Ken Clarke is wrong on child benefit cut: no surprise there


The man who – as Chancellor – abolished the marriage tax allowance is at it again. Once more, Ken Clarke refuses to see any difference between people who are raising families and people who are single and without dependents. Or, at least, he refuses to accept that the tax and benefit system should recognise any difference between them.

He has pronounced on the Child Benefit cut farrago – which has to be the most grotesquely misjudged (or unjudged, since it was so obviously not thought through at all before it was announced) policy in recent political history. As Mr Clarke puts it in his thick-skinned, bluff manner: "It is quite wrong that some people are firstly paying the higher rate of income tax on the basis that they're above average earners and at the same time receiving a social benefit to help them pay for their children. It's an anomaly [which had to be addressed]."

What is wrong with that statement? First, and most important, the universal Child Benefit was introduced as a replacement for the old child tax allowance which was seen as unfair because it benefited only those who paid income tax. Not only were the poorest and the unemployed left out of it, but because the tax allowance went into what used to be called the "man's pay packet", it could be used for his own self-indulgence rather than to help the children of the household. This old fashioned Andy Capp view of working class life in which the husband could drink or gamble away his earnings rather than using them to provide for his non-working wife and family, is now a relic of history. But never mind. The universal Child Benefit came in to deal with this problem and was designed to go straight to the wife (or to the mother of the children, whether married or not).

Those who insist that it is absurd to give higher earners a "social benefit" – middle class welfare, as it is scathingly known – seem to forget that what was once a tax relief for people who were bearing the expense of raising the next generation, was abolished on the understanding that it would be replaced by this "fairer" direct payment. If it is now to be taken away from higher rate tax payers, there will be a whole swath of people whose family responsibilities will get no acknowledgement at all in the tax and benefits system. They will, in effect, be treated as if they were single and unemcumbered by the costs of child-rearing.

Second, the conception of what constitutes "higher earnings" has been travestied by years of fiscal drag. The failure to raise the threshold for higher rate tax has meant that people like senior nurses and police officers are now being taxed at a rate that would once have applied only to the seriously affluent. To add to that injustice, they will now lose their Child Benefit. What an idiotic dilemma for the Tories (supposedly the party of the aspirational family) to have got themselves into.

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