Wednesday, 6 October 2010

Left and Right get self rightous about protecting the rich

At the Conservative party conference we saw two major announcements on benefit reforms to help cut the welfare bill in preparation for the new benefit reforms which will bring in a new universal credit but which will probably prove more expensive.

On the one hand we had a cap on benefits at £26,000 (except for disability grants) and the other issue is that we have a stop on child benefits for people paying the higher rate of tax. The first restriction could have an effect on benefit claimants in many expensive areas, such as central London. The second affects the rich. Yes you are rich if you earn over £44,000. There is no shame in saying it. The average household income in the UK is £22,800 (£19127 in the North east) and only 15% earn above the 40% rate.

Opinion polls show both policies are about as popular as benefits cuts can be, with the Sun poll showing approval ratings of  86% and 86% respectively. So which cut are Labour and Conservative politicans and press going apocolyptic about? The cut for rich people. The idea that higher tax payers should recieve benefits (unless they are on benefits) strikes me as absurd. Both Guardianistas and Torygraph readers are going beserk about it. This country is about protecting the priviledge of the better off. It is clear from the reaction to this that both the Left and the Right share this preoccupation. They want a welfare state that covers everyone, rather than one that gives targetted benefits to the poor and needy. Benefits should be a safety net not a free for all.


  1. Agreed that the rich shouldn't get benefits. But isn't the problem the arbitrary way these child benefit proposals will be applied?

    Or should I take it you are fully in support of households with an income of £86,000 qualifying for child benefit?

  2. Dave - it's an interesting question you raise. If you have a cut off point on child benefit there will always be unfairness at the margins.

    We could have a family income level instead, say £65k, but it could be argued that this would be unfair on families with two working parents and would discourage work, they could point to higher childcare costs as a a result of both working.

    The only other thing I could suggest is a taper but this would become expensive to administrate and become something people could be caught out by.

    I think we need to reciognise that with any tax or benefit change there will be losers and winners.

    It probably isn't fair that a household with an £86K income should get it but that doesn't mean it is right that a parent with an income above £44k should. Two wrongs don't make a right.

    People in power have to strike the right balance between making a decision that makes meaningful savings and is generally progressive. Added to that it has to be easy to understand. A criticism of many of the last governments tax crdits is that you had to have a phd to make sure you were not being under or over paid.

  3. Hi Neil.

    "It probably isn't fair that a household with an £86K income should get it but that doesn't mean it is right that a parent with an income above £44k should. Two wrongs don't make a right."

    Good luck with that line on the doorstep...

  4. Good luck with defending how your party got us into the mess in the first place. And if Labour are going to attack us for backing reducing Child Benefit for the rich then I look forward to hearing their plans for deficit reduction .