Now we know. The coalition government is going to stop child benefit for any family in which one parent is a higher rate tax payer. That means that a family with one parent earning £44,000 or more will be worse off by £1.055.60 a year for their first child and £696.80 for others, (£20.30 and £13.40 respectively a week).
Because of the anomalies involved there has been much talk about 'loss of income' and the effect this will have upon the Iain Duncan Smith agenda of helping families.
Can child benefit be considered a 'loss of income'?
The Family Allowance was introduced in 1945 and was fully replaced by Child Benefit in 1979. Initially there was no allowance for the first child and it was only given to the second and subsequent children. As we know this has been amended over the years and of 15 countries studied, the UK is unique in paying a premium for the first child. Four of the countries, including the USA, do not have universal Child Benefit although the USA provides comparatively high levels of assistance to low income families. Norway, on the other hand, represents the reverse of this position with high levels of support and low levels of means-tested support.
Just over half (55%) of children eligible are first children for whom the higher benefit is paid and the government is paying benefit for 12.7 million children. (1996 figures).
The whole idea of George Osborne's new policy is to save money. Wouldn't it have been fairer to abolish the higher payment for the first child and slightly raise the payment for all children?
To exclude those who earn over £44,000 creates many anomalies as other commentators have stated today.
Let us remember Beveridge's arguments in favour of family allowances. They are just as relevant today in many ways as they were in 1945, although I'm sure Beveridge never dreamt that the UK would be paying for the children of other EU countries - most of whom have never set foot in Britain - if a parent decides to come here.
It is unreasonable to seek to guarantee a subsistence level income during periods of
unemployment or disability without also ensuring sufficient income during periods of
earning. In spite of wage increases, unemployment, disability and large families were
the main indicators of poverty, the last of these because wages do not reflect the size
of an earner’s family.
It is dangerous to allow benefit during unemployment or disability to exceed earnings
during work. The gap between income during earning and during interruption of
earning cannot be kept large for people with large families “except either by making
their benefit in unemployment and disability inadequate, or by giving allowances for
children in time of earning and non-earning alike.”
Children’s allowances can help to restore the birth rate and act as a signal of the
national interest in children. “Children’s allowances should be regarded both as a
help to parents in meeting their responsibilities, and as an acceptance of new
responsibilities by the community.”