The Tories announced means testing of child benefits at their party conference the other day. This child benefit is about £1,700 per year for a couple of kids, and is a universal benefit. And given that this universal benefit is a major lever in getting the middle class to support the concept of a welfare state in the UK, the Tories figure that if they can remove this benefit they will reduce support for the welfare state.
At a high level this is quite a coherent strategy.**
However: the means testing announced by the Tories is complete and immediate loss of benefit for anyone earning over around £45k per year. So if you have a single income family unit earning £50k they lose £1,700, but if you have a two income family unit where the primary earner earns £40k and the secondary part time earner earns £20k for a combined family income of £60k, the family retains the £1,700 child benefit in its entirety.
There is no mention of tapering, big economic fail. An example of tapering would be a loss of child benefit equal to the amount earned over £45k, so at £45k you would lose zero child benefit, at £46k you would lose £1,000 of child benefit, and at £46,700 you would lose the child benefit in its entirety. My example of tapering is abrupt, but would avoid the current situation where someone earning £44,900 retains £1,700 of child benefit, and someone earning £45,100 retains £0 of child benefit (so is actually worse off).
When pressed on why the government isn’t means testing the entire family unit for the allowance, the Tories said that would be ‘too hard to implement, and would require major overhaul of the tax code’.
Boo fucking hoo. You want to implement a cut on the welfare state more drastic than anything enacted by Thatcher, that is the prerogative of being the ruling party (or at least the dominant partner in the ruling coalition). But you can’t get out of doing your homework to make the policy equitable by saying that is too hard. Go back to school and learn how to do numbers.
Oh, and the policy looks like it is disproportionately severe on widowed parents. Whoops.
When the general public duly erupted in the oh so predictable backlash (“when I said cut welfare, I meant cut welfare for other people”), the Tories responded by announcing a tax break for married couples / civil union partners.
This is social engineering in favour of smug marrieds / smug civil unioniseds, so raised my hackles a little. (I could pontificate about how your marital status shouldn’t be used as a proxy for tax policy, but that is verging on a philosophical debate rather than a factual debate. If you disagree with me I am not going to change your mind, ergo discussion is pointless)
But don’t worry about people going out and getting married for the tax break, because this tax break is…… wait for it…… £150 per year, offsetting 9% of the child benefit cut.
And there are murmurings of RPI + 3% average fare increases on the railways. Fare increases for the past few years have been set at RPI + 1%, and the Lib Dems campaigned on RPI -1% (ie fare cut in real terms). A couple of major problems here:
This is an indirect tax on rail commuters, who are reasonably likely to have just been affected by the removal of the child benefit as above, and
Depending on where the commuter is travelling this fare increase may go straight into the pocket of the private sector franchise operator, so the government doesn’t receive the full benefit of this tax. Economic lunacy.
I don’t mind parties making shit up when they are in opposition. All the opposition party has to do, and is required to do in order to regain power (assuming that the populace become disenchanted with the ruling party over time), is remind people that they exist and they are different to the governing party. The Tories could announce a policy of zero income tax and flat 30% consumption tax when they were in opposition and I wouldn’t be particularly bothered, just so long as they replace this with a less socially reprehensible policy when they seize power.
Announce fringe policies when in opposition, tack to the centre when assuming power. Everyone does it, nothing to see here.
To announce inequitable and makeshift policies like the three above when you are in power (well, announce two policies and release one rumour)? That is intellectual laziness.
To preside over the release of three intellectually lazy ideas in as many days? That is just plain sloppy.
I mean, the Tory politicos will have a squad of economists who should have called bullshit on this.
Or do the top dogs get together at their party conference, engage in unseemly behaviour and think up some wild ideas whilst under the influence of grade A pharmaceuticals, call said hallucinogenic ideas policy, and announce policy without running policy past any tax wonks?
**Note I said coherent, not desirable or compassionate. Thus methinks the overall coherent strategy was thought up long ago, back when the Tories were drooling in anticipation of single party rule. Suckers.
