Published on 5 Mar 2012

Child Benefit – Osborne wants to keep it simple

A lot of pre-Budget kite-flying going on. Always a danger that you raise expectations with exercises like that and then find you can’t deliver on them.

On child benefit, the Treasury seems to be looking at a number of ways of ameliorating the child benefit removal for 40 per cent tax payers. All of them look pretty expensive. The plan is to have something ready to announce in the Budget on 21 March.

The IFS suggested a couple of solutions in their Green Budget, including integrating child benefit and the child tax credit but I understand the government is not drawn to a solution that would effectively mean abolishing child benefit and bringing in something different in its place. It doesn’t sound as though the IFS tapering idea is necessarily a route the government wants to go down either.

Elsewhere in the pre-Budget chats, the Lib Dems have surprised some by showing a willingness to discuss the possibility of dumping the 50p tax rate in return for some serious taxation of wealth. It’s not clear that is going anywhere. It looks like there will be a big clampdown on tax avoidance at the top end of the property market – perhaps with a new supertax rate of stamp duty for the most expensive houses. All this will be sold as an all-out assault on the massively distorting effects of the top-end London property market on homebuyers but looks like it will fall some way short of the sort of wealth tax that many Lib Dems would like to see.

This week’s cabinet will continue the unusual star chamber on economic growth that didn’t quite get finished last week. Eric Pickles was taken apart in what one minister described as an “acidic” interrogation. Caroline Spelman “jumped up like a meerkat” when the focus then turned on her (the PM, chancellor, DPM and chief  secretary leading the questioning).

Who will they turn on in the sequel tomorrow morning?

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5 reader comments

  1. Concerned citizen says:

    How about they set the maximum number of children per family eligible for child benefit. This would disincentivise those in society who are ‘gaming’ the system by having a dozens of children!

  2. Mudplugger says:

    Osborne will continue to struggle on Child Benefit because the problem goes back to the early feminist agenda.
    30+ years ago it demanded that couples be taxed individually, in order to help define the woman as a person in her own right. OK as far as that went.
    The trouble starts when tax-refunded benefits aim to reflect the very different income metric of the ‘household’, rather than the individuals. That is what led to the cock-up with the previous announcement, allowing policy-fatal examples to be identified (two earning £80k keep the benefit, one earning £45k loses it).
    The risk is that any method to overcome that flaw will introduce yet more complexity into an already over-complicated tax system.
    Time to go back to taxing by ‘household’ perhaps ? A brave move, Chancellor, as Sir Humphrey might have said.

  3. Philip says:

    I see the star chamber picked the low hanging fruit.
    And where is the equivalent process which examines the Treasury’s record on managing the economy? (And meddling in other Departments’ policies)?
    And who examines the coherence of Goverment policies and actions?
    And have you seen any pigs flying past your window?

  4. everhopeful says:

    Re Concerned citizen
    Cathy Is there any hope of finding some facts on this question. How much do multiple child families cost us.
    The argument has always been that we need the next generations to pay pensions and NHS. Cannot see how this can be true. Technology and production technologies will only improve. There are not enough jobs for our workforce now and I cannot forsee this changing significantly in the future. Skills are going to be crucial, not numbers.
    If this is correct, given that these “extra” people can only be a burden on the taxpayer, why are we financing them? Its not just child benefit, its a lifetime cost. Surely a reasonable limit (say 4)eligible for benefit is preferable. Not suggesting a birth limit, just a limit on the number eligible for benefits.
    For those that would disagree on moral/religious grounds, perhaps they would take up the financial burden?

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