CPAG Guest Post: Save Child Benefit

For over 100 years the British tax and benefit system has recognised the costs of raising children. Families with children, whatever their income, have higher costs than families who do not have children. Since 1977, these costs have been recognised in the tax and benefit system through universal Child Benefit (CB) payments. However this is set to change in 2013, when Child Benefit will be taxed back from families with a higher rate tax payer. While the announcements in the budget – which were widely tipped to fix the problem – were a step in the right direction, they by no means fixed the problem. In fact, they missed the point entirely.

When Child benefit payments stop being universal next year, the UK will join Italy as only the second developed country that does not recognise the costs of children in the tax and benefit system. Families with children have higher costs than those without children – regardless of the household earnings. The question of fairness should not be if a household earning £50,000 needs CB or not, it should be a question of fairness between households earning £50,000 who cover the costs of raising happy, healthy children, and those earning £50,000 who do not.

When the claw-back was announced as a back of an envelope idea at the 2010 Conservative Party Conference, George Osborne declared that any household with a higher rate tax payer would lose CB. Without any clear vision of how this might work, it was suggested that all higher tax rate payers would have the entire value of their household’s CB added to their tax bill at the end of the year. Instead, under the announcements made in the budget, families with one earner taking home over £50,000pa will have 1% of their CB taxed back for every £100 they earn. Rather than being thrown down a cliff edge, families are being pushed down a flight of steps; the tax and benefit system will still cease recognising the costs of raising children.

Children are not a private luxury, and while it might sound clichéd, they quite literally are the future of our society. Child benefit plays a crucial role, it is the means through which society contributes to a small part of the costs of raising the next generation.

On top of this unfair claw-back, CB rates have been frozen for three years, which will see their value decline by over 10 percent in real terms. This cut will hit all families, including those with incomes too low to pay tax in the first place.

The Child Poverty Action Group researched what these two changes will mean to families across the income scale. We surveyed over 350 parents who spoke about dreading these changes, and having to cut back on necessities, like food and fuel, as well as missing out on important treats, like buying birthday presents or going camping. Some parents had already planned strategies on how to stretch family budgets even further, such as going without childcare or seeing relatives, but too many simply did not know how they were going to cut back. Parents felt that payments made for children, and spent on children, were being cut to deal with the deficit. No parent thought their child should pay for the financial crisis.

But importantly, the report (accessible by clicking here or on the image above) also highlighted how crucial Child Benefit payments were for family incomes, right across the income scale. We polled 650 parents and found that CB was spent overwhelmingly on meeting children’s needs (on items such as children’s clothing) or on household needs (like bills and mortgages). As Child benefit payments shrink or are taken away in 100 tiny cuts, so too will families ability to meet these needs.

Child Benefit needs to remain universal, to recognise costs of raising children that all families with children bear. Removing it from some families in tiny cuts to pay for the deficit is faulty logic. All wealthy households, including and especially those without children, should pay their fair share – this is done through progressive taxation, not a tax on Child Benefit. Child Benefit rates also need to be restored in line with inflation. With many families finding it harder to provide for their children, it makes no sense to cut payments that are spent on children.

Rys Farthing

Child Poverty Action Group

CPAG is the leading charity campaigning for the abolition of child poverty in the UK and for a better deal for low-income families and children.

Visit the CPAG website here

Weekly Round up 23/03/2012

Apologies for missing the weekly round-up last week but time was a bit tight and basically everyone was talking about what might happen in the Budget so we thought it might be better to leave it and let everyone talk about what did happen in the budget before posting again……

News in Brief

Budget 

It’s been covered in great detail elsewhere so we won’t spend too long on the Budget here. But, JRF produced a very good briefing on what the budget meant for child poverty and IPPR looked at the impact of the budget on the North.

The Guardian asked a panel of experts, inclduing Alison Garnham, Chief Exec of CPAG. for their views and The IFS produced a good summary of the whole thing in 13 slides. The figure below is taken from the chapter on the impact on Households within the Budget document (available here), which shows that the poorest quintile of households suffered the most, with exception of the richest quintile

Regional Pay was a Budget issue that concerned people in the North East and The Journal and the Shields Gazette and the Sunderland Echo all covered this issue from a North East perspective, The Guardian suggested it could lead to regional shortages of teachers and the TUC launched a Pay Fair campaign on Twitter

Employment

JRF and Women Like Us produced a very interesting piece of work on the benefits (and challenges) of building a sustainable quality part-time recruitment marketwhile, coincidentally, Salon published a piece by Sara Robinson which suggested that 150 years of research proves that long hours at work kill profits, productivity and employees.

