The folly of means-tested (child) benefit

Reports are that child benefits ‘for the rich’ are firmly in the sights on the new British coalition government as it seeks to tackle the huge deficit in public finances. And what could be wrong with not giving money to people who do not need it?

Applying this logic why do ‘the rich’ (usually meaning anyone earning 50% or more than whoever is speaking) have access to state schools and the National Health Service? Why do local councils collect their rubbish and light their streets? Why do ‘the rich’ benefit from improved roads and public transport?

And, to move the debate obviously to FTM ground, why do the rich have access to tax-payer subsidised nurseries and other non-parental childcare? To press the point home, tax-payer subsidy for non-parental childcare gives money only to people who have jobs – unlike child benefit, which is truly universal. This sounds a lot like a subsidy for only the rich.

Ah, perhaps child benefit is in the political cross-hairs since it is easy to target, unlike all the benefits mentioned above. But means-tested benefits suffer from unintended consequences.

I was talking recently with a friend whose politics are left of centre. She was telling me about her niece who is only £5 a week better off by working. Her niece earns, in effect, less than 20p an hour. And that is where means-tested benefits lead: a huge poverty trap that is very difficult to escape. It is well-intentioned but foolish and the calls to means-test child benefit are similar.

Advice to the new government: abolish all tax-payer funding of non-parental childcare. Soften the blow by increasing child benefit by a proportion of the money saved. Result: government spending is reduced; people have more choice in the childcare for their children; and the poverty trap is weakened.

3 Responses to “The folly of means-tested (child) benefit”

  1. Anna Lines Says:

    That the taxing of Child Benefit would be a foolish thing to do is right, but not quite because of the reasons given above. A lot people are simply not old enough to remember that this benefit is effectively a linear descendant of the old Child Tax Alllowance. This allowance was age related and could be claimed by every working parent in respect of each child. At one time it amounted to as much as 107% of the then applicable Personal Allowance in respect of 17 and 18 yer olds who had stayed on at school.

    For all kinds of ideological reasons and smoke and mirror games played with the electorate it was phased out in the mid-seventies and plenty of politically naive mothers gratefully collected their fistful of fivers from the Post Office. And soon after that there were economic strictures and voices went up saying that “the rich did not need it” and quite a few added: “and the poor spend it in booze and fags”. It was soon to be frozen for a number of years. And this showed how vulnerable this neutral tax allowance had become once it was converted into a benefit.

    And here’s another government raising the same arguments yet again.
    Why not remove this altogether and reinstate the Child Tax Allowance (for those who earn enough for their incomes to absorb it)? Let’s see the family as a production unit that grows children for our future use.
    Like every business, it incurs inevitable costs, including the wage of a business manger (i.e. the mother at home!). Why not set them off against tax? Ok, some businesses are more profitable and successful than others, but the same kind of expenditure may be claimed by all.

  2. despairing mum Says:

    If Child Benefit is scrapped or means tested then lots of mothers will feel enormous pressure to return to work to make up the difference. Children will lose out on parental care. There will be even less option/choice/freedom for mum or dad to stay at home for a period of time to do the ‘caring’/nurturing/loving. Call this fair? I don’t think so. Certainly not fair on the little ones who will be shipped off to the taxpayer subsidised nursery down the road…..(and by the way the childcare industry is hugely expensive – how can we justify that as a nation? ). As far as I’m aware mothers don’t want to leave their children – younger mothers are now re-evaluating whether there’s common sense in leaving their children for other people to enjoy the first step, the first word, the first conversation ……..Is this what the Conservatives wanted? Do they really want more stranger care and less family time as parents feel more and more pressurized to return to work to make ends meet? I thought we were returning to family values, stronger families, better support for families and a better understanding of the time spent by parents (usually mothers) raising the next generation?

  3. Angela Says:

    I believe the roots of child benefit payment lie with Eleanor Rathbone who aimed to achieve “endowment of motherhood.” She was behind the introduction of the Family Allowances Bill in 1946 which was backed by all parties. We must not give in to despair – if we are to be effective in remaking the country and the world we need to retain our faith in politics. I recommend the book “Eleanor Rathbone and The Politics of Conscience” by Susan Pederson – in particular the chapter headed “Must Mothers be Poor?” But what to do now that the votes have been cast?

    The first contribotor remarks:”tax-payer subsidy for non-parental childcare gives money only to people who have jobs”
    Duh?! This is exactly why they do it (the aim is to get more people into jobs, not to “support the family”.) The government DIDN’T CARE, DOESN’T CARE! I can’t see the new coalition government dropping this. And I gather from my son (I don’t bother following the news myself any more, it’s too depressing) that the LibDems have just agreed not to obstruct the Conservative proposal to spend millions on Trident missiles….. These “surprises” don’t surprise me at all (am I getting old and cynical?) although I suppose I am shocked by the unseemly haste. It is like the discussion on this website about the “marriage benefit” – it is the government’s AIM which is questionable, and to me the aim of every party seems to be the same – based on economic rationale above all else, and until those fundamental aims change I can’t see any policy changes for the benefit of humankind, only policy changes which benefit the economy (speaking short term of course.)
    So how can we possibly expect them NOT to target child benefit? Sigh. Is the problem with your friend’s niece’s job that the level of benefit is too high or that the wages of the job are too low? I still feel that a “left of centre” approach is a “kinder” one, but maybe if the policies took more account of the true nature of people (selfish!) and legislated for proper remuneration for a job well done (including parenting, of course – putting mothers on the national payroll was muted early in the 20th century!) instead of compensation for not getting a job (or being robbed, or discriminated against, or having a poorer background, or not being able to afford what other people can afford….. I could go on, and on, and on….) then the policies developed by a socialist government might have been more successful. As it was, I am the first to agree that they left a legislative mess. Next on my reading list is Oliver James’ “The Selfish Capitalist”… I hope he has some concrete suggestions!

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