Child benefit: Poorest must be protected

The idea of a children’s allowance was one of the three key ideas that the father of the welfare state Sir William Beveridge laid out in his 1942 report.

Since then it has been an integral benefit – and has helped thousands of hard-pressed families ensure that their children don’t suffer and are kept out of poverty.

The beauty of child benefit has been that it’s a very simple idea. As a benefit paid to all mothers, it was easy to administer, attracted no stigma and had high take-up rates as a result.

Beveridge’s baby has proved one of the best-loved and successful benefits as a result. So it is no wonder that the Chancellor’s announcement yesterday that those who earn more than £44,000 a year will no longer receive child benefit from 2013 caused such a storm.

Going after families with children

It is strange that in these austere times that George Osborne appears to have consistently gone after families with children (a rise in VAT, cuts to maternity allowances, freezing child benefit and abolishing child trust funds) as opposed to going after those with the broadest shoulders and the greatest responsibility for the current financial crises.

Closing loopholes around tax evasion (£40bn), ending the non-dom rule (£3bn) or introducing a ‘Robin Hood tax’ on transactions by banks (£20-50bn). Compare that with the relatively modest £1bn saving on child benefit, and it seems a high price to pay for the good will that has been lost.

But we live in extraordinary economic times, and it would be unrealistic to assume the welfare state will not be looked at by the coalition government.

While we at Save the Children are opposed to cuts in child benefit, if there are cuts, the principle that the wealthy have their benefits cut rather than those in poverty is hard to disagree with.

After all, Beveridge’s original idea of a welfare state was one that would provide ‘freedom from want’ – to help the least well-off rather than the middle classes.

Welfare reform

So if this benefit – which for more than 50 years has supported families in bringing up their children – is cut, it should only be done if savings are ploughed back into welfare reform, so that those in the greatest need receive the support they require.

But the Government need to look closely at the logistics of the decision they have made. Parents feel it is unfair that a couple both earning £43,000 (a family total of £86,000) will keep their benefit while a family where one partner earns £43,876 and the other nothing will have it taken away.

To take this to its logical conclusion, we could see people turning down promotions and pay rises. Under the Chancellor’s plans, a one-earner family on £43,875 would need a payrise of £2,975 to ensure they were no worse off after paying tax and losing child benefit.

The idea of a tax break for married couples – rumoured today as a panacea for the child benefit changes – we believe will end up penalising single parents. After all, help should be based for those who are most in need not on marital status.

The Work and Pensions Secretary Iain Duncan Smith claimed in his speech today that this Government had concern for the poor “running through its DNA”.

Now is the chance to prove it.

Save the Children agrees with the idea that families should be better off in work than on benefits, but – as the debate over child benefit has shown – the details must be worked out carefully so that the poorest are protected and families with children are not hit further.