Figures given in reply to a Parliamentary Question on 15 November offer a much simpler and much fairer alternative to the Government’s widely criticised plan to withdraw child benefit from higher rate taxpayers. The Chancellor of the Exchequer, George Osborne, presenting the Comprehensive Spending Review on 20 October, had said: “I simply cannot ask those earning just £15,000 or £30,000 a year to go on paying the child benefit of those earning £50,000 or £100,000 a year.” But the solution proposed by the Government is plainly unfair. Abolishing child benefit for the higher paid automatically places the whole burden of the cut on families with children. Childless taxpayers with similar incomes will not lose a penny.
Paul Flynn, the Labour MP for Newport West, therefore asked the Chancellor what increase in the higher rate of tax would be needed to cover the cost of child benefit payable to higher rate taxpayers. The answer was that the cost in 2010-11 is £2.0 billion and the higher tax rate would have to rise by “around 2 per cent” to cover this cost. All those earning £44,000 or more would pay an extra 2p on every pound of additional income, but the burden would fall equally on those with and without children. And none of it would fall on those earning £15,000 or £30,000.
Moreover, the much criticised unfairness of the Government’s proposals to families with two medium-income earners would be avoided, as would the enormous administrative complications involved in discriminating between families just above and just below the higher-rate threshold.
It’s not too late for the Government to see sense, adopt the sane solution and retain the universality of child benefit.
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Reinventing the dole: a history of the Unemployment Assistance Board 1934-40
This previously unpublished material for a book by Tony Lynes, based on official papers from the time, describes the origins and history of the Unemployment Assistance Board, the central government department which came into existence in July 1934 to administer means-tested assistance to the unemployed. The material is published in full here under a Creative Commons licence.
Our Pensions: a policy for a Labour Government, by Tony Lynes, was first published as a pamphlet in August 1996. You can read 'Our Pensions' here updated in 2001, complete with a foreword by Paul Flynn MP. Alternatively, download the whole pamphlet as a text file