Wednesday, 6 October 2010

The child benefit row

Denying child benefit to higher rate taxpayers has caused a media storm and disquiet among Conservative activists and backbenchers, despite the fact that relatively few people are 'unfairly' affected, mainly stay-at-home mums although they are a group close to the heart of some Conservatives.

However, it seems that 83 per cent of voters approve, although that is not that surprising given that around that percentage do not lose out from the proposals: Poll

I think David Cameron made something of an error by appearing to offer a married couples tax allowance as a sop. Admittedly, it is in the coalition agreement, but it was supposed to only apply to basic rate taxpayers and the Liberal Democrats might not like it being extended to higher rate taxpayers.

What this particular disproportionate row does illustrate is the difficult politics of reducing the deficit. Given that this particular measure saves only about £1bn, it appears that stopping child benefit at 16 is still on the cards, as is restricting the availability of bus passes. More generally, we are shifting from a universal welfare state to one provided as a safety net for those in need.

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