Sunday, 4 March 2012

Child Benefits: Coalition Cuts Must Be Stopped

Cuts to child benefits for higher rate tax payers were rashly announced ahead of the 2010 Conservative party conference by George Osborne to demonstrate that he had the courage to raid his own party's supporters' pockets for the deficit reduction programme - thereby proving to everyone else that "we're all in it together.
But now more and more people are waking up to the fact that the cuts are unfair and unworkable.  Thousands of parents on low and middle incomes face losing a huge proportion of their income overnight. And far from making work pay, many parents could find they are better off on benefit. This makes no economic sense at all.

The first problem  is one of fairness. It cannot be right that a two-earner family each earning £42,000, a total of £84,000, would keep all their child benefit, but a single-earner family on £43,000 would lose it all at a stroke.Then there is the problem that families lose it all at once, so a pay rise – perversely – could see a family worse off than it was before

So far from being all in this together, Cameron, Osborne and Clegg have chosen to give the banks a tax cut this year while their Budget measures are hitting women harder than men and pushing up child poverty. And families with children will lose an average of £580 per year from policies coming into effect this April alone.
The Coalition government must think again on changes to tax credits and child benefit which will cost families with children up to £4,000 per year.

First, their changes to eligibility for working tax credits are set to clobber hundreds of thousands of parents in part-time work by up to £74 per week. From April couples with children earning less than around £17,700 will need to increase the number of hours they work from a minimum of 16 to 24 hours per week or they will lose all their working tax credit of £3,870 per year.

This change will penalise parents who are working and trying to do the right thing, but cannot increase their working hours at a time when the economy is flatlining and unemployment rising.

This unfair and damaging change could and should be cancelled using the hundreds of millions of pounds the government itself has said could be raised by closing a stamp duty tax avoidance loophole on properties worth over £1 million.

But will this be another example of a stubborn Coalition wanting to be seen as acting tough no matter what  the consequences?

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