The magic money tree is back

One of the unfortunate consequences of the restoration of winter fuel payments is that voters' faith in the magic money tree has been restored.   Shake it hard enough and it will deliver!

Pensioners, of course, are much more likely to vote and those over 55 voting exceeded those under 55 at the last general election.    

The Government has suffered political pain for little fiscal gain.  Ironically, although I will be (rightly) taxed on the payment I receive, my partner will receive it tax free.

The policy change encouraged more pensioners to apply for pension credit which is a good if unintended outcome but it reduces the fiscal benefits even further.

Why did the Government do it?   I think they were genuinely spooked by the state they found the public finances in and thought this would be a current financial year win.

It also means that no one is likely to challenge the triple lock although it has delivered pensions £800 higher than they would otherwise be because of the earnings link.

Its defenders will say that state pensions are lower in the UK than elsewhere in Europe, but private pensions are higher.   Not everyone has them, but that is why we have pension credit.

This policy change will encourage backbench Labour MPs to demand retreats on benefit payments and qualifications which means that it will be difficult to avoid tax rises in the autumn.

Higher rate taxpayers to lose child benefit

George Osborne has announced that child benefit will be withdrawn from higher rate taxpayers from 2013: Child benefit . (Incidentally, one would think the Telegraph would know the difference between 'principal' and 'principle').

Universal benefits of this kind cost a huge amount of money, although they also underpin support for the welfare state from the better off part of the population.

Of the various options that have been discussed so far, this is a more equitable move than stopping child benefit at 16 or restricting it to the first two children (the latter would particularly hit poorer families).

It will be interesting to see whether there will now be restrictions on the winter fuel payment or bus passes. One has to remember that a lot of older votes are Conservatives and they have a high rate of turnout.