The charge: That George Osborne’s new cuts are unfair and badly calculated – and a way to sneak in tax breaks for married people through the back door.
Is it deliberate that the Conservative party have rearranged child benefit so that anyone around the tax threshold is better off partnered up? Is it deliberate that they also seem to be hinting that middle class families can get their taxes back through marriage tax breaks, instead of child benefit? Is this George Osborne’s way of telling us that far from rolling back the state, he’s going to use it to reach into your home, to needle and nudge people into the ‘correct’ lifestyle choices?
The idea that the ‘squeezed middle,’ as Ed Miliband puts it, should get some sort of recompense from the system they disproportionately pay into is not unreasonable, even when cuts are happening – indeed, perhaps especially when cuts are happening and taxes are going up. This is especially true of the lower part of the ‘squeezed middle,’ who fall into the middle when you calculate the mean average, but if you work out a median average they are far, far below it.
Whether this ‘giving back’ to the middle is best done by child benefit or tax breaks (or, as some may prefer to think of it, just not taking quite so much of their money from them in the first place) has become a seemingly endless point of discussion.
The idea that someone earning £44k per annum should be entitled to a handout per child regardless of how many children they have does seem, to some people, understandably ridiculous. While £44,000 is hardly a fortune, neither is it dire poverty. It seems we have the opposite problem to America, where there are huge numbers of extremely poor people who support economically masochistic policies because they believe themselves rich – or believe they soon will be.
On the other hand, those lower-middle earners fork out an awful lot of their money in tax for other people, and those taxes do, in part, fund child benefit. If the lower-middle earners are taxed to the point they can’t afford to have as many children themselves as they would wish (something which is not uncommon), it’s hardly unexpected that they will eventually grow to resent those taxes paying for someone else to have as many as they like. Unless we’re going to start limiting the number of children for poor families on benefit, it isn’t wholly unreasonable for middle-earners with kids to get back a bit of their own tax money.
So where does that leave Osborne?
Well, it leaves him with the perfect smokescreen for doing something he has no electoral mandate for; something the Liberal Democrats negotiated away as part of their conditional parliamentary backing. George Osborne has devised a policy whereby a single person raising a family on only £45,000 a year would no longer be entitled to any benefit, yet a couple with a joint income of £80,000 would. He either can’t add up, or he’s giving married people tax breaks through the back door.
Meanwhile David Cameron is hinting that marriage tax breaks are not off the agenda, and that this policy will be their likely way to grease the skids of these new middle-class cuts.
The problem is, the people who need the most support are surely single parents. There are all sort of hidden costs involved in raising a child alone – not least, childcare.
While it makes sense to argue that it’s preferable for middle-income earners to keep a little more their own money if it means they don’t need to take back from that same tax pot (which is best kept for the very needy), it is simply wrong to use taxpayers money as a carrot for particular lifestyles – especially when often those lifestyles are not a matter of choice. After all, how many single parents planned to be single parents?
Verdict: If executed (the policy, not Osborne) alongside fair tax breaks for the ‘squeezed middle’ – in particular, those in the lower end who also have children – they could make their claim of ‘fairness’ and it would be a sensible argument. But done as a way of rewarding certain types of people, often people who’ve just been lucky, at the expense of people who’ve been unlucky, the verdict, Mr Osborne, is a resounding guilty.