Coalition Frankenstein Government Child Benefit Cut Middle Class Shocker

I am not a Tory in any sense of the word, but this is the most sensible thing that they have done yet. Have been saying that this has needed doing for years and although I would have put the limit at 50k I agree. Any one you has that much coming into a household has enough to reduce their outgoings to suit!

Other people have a lot less to live on and manage.

Slashing child benefit in such an ill conceived unfair way is a massive own goal - for both the Tories and the Lib Dems - and will dominate the conference. They should be quiet - if after 13 years in opposition and five years locked away coming up with ideas this is their opening gambit, it's a bit pathetic and dreadfully communicated.

Clegg is such a shameless opportunist, I wouldn't put it past him to change his mind and hook up with brother Ed in an alternative coalition should things cut up rough over the next year. And I bet Cameron thinks this too. Watch this space indeed...

It's tough to lose £1700 a year - my family will too - but it is difficult to justify why families on this level of income should be getting a tax-payer funded bail-out. Why should a single person on £20k a year be subsidising people like us? This universal benefit is just not socially justifiable.

Where the government has really missed the "common-sense" test is in the way it proposes to end it. "Tough but fair" is Osborne's mantra. But can it be fair that a dual income family earning £80k gets a top-up while a single income family on £50k does not? No!

This could become the Coalition's 10p tax band - Gordon Brown never really recovered from that ill-thought out move. The middle classes know the country's finances are pretty bad. We are all going to have to address that. Personally, I'm prepared - if not pleased - to take the "tough" option but only if it truly is "fair".

I think this coalition government has a lot to offer the country if it really can push through a"tough but fair" reforming agenda . But it only has a short window of opportunity to make this particular tough move fair because ill-conceived moves such as this could so easily tear it apart.

Walayat: "Summer correction could hit low of 9800 than rally to 10,700."

The only analyst who has been absolutely right on all counts.

Too right, this antiquated subsidy should be completely revoled. You want kids, you pay for them. I'm damned if I see why I should!

Tony

if you make it impossibly expensive for the middle class to have children then all this country will comprise of are baby making factories on benefits.

Which means higher taxes for you as you will pay for their benefits for life!

Tony,

Don't forget all the free services youve enjoyed and your part in the £850 billion debt bill that your leaving for the next generation, thats £28k of debt per current tax payer that the next generation will have to pay for.

NW

Hi Nadeem,

I will take this opportunity to say how much enjoy reading your market and economic analysis, it's top notch, so thanks for sharing.

As to your reply, thanks. 'Free' is very mis-used word these days, I pay my taxes, so I'm not entirely sure what "all the free services I've enjoyed" means.

In the context of living in a democratic society, and in light of the fact that to a large degree I believe that society gets the government they deserve, then yes I do have a 'part' in the £850 billion debt from a collective perspective. However, let's put that 'part' into perspective, the government does not phone me up and ask me to make the final decision, or even to cast an individual vote, on where we deploy our troops, or how big a pay increase we should give GP's, or how many new managers we should create in the NHS.

With the greatest of respect the rest of your reply, in the context of my comment suggests you endorse the idea of kicking the can down the road. I do not. (I'm fairly certain you don't either, that's just the way it reads in this context)

Child benefit, or as it was originally known, family allowance was brought in post WW2 with a specific purpose in mind. Fast forward to today, encouraging people to have as many kids as possible to swell the future taxpayers, so we can "play now, pay later" is not a sustainable policy.

Hi Tony

If it were up to me ALL child benefit would be scrapped to pay down the debt.

To be blunt the problem with this governments policy change and Labours string of policies before it, is that it favours (as commented above) baby producing factories to maximise benefits for life churning out ferral youth roaming the streets that resulted in dumbing down of the population thus paying child benefit to the middle classes induced them to have children that grow up to become the doctors, dentists, and most importantly TAX payers to counter the dumbing down of the population, now thats gone!

Do way save anything from this policy change in the long-run ?

Lower future tax revenues, higher benefits bill EQUALS MORE DEBT.

The policy change has NOT been thought out, as I said above they should either scrapped it altogether or have kept the status quo.

This is the worst possible decision that will result in LESS wealth generation. Look at all of the consumption that the middle class famlies spend on their 'little preciouses' mothercare will take a hit so wil many other UK companies.

Instead of cutting benefits they should have ENTICED the middle class to have MORE children !

They should enticed families to STAY together so that there is less burden on the state from single parent families.

The frankenstien government has made a huge blunder.

I hope that clarifies where I stand.

Best

NW

the double income families that are individually each below the top tax rate are aspirational voters who may defect from the tories. Hence their child benefit wasn't attacked.

Cynical.

Hi Nadeem,

Thanx, understand your point totally

Best wishes.

Max £26K benefit per family:

welfare cap to large families (niche case), assuming it doesnt encourage a large family on welfare to break up and split the kids between them to get double the money:

In addition, there are larger families that work (most housing benefit is paid to people in work apparently) that have never needed state assistance but have been displaced from the workforce by east european labour. Suddenly they can't afford to work even if they could find a job anymore. Radio 5 has had people in this category calling in. Its a real problem even before this welfare cap was raised.

The real problem with this capped welfare policy is it doesnt reduce welfare dependance as you can still go ahead and have 2 kids at least and get the house which you have no chance of ever buying in any case. But its good politics.

I do understand you saying scrap child benefit, but there has to be a mechanism of helping out children of single parents particularly - a lot it is just circumstance.

Don't be under any illusion by the economic calm you see around you as the bottom line is that the country WILL go bankrupt (high if not hyper inflation destroying the value of the paper that they call the british pound), if the deficit is not cut.

The government is effectivelty saying that it is capping housing benefit at £500 a week to east into the £20 billion housing benefit bill.

The announced cuts are only the first step, because TOTAL debt will still INCREASE by 50% over the next 5 years regardless.

The government will now use REAL inflation (about 6%) to ERODE the purchasing value of benefits and earnings.

Best

NW

I agree with you that deficit must be cut. You can't keep spending what you don't have (it was only done to prevent depression after the global crisis which the tories wont admit to).

I just don't think it matters if you cut it all in 4 years or 7 years. for that decision overall employment levels are far more important since our debt is very much longer term bonds with less rollover required than even Germany in the coming year or two.

The difference between cutting the deficit over 4 years and 7 years is approx £200 - £250 billion of more debt.

The point is, when governments lose control of deficits then the markets forced cuts are near immediate as evidenced by the depression in Ireland / Greece and the hyperinflationary collpase in Iceland.