Are the child benefit reforms really ‘fair’?

By Anna Hayward

child benefit photo

For the first time in history the government has announced that on January 7 child benefit will become means tested. Child benefit means testing assesses individual parent’s income rather than the income of households with children. If one parent earns over £50,000 the child benefit will be capped while if one parent earns over £60,000 the benefit will be stopped all together. However, if two parents earn a household income of over £50,000 their benefit is not cut and this is where the perceived unfairness rears its ugly head. Two Sussex mothers voice their thoughts on how fair they think the reform is.

In a recession where inflation has risen to 2.8% and the deficit stands at £167.9bn, this blow will put families under more financial strain. The IFS estimates that families affected by the reform will lose £1,300 a year so every penny will count. 1.1 million Families are expected to be affected by the reform. As a parent who earns £65,000 a year, Emma Green will be one of many parents to have her child benefit stopped. Emma, 32, is a London solicitor with a four-year old son, Harry. The family have debts of £75,000 after selling their home in Surrey to move to Chanctonbury Close, Rustington because Emma’s partner was made redundant from his job as a product manager of a fresh produce business. Emma will not be debt free for another eight years. The changes are meant to save the government an estimated £1.5bn between 2013 and 2014 but this is no comfort to Emma whose son’s financial security is now under threat. Those entitled to the full benefit payment receive £20.30 a week for their eldest child and for any children after that parents will receive £13.40. Emma used the £20.30 a week to build up a trust fund for Harry but now the benefit has been stopped Emma has no disposable income to replace this. Emma said: “I am constantly worried about the future and financial security for my family and my son. I am strongly opposed to this cut because it is blatantly unfair on families. To have this current mixture is grossly unfair.”

The perverse unfairness created has triggered criticism from Labour MP’s who say the reform is a ‘huge assault’ on families. But David Cameron stated the changes were ‘fundamentally fair’. Yet critics are questioning how ‘fair’ the reform is when families who have a joint income of £75,000 escape the tax cuts just because each partner earns under £50,000. Emma is one of many wealthy struggling families that shatter the stereotypes that higher earners are spoilt and undeserving of child benefit. Emma resorts to buying Harry’s clothes and teddy bears off Ebay and the family can only afford to go on The Sun newspaper holidays for four days at a time.  She said: “I feel it creates a barrier between higher and lower income families and more resentment of lower income families who have access to more benefit.

Why are we less deserving of it?  Our circumstances mean we are not living like millionaires and we struggle just as much as someone on benefits who receives a council house and huge subsidies on council tax.”

The government is clawing back the benefit through a self-assessed high income benefit charge if parents don’t opt out by January 7. However despite the government protesting they had sent out letters, as many as 850,000 parents were not warned until the last-minute. Tim Loughton, ex child minister and MP for East Worthing and Shoreham, said: “Most people agree that regrettable though it is due to the economic climate we should make some sacrifices. However what I have serious reservations about is the current unfairness that if two parents earn over the cap they keep their child benefit. None of this is easy but it is a question of priority.”

Despite the unfairness the coalition are implementing measures first seen when the benefit came into being. Known as the ‘family allowance’ for the first time in August 1945 families with children received 5 shillings a week for their oldest child. It was pushed through by the coalition government then to help families cope with post war poverty, food rationing and housing shortages. The only difference between then and now is that the coalition has taken into their own hands which families more in need of it.

The government’s priority is supporting families like Lucinda Gent’s family who ears below the 50k mark. Lucinda, 22, has three children aged 14 months to 4 years old and with her husband as the sole provider money is tight. Lucinda, of Meaden Road, Felpham, said: “It is a struggle every day. I wouldn’t say that people below the 50k are more deserving of the child benefit but I would say that they are in more need of it. I look at the people moaning about only earning 50k and I think their spoilt. I would love to live on 20k a year let alone 50k.”

Despite the unfairness Cameron argues if the money is taken from the better off 15% in the country it would be taken from someone else. Contrary to criticism saying the changes are widening the divide between the wealthy and poor but Lucinda feels the controversy just highlights it. She said: “I wouldn’t say that the 50k mark for child benefit is making a divide, but there always has been. The higher earners don’t understand struggling to live, they look down at the lower earners and think they should work harder and stop claiming benefits.”

Public opinion is divided but the government is determined to revolutionise the benefits system. Child benefit is the beginning of a massive overhaul of the welfare system. They are planning to replace the six income related benefits with a universal credit. When this comes into effect Cameron’s ‘fairness’ will be meaningless as it will affect all families receiving benefits regardless of income.

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