Political Promise

Coalition cut the Middle Class Child Benefit

In Michael Indian on October 5, 2010 at 9:55 am

The Coalition has pressed ahead with sweeping cuts to the Welfare budget by announcing plans for reductions in child benefit paid to high earners, reports Mike Indian.

Chancellor George Osborne has announced plans to remove child benefit from any family where one parent is earning more than £44,000 per year from 2013. Ministers claim this move is tough but fair and justify it by their resolve to stick to their five year plan to substantially reduce the deficit.

Coming only days after the Conservative-led coalition unveiled what it claimed were the most radical welfare reforms for a generation, the cuts to the child benefit are the first move against so-called “universal benefits.” A Tory vision for welfare system based upon a single, universal credit is also a vision where those who can pay their own way should not expect the state’s support.

In reality, his first major move has sent Osborne reaching into the pockets of 1.2 million people and chipping away at one of the key pieces of the welfare state. Universality was one the core tenants embraced in its foundation and has gone largely unchallenged over the last half century by both left and right. Whilst debates over the state of the NHS have often dominated headlines over the future direction of Britain’s welfare policy, millions of people have been quietly and calmly receiving other means of support. With 96-97% of the eligible population claiming child benefit, George Osborne has woken the British public up to the harsh reality of what spending cuts may mean for the future of an entity that has quietly permeated their lives over the last fifty years.

The resulting backlash is both understanding and inevitable. For many, this is the first example of the deficit reduction strategy falling close to home. Whilst some of the basic principles of Osborne’s argument are strong (deficit reduction, all in this together, we’re not cutting everything), it does not change the reality that this policy is ineptly formulated and contains a colossal defect. How can we believe “we’re all in this together” when families where both parents earn just under the new £44,000 threshold, but take home a larger household income overall, are exempt?

“Is this real life? Is this just ideology?” some will ask, but they’re wasting their time. Motivations are irrelevant when you consider the simple fact that thousands of households are going to be worse off. It is very easy to say that rich should be paying more, because they can afford to. In actual fact, those who are paying are not the rich, but once again the ‘squeezed’ middle classes. Higher tax bands and harsher times have left these households slighter margins. For them, child benefit is a little bit of extra help towards the most important cost in their lives. Their defence of this subsidy maybe selfish, but it is a completely justified selfishness.

Rather than risk an all out quarrel with the pinched middle of the country, the Conservatives have tried to rally support against a common foe, benefit cheats.  In his speech to the Conservative Party conference in Birmingham, Osborne also announced plans to cap the maximum amount of benefits any family can claim at £26,000. He hopes a cap on the amount of benefit a family can claim will show them that a life on benefits cannot pay.

Make no mistake, the timing of the announcement was elementary political distraction, but in the long term it will serve the government well. Reminding the voters that the axe will fall just about everywhere over the next four years and appearing tough on a systemic problem that has plagued successive governments will help mitigate the political fallout from cuts to more universal benefits.

In the long term though, we are seeing the end of the welfare state as we know it. Once universality is gone, then the grand idea of a social consciousness binding Britain together and underpinning the welfare system will be gone too. The NHS will remain (in some form), but in social affairs we will have to become a nation who are more self reliant and self-seeking.

Maybe we are not so far from that already? Whereas the vision for post-war Britain was cradle to grave care for all, built around a nation that was socially acute to the needs of their fellow citizens, this has long since become a great myth about us. We may leap to the defence of the NHS citing this grand ideal as our justification, but it is the worry of paying for medical care that concerns us. We see it in the protection of child benefit; we are quickest to leap to the defence when we know it is something we stand to lose on a personal level. If the welfare state is to survive in any form, then we must be honest and realise the same basic self-interest binds all who embrace it, both us and those we label benefit cheats.

Yet, the establishment of the degree of state intervention by the Labour government of 1945 remains one of the greatest achievements of the twentieth century. The optimism its creation embodied does not deserve to die because of the bloated bureaucracy that now surrounds the plurality of benefits. Citizens in all strata of society have become idle in the embrace of the state, regardless of their actual need for benefit. The threat of a sudden withdrawal long overlooked support should galvanise us into action. If we want to hold onto something by 2015, we will have to fight for it.

Some will tell you that George Osborne and Iain Duncan Smith’s aims in government are not compatible, that austerity and revolution cannot be achieved together. Wrong, this is the wakeup the people of this country need to take one its best institutions back to its proper purpose, helping those most vulnerable in society as the welfare net rather than the welfare state. By the looks of George Osborne’s plans there will be plenty who will need it.

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