The TUC published their latest Employment Blackspots and the North East was , unfortunately, well represented. Middlebrough was the second hardest place to get a job with approximately 24 claimants for every vacancy and threee other Local Authorities in the North East in the top 10 for youth unemployment.

Education – pupil premium

The Guardian published some data obtained by David Lammy MP that suggested that the Pupil Premium was ending up in places where it might be hard to argue it was most needed. The Full Fact website checked out this assertion a few weeks ago….

General comment

Lots of comment this week to distract you from the Budget….

Fraser Nelson argued in The Telegraph that ‘At the heart of the Child Poverty Act lies an agenda which has arguably done more damage to Britain’s social fabric than any idea in modern history’ 

David Brady argued for a wider view of the welfare state in The Guardian, who also featured articles on ‘the working poor’ in the UK today and the supposed ‘culture of poverty’ in the US – all worth reading.

The Centre for Research on Families and Relationships published a report on Parenting on a Low Income and The Nuffield Foundation published a report exploring the role of informal childcare in the UK.

Graphics of the week

An excellent graph from the New Economics Foundation who called the the budget one ‘for the 1%’. The graph, which will get bigger if you click on it, suggests that it is not the size of our public sector debt that should be the primary concern of our nation….

Best wishes,

Steve

Weekly Round up 09/03/2012

News in Brief

Welfare Reform

Wednesday saw the launch of a report to Save Child Benefit, organised by CPAG and the topic of child benefit occupied a lot of political comment this week. The Telegraph, The Spectator and The Guardian all offered views on the proposal to withdraw child benefit from higher rate taxpayers. You gov suggest that 68% of the population thought the new rules are unfair. Despite all of the column inches devoted to the subject, one of the most sensible and succinct offerings came online, via Paul Spicker’s Social Policy blog:

The main argument for cutting Child Benefit seems to be that it will help to cut the deficit. If the government wanted to increase the burden on richer families, it has the option of clawing back the benefit through the tax system. It would make more sense to tax all higher rate payers, rather than only those with children. If the government was serious about cutting the deficit, they would be raising tax. The fact they are not talking about raising tax is a strong indication that this is not really about balancing the books. They are focusing on public spending, which is quite a different issue.

Tax credits were also in the news this week with the announcement that some working families would be better off on benefits

The Welfare Reform Bill became law this week (not last week as I had reported here 7 days ago!!) and Iain Duncan Smith stated:

The Universal Credit will mean that work will pay for the first time, helping to lift people out of worklessness and the endless cycle of benefits. Whilst those people who need our help and support will know they will get it without question

The Sun has started a ‘Beat the Cheat’ campaign encouraging members of the public to telephone the benefit fraud hotline if they suspect someone of being a ‘fiddling scrounger’. An excellent post by Declan Gaffney on his L’Art Social blog and one on The Guardian Comment is Free site offered alternative views on the crack down on ‘benefit cheats’.

Child poverty stats

The Guardian and Experian released information ranking each local authority area in England against a  number of poverty indicators. Unfortuantely for the North East, each of the 2 Local Authorities in the region were placed in the top 70 (the top 20%) overall. Middlesbrough topped the list and South Tynseide also made it into the top ten. The Guardian also charted the decline of Middlesbrough using the tale of the Tuxedo Royale floating nightclub, pictured at the top of the post and well known to many in the region…

General comment

The Guardian reported on an IFS report that suggested that the poorest families were most affected by the austerity measures of the Coalition Government.

Alison Garnham, the Chief Executive of CPAG, gave an interview to Nursery World which can be found here

Signpost(s) of the week

A series of photographs in last weeks New Statesman depicting what life is like for a poor child in Britain today

The Feminisation of Poverty and the Myth of the Welfare Queen – an excellent article in the week of International Women’s Day.

Rafael Behr asked if Labour can start a different conversation about benefits

Graphic of the week

It has to be the interactive ‘poverty maps’ provided by The Guardian and Experian. Click on the maps below to take you to The Guardian website where you can see how your local area fared.

Weekly Round up 02/03/2012

News in Brief

Welfare Reform

The Welfare Reform Bill finally became law this week and was hailed by David Cameron with predictably robust language:

‘These reforms will change lives for the better, giving people the help they need, while backing individual responsibility so that they can escape poverty, not be trapped in it. ‘Past governments have talked about reform, while watching the benefits bill sky-rocket and generations languish on the dole and dependency. This Government is delivering it. ‘Our new law will mark the end of the culture that said a life on benefits was an acceptable alternative to work.’

A letter to The Guardian earlier in the week had pointed out that ‘over the last 40 years unemployment benefit has been cut by 50% as a proportion of average earnings, to just 10%’ and that, out of 27 EU countries, only Estonia had a higher level of poverty amongst unemployed people than the UK and the BBC reported that the welfare reforms would mean an extra 6,000 children living in poverty in Wales next year alone.

