Category Archives: benefits

Couples earning £100,000 to keep child benefit?*

We promised to restore recognition of marriage to the tax system. Instead, this budget tells millions of parents that they can only keep child benefit by both going out to work.

If Mum stays home to look after the kids then Dad can only earn half what they could take home as a couple before the family loses child benefit.

All the Chancellor has done in the budget is raise the threshold above which benefit is taken away by around £7,000 and replace his previous ‘cliff-edge’ withdrawal of benefit with a steep taper that leaves single earners with children facing implied marginal tax rates of well over 50% if they have one child, and nearer 80% if they have four or five.

George Osborne has done nothing about the main problem with this policy – a single earner household losing their benefit while a dual earner couple earning up to twice as much keep theirs.

A single earner household, say with Mum staying home to look after the kids, will lose child benefit if they earn between £50,000 and 60,000, but a couple where both parents go out to work can keep their child benefit even if they earn £100,000 between them.

What is Conservative about that? And why on earth is the Chancellor still trying to do it even though colleagues have tried to explain the problem to him time and time again.

*if they both go out to work

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Child Benefit 40% Tax Policy in Trouble

The government’s plan to withdraw child benefit from households in which one or more taxpayers pay 40% income tax is in serious trouble.

I have just come from a parliamentary debate in which Christopher Chope, MP for Christchurch, exposed a whole series of problems with the policy to which the minister, David Gauke MP, had few if any answers. The government line is simply not convincing, one suspects because the policy was drawn up in a rush before our 2010 Conference without being properly thought through.

More seriously still from the government’s perspective, it is not clear that it has a majority in Parliament for the policy. The LibDems, of course, love the idea, but Labour appears set to oppose it, having somewhat opportunistically deemed the households affected to belong to Ed Miliband’s rather elastic “squeezed middle”.

Meanwhile, a very significant number of Conservative backbenchers have concerns and, in many cases, these are sufficiently serious that I would expect them to be expressed in the voting lobbies.

The policy is particularly toxic for colleagues who want to see the government do more to promote marriage and the traditional family, given the lack of movement so far on the government’s promise to recognise marriage in the tax system. However, the policy is also objectionable for those who want the tax system to be neutral between personal choices, since it clobbers single earner householders, most usually with a stay-at-home Mum, relative to dual-earner couples.

Ministers cannot answer colleagues who question them about the sheer unfairness of one family with a single earner on £45,000 losing their child benefit, while a family with two earners, each earning around £40,000, get to keep their child benefit. Certainly, I don’t feel that I am currently able to give constituents a satisfactory answer as to how this is fair, particularly when we continue to pay child benefit to many thousands of children in EU countries such as Poland and Lithuania, where costs are much lower, even when they have never set foot in the UK.

Given the four figure sums involved, the equivalent of £4,000 of marginal gross income for a family with three children, it is no surprise that many people have contacted their MP on this issue. I have had several dozen constituents raise it with me, but another MP says that he has been contacted by over a thousand people. Adding to the weight of such representations is the fact that, at least in my case, they do not appear to be part of an orchestrated campaign.

Colleagues had expected the Treasury to come forward with proposals to mitigate the unfairness of the policy, but now it is suggested that this would be too complicated and difficult, given the implications of household means testing for independent taxation.

If so, the Treasury would be well advised to use the Budget to drop this policy. The alternative may be that it is defeated on the floor of the House.

MP welcomes Government boost for local housing

Building on the flagship Housing Strategy, the Government has this week unveiled a range of measures to help first time buyers onto the housing ladder, provide support for millions who have been left languishing on social housing waiting lists and get construction on the move.

The announcement that, through the New Homes Bonus, Medway Council has been granted £2,317,239 this year to build much-needed housing in the local area is welcome. The New Homes Bonus, which will start being paid in March, is a multi-billion pound programme which rewards communities when they accept more housebuilding in their area and includes extra rewards for building new affordable homes, and for getting long-term empty homes back into use.

 Medway Council, under the leadership of our excellent group of Conservative Councillors, will have ultimate oversight of any proposed building development, not central government. It will be the job of locally elected, and therefore accountable, representatives to decide on the benefits of building new affordable homes versus the human, environmental and economic impact of continuing with Labour’s failed housing policies.

Labour led Britain into a housing crisis – the number of affordable homes fell, waiting lists almost doubled and first-time buyer numbers collapsed to their lowest level for a generation.

As I said on Wednesday in reply to Simon Hughes in the House of Commons debate on Welfare Reform, it is not fair that many of my constituents are forced to get up at 6 in the morning to catch a coach to London because they cannot afford to pay the fare for the train, let alone find the rent for a flat in Bermondsey. It is not fair that the taxes of so many hard-working residents in my constituency of Rochester and Strood are supporting people on benefits who live permanently without a job in some of the most expensive accommodation in the country.

The government is right to tackle the lack of decent homes as a priority while also addressing the huge imbalance in the welfare system which traps people on benefits. I am delighted to welcome the Government’s £2.3m funding for new homes in Medway, which is far more than generous than the grant allocated to our more leafy neighbours such as Sevenoaks and Tunbridge Wells (£645,997 and £597,603 respectively).

The Government’s action will help local people onto the housing ladder, provide more affordable housing and create local jobs.