Thursday, October 07, 2010

How beneficial.

I've just had an interesting conversation with my sister.

I was telling her about the cut in child benefits for people earning £44k or more per year. And how some people are outraged. And how other people seem to think it's the best thing since sliced cheese. Or whatever.

We're both so Swedish -

we concluded that by doing this, they're turning this into a benefit rather than money towards the child. In the long run, won't this turn into another stigmatised benefit where higher earners moan that people ('scroungers') take our tax money... blablabla.

I'm not saying I'm for or against this cut. I can absolutely see why a country/government trying to cut down on spending is choosing this option. But what is interesting about this is people's attitude towards benefits.

From our (blonde and oh-so blue eyed) Swedish perspective, it's an ideological issue more than anything else. It's not just about benefits to those who struggle - it's about a welfare country, where the welfare is fair. That doesn't necessarily just mean that those who are poor get benefits chucked at them. Nor does it mean that those who pay more tax in get more of the perks. It just means that some benefits/tax credits/whatever you choose to call them are for everyone, regardless of background or 'class' (I hate that term but that's for another day).

It's the same with student grants/loans. No matter your background or financial family situation, everyone in Sweden is entitled to the same amounts. Child benefits works the same way in Sweden. Families who struggle may be entitled to more - but I don't think that's labelled in the same way; it's part of the circumstances on which your benefits are based I guess.

I don't know. This goes back to a blog post I wrote a while ago about growing up 'well off' and being made to feel inferior because of it in this country.

We're all just people after all and when something becomes a stigma it's not the right way to go about it. And that's my reservation about these plans to cut child benefits for high earners.

Having said that, perhaps the general stigma surrounding benefits is where we need to focus first of all, before we worry about a money-saving scheme like this one will create more of it... Maybe I've got it all backwards.


A + said...

I wouldn't say the problem is that children that are well off and being brought up in wealthy families are loosing the child benefits.

In principle I think most people can accept that we should not tax the public in order to give families with good incomes benefits. Add to that the "problem" that a the child benefit in families with high incomes seldomly go to the child. Instead the benefit is saved or spent on something else (ie, the child would not be worse off if there is a cut in the benefit).

A - said...

But there are problems with a cut, from a practical point of view! How are we to register the need for the benefit? To make a needs assessment costs (tax)money. The procedure will probably also imply a privacy intrusion. Those seeking the benefit must demonstrate that they have need of it and many will be constested. These are all arguments against the cut.

A + said...

Im not entirely sure what the proposal looks like, but if I've understood it right the chancellor has proposed that in order to avoid the side effects above, any parent with an income above £42 000/year should be taxed with an amount equivalent of the child benefit. In that way you don't need a needs assesment!

A - said...

But there are also problems with this. If one of the parents earn £43 000 and the other nothng, then the household get a tax increase. Compare this with two parents both earning £41 000, this family don't get a tax increase. This is unfair and it creates an incentive not to work more or go up in salary.

So, even if there in principle is ok to cut the child benefit to families that are well off, there are not real practical alternatives other than keeping the child benefit general...

Julia said...

Wow that's a lot of comments in a short space of time lol!

No - it's not a *problem* as such. It's a different way of looking at this benefit. And I guess the view on similar benefits in Sweden has always been slightly different, it's not there to support poor people but rather to support every child. I can't phrase it in a better way and I realise it doesn't sound great. But I guess what I'm trying to say is there is/should be/is in my head a distinction between benefits given to those in need; and benefits for children/students etc.

I don't know whether there is any research or stats to say where any family (high or low income) puts this benefit - I can only speak from experience and when I was in my teens most of my friends got this money as a monthly allowance (in exchange for chores or whatever) and some would use it on bus passes etc. So I'm not sure it's right to assume that it rarely goes to the child - unless there's some evidence I've not seen :) In fact, I think from a certain age there was the choice of it actually being paid straight into the child's bank account. Couldn't tell you what age though cos I can't remember.

The end of your second comment there is sort of what I was getting at. If this is a benefit aimed at the family rather than the individual child (regardless of their parents income) there will inevitably be contestations (that's a word, I'm sure!) and if families have to apply it will be another costly and time consuming exercise...

It does seem to be a pretty arbitrary set of rules surrounding this and I have to say I've not read about it in detail. Mostly because it doesn't affect me (long way away both from earning that amount and from having kids!).

Like I said in my post I don't even know if I'm for or against this cut. I don't know if the £42k or whatever is a reasonable threshold. I don't personally know how much it costs to raise a child.

I'm more interested in this cultural view on what these types of benefits are for - and I was struck by how Swedish I must be in this sense.

There are a lot of benefits available in Sweden. But it doesn't have the same benefits culture as the UK does. I don't know why this is - more leftie maybe? ;)

I absolutely agree with you that it's not right that the whole population are taxed in order to make the rich richer.

Hm, I've babbled on for a bit here but I hope it makes some sense!