Child Benefit – to means test or not test?

When the idea of means testing child benefit was in the press earlier in the year, I started off (like many people) thinking it was fair enough for rich people not to get Child Benefit. They don’t need the money. Why should they get it? What’s wrong with targeting it at those in most need?

The Child Poverty Action Group made me look a little more closely at this issue. Here are some of its aims:

CPAG’s aims are to:

  • Raise awareness of the causes, extent, nature and impact of poverty, and strategies for its eradication and prevention;
  • Bring about positive policy changes for families with children in poverty;
  • Enable those eligible for income maintenance to have access to their full entitlement.”

These are aims I fully support.

According to Imran Hussain, Policy adviser at the CPAG, the take up of Child Benefit is around 98% whereas the take-up of means tested child tax credit is around 80%. (You can read the full article published in the Sunday Times on 28th May 2010 here: http://business.timesonline.co.uk/tol/business/industry_sectors/public_sector/article7138335.ece  )

The issue of wealthy people receiving benefits they don’t need should be addressed through taxation; Child Benefit remains universal but is included as taxable income. Critics say that the wealthy often avoid paying tax but the answer must surely be to tighten up tax loopholes and increase the number of Revenue staff employed to ensure compliance.

The CPAG published a manifesto for success in ending child poverty in 2009. One of their 10 ‘tangible steps’ is:

Move away from means tests. Tax credits and means-tested

benefits are complex and expensive to administer. They generate

high levels of error, which prevents families from getting their full

entitlement. By contrast, universal benefits, such as child benefit, are

simple, effective and popular. When combined with progressive

taxation, universal benefits do not squander money on those who do

not need it; they ensure that everyone who is entitled gets what they

need.”

Yesterday they released a statement on the Child Benefit means testing proposal:

“CPAG statement on child benefit proposal – a new child penalty

4.10.10

In response to the Chancellor’s comments on changes to Child Benefit, Alison Garnham, Chief Executive, Child Poverty Action Group, said:

“This is not the right thing to do; this is the wrong thing to do. This is a new child penalty.

“Once again families with children are being expected to bear the brunt of the cuts. This is taking money directly from children and, once again, from their mothers, who are the main recipients of this benefit. It’s shortsighted and counterproductive to ignore the role this benefit plays in family finances.

“We urge the Government parties to honour their election pledges not to means test child benefit and to recognise that investing in ending child poverty may save the Government £17 billion a year through lower benefit spending, greater tax revenue and lower public spending on health, education and criminal justice.”

“It’s difficult to see how the Government is going to meet its target of ending child poverty by 2020 through undermining the most popular, widely understood and targeted benefit helping families.””

Universal Child Benefit shows that as a society we value children and the extra cost they bring to parents. They are the citizens of tomorrow; they will be the workforce of the future, providing services, paying taxes into the economy and, one way or another, looking after us when we get old. Under the current proposals, wealthy people without children won’t be penalised but wealthy people with children will lose out. Because of the married tax break proposal, wealthy people without children who are married will be better off, whereas single unmarried parents will lose out. That is penalising people for having children as well as penalising them for not getting married. Neither seems right.

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6 Responses to Child Benefit – to means test or not test?

  1. Salfordmatt says:

    The trickiest part of the discussions I have had is to recognise the point that ‘people who can’t afford children shouldn’t be parents’ but to then explain that it’s not the fault of the child that their parents couldn’t afford them. It seems strange to blame children for their parents.

    • Minus says:

      If they’re bad enough people as to have children they can’t afford and just assume that the state will pay for them, what’s the probability that the money ends up mostly benefiting the child and not the terrible parents in question?

      The unfortunate thing about child benefit is that it actively encourages people to have children that they can’t afford to keep.

  2. Minus says:

    I’m very aware that child benefit is nowhere near enough to cover the cost of raising a child, but coupled in with increased JobSeeker’s Allowance, higher Local Housing Allowance, higher priority for housing lists, Child Tax Credits and other financial incentives, it certainly isn’t dissuading people from having children that they can’t afford to keep.

    • anpa2001 says:

      Paying people child benefit is not the same thing as ‘the state bringing up their children’. At the moment, child benefit is universal so not all people receiving it are poor or unemployed. They are bringing up their own children by anyone’s definition.

      • Minus says:

        If they can’t afford to raise the child, then they’re not bringing up the child without state support. Child benefit is not the only child-related stipend which prospective parents stand to gain when they have children, but it is, as far as I know, the only universal one.

        Why it is universal, I will never know. The means-testing cost argument doesn’t really add up. Why means-test Jobseeker’s Allowance or Housing Benefit if it’s cheaper just to give it to all comers?

        I know people who have sat down and tallied up the benefits they could expect to recieve before making the decision to have a child. I think that it’s a sad state of affairs when the attitude towards children is “How much is the government going to pay me to breed?”

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