Next week sees the launch of a report to Save Child Benefit, organised by CPAG.

Childcare costs

The Daycare Trust published the findings of a survey in a report on Monday looking at the rising cost of childcare that received widespread media coverage including in The Telegraph, The Huffington Post and The Independent.

Child poverty measure

It was reported that Nick Clegg and Sarah Teather had to block plans by senior Conservatives to scrap the 60% relative poverty measure. Downing Street suggested that measuring poverty using a relative measure was ‘a narrow approach that can fail to tackle deep-seated problems’

Employment

The CIPD suggested that there was no need to cut employment rights to stimulate the labour market, in direct contrast to a claim made in The Telegraph last week and Daniel Knowles identified that low pay was as much of a problem as unemployment, also in The Telegraph. Meanwhile, David Cameron suggested that business could help ‘smash poverty’

Signpost(s) of the week

A special pullout in the New Statesman from last week, looking specifically at different approahces to tackling child poverty is now available on the Webb Memorial Trust wesbite.

A very interesting post looking at the impact of stress on parenting, especially in low-income families

An article in The Week suggested 3 ways to fix America’s child poverty problem

Graphic of the week

The DWP published figures for the cost of fraud and error earlier this month and this graphic shows the relatively small amount lost to benefit fraud (in pink in the image) in comparison to fraud elsewhere in the system. Benefit fraud accounts for approximately £1 billion out of a total of approx £21 billion, with tax evasion costing approximately £7 billion. The midweek post next week will be on the portrayal of benefit fraud and error and we may be asking for your help with some suggestions for a social marketing campaign.

Breakdown of Public Sector Fraud Loss

Best wishes,

Steve

Weekly Round up 24/02/2012

News in Brief

Lots of new developments on the Welfare reform front again this week and the issues surrounding various work related programmes and the allegations regarding A4E are well documented elsewhere so we’ll try and leave these well alone. There’s plenty of other things of interest.

The DWP issued statistics on the amount of money lost through fraud and error this week, choosing to issue a press release which focused on fraud despite error costing 1.5 times as much. DWP also published information on the amount of benefits unclaimed during 2009/10 . No press release accompanied this information despite an estimated £7-£12 billion worth of benefits going unclaimed. Fraud was estimated to cost only £1.2 billion.

At the top of this post is an image from a campaign to crack down on ‘benefit thieves’. I couldn’t find an image or a campaign relating to unclaimed benefits – maybe we could start one around ‘benefit philanthropy’?

Child benefit changes were back in the news with a Conservative MP claiming the policy to withdraw the benefit from higher rate taxpayers is ‘in serious trouble’   whilst Janet Daley, in The Telegraph, questioned the planning behind the policy

Local firm Greggs have made the news on a couple of occasions recently, firstly as a result of a considered response to a letter regarding their participation in the voluntary Work Experience scheme and then when the Chief Executive Sir Ken McMeikan voiced some concerns over elements of the programmes. The former Chief Exec of Greggs, Sir Mike Darrington, also made the news when he spoke out against executive pay

Employment

Sunderland was identified as the 3rd worst city in which to find a job this week and whilst most attention has been focused on work experience, placement programmes and ‘jobsnobs’, Daniel Knowles identified a broken training system as the real problem and Jeremy Warner suggested firms would hire more workers if we ‘make it easier to fire them’

Campaigns

Newcastle CVS and VONNE published the findings from their Surviving not Thriving survey focussing on Newcastle’s voluntary sector. The report highlighted that 20% of respondents thought that they may close within 12 months

General comment

The Mirror highlighted a Barnardo’s report which demonstrated the choices people on low incomes are forced to make

A very interesting BBC report highlighted the ‘history of distrust of disability’

Two articles in The Guardian – one by Suzanne Moore on how we, as a society, appear to be disgusted by poor people, rather than poverty and one by Barbara Ellen which suggested that today, poverty not had only to be proved but also had to ‘be highly visible and in an almost theatrical way’

Finally, Neil Davenport suggested that ‘maybe the jobless should get on their bikes’ on Spiked Online

Signpost(s) of the week

The ever excellent Inequalities Blog have posted a number of interesting articles recently but this one in particular caught my eye – disspelling the myth of families that have never worked

Graphic of the week

The number of part time workers who can’t find a full-time job is at its highest leevvl since records began. This is particularly worrying given what we already know about in-work poverty, forthcoming changes to the tax-credit system and the potential to extend conditionality to those people already in work. The chart below is from The New Statesman blog and was compiled using stats from the Labour Force Survey