this year.
There are inconsistencies but our understanding is that the Government has tried to find the simplest way possible of running this system so as to avoid huge administration costs.
The sliding scale of child benefit entitlement for those earning between £50,000 and £60,000 is a concession it has made in answer to earlier complaints.
To do everything the critics want would surely end up with a fully means-tested system and administrative costs so high that they might end up eclipsing the savings which are made.
This new system might need some adjustments in the future and there are certainly aspects which are of concern, but let's bear in mind that the group of earners we are talking about here can afford this cut without it causing any great hardship.
Comments
by New_Walk_View
Saturday, January 05 2013, 8:09PM
“Well said.
If there was ever any carefully researched social/cultural/economic or moral basis for paying child benefit to high-earning parents, I don't recall politicians sharing it with the electorate.
In the present economic climate it's hard to see any justification for it.”