Explaining the child benefit saga

Do you prioritise fairness for individuals or for households? The coalition is realising you can't d

Observing a government in the midst of a policy u-turn is rarely an elegant sight. When it is drawn out over an extended period, and fuelled by briefing and nods and winks from the PM downwards, it is even less edifying. So it is with the coalition's current contortions on Child Benefit.

None of the proposals being discussed as improvements to the coalition's original idea (to axe Child Benefit for households with a higher rate tax payer) are attractive. All are likely to be an administrative nightmare. Indeed, if the government could press rewind I doubt very much they would choose to repeat the initial pledge they made (not withstanding polling evidence showing it could be quite popular). And if they could press fast-forward into the future my guess is that they would probably decide not to plump for the sort of complex proposal that they are reportedly leaning towards (for instance creating what would in effect be a new tax threshold at £50k).

As things stand, Osborne's room for manoeuvre is limited. He's made clear that he wants to remove Child Benefit from the affluent. Some of the ways of achieving this that have been floated by leading voices like the IFS, such as integrating Child Benefit within the tax credit system, and so means-testing it according to household income, are now likely to be deemed to be politically too difficult (even though they might have once been possible back in 2010).

Why? Because they would hit (many) households with two earners each on say £30k-35k. You might think this would be more rational than axing Child Benefit for single earner households on £45k. Perhaps. But the last thing a government in retreat wants when placating one group of losers is to create another disgruntled set who previously thought they would escape unscathed. Indeed, the biggest risk the coalition faces right now on this issue is not that they fail to recoup the full £2.4bn they were hoping to save, but that they find themselves making a series of expensive concessions as each new proposal they make comes under pressure. They need to find a position they are sure they can defend and stick to it.

Given the hole they are now in on this issue, and assuming a complete u-turn is not on the cards, the least bad option for Osborne would probably be to ditch the idea of abolition and instead start taxing Child Benefit for higher rate taxpayers; though he will probably feel this falls short of what he needs to do (and it still suffers from some of the problems as his original idea).

Given the upheaval, it's worth asking what led the government down this path? Part of the answer is the tendency towards politically-driven but ill-conceived policy announcements - recall that the Child Benefit proposal arose in the first place in order to soften up opinion in advance of the wider cuts to the benefit system.

But it also reflects an underlying and still unresolved issue about the future of the tax system. Take a step back from the detail of this row and consider what pattern emerges from the coalition's changes to the tax and benefit system. In terms of where money has been spent, it has been on Clegg's flagship idea of increasing personal allowances - an agenda which is primarily about tax-cuts targeted at individuals. Meanwhile those parts of the tax and benefit system targeted at supporting households and children (like tax credits) face harsh cuts, though no one in the coalition would like to put it this way.

The Child Benefit proposal is an uncomfortable hybrid: it's based on individual earnings (means testing child benefit for higher rate tax-payers) but in a very clunky and arbitrary way it nods towards considering household income in that it asks each claimant whether their partner pays the higher rate of tax. The result, as has been widely pointed out, is that the single-earner household on £45k risks losing up to several thousand pounds while the dual-earning household on a combined income of £80k loses nothing.

At the heart of the issue is the point that tax and benefit reforms can prioritise fairness for individuals (Clegg's argument), or they can seek to respect the principle of individual taxation whilst advancing greater equity for low and modest income households with children - which is in essence what tax credits seek to achieve (at the price of far greater complexity). But they can't do both at once.

Regardless of how the current Child Benefit saga plays out it is unlikey to be the final word in this debate about supporting individuals as opposed to households. Why so? Because if personal allowances continue to be the favoured mechanism for tax reform, and there's little reason to think they won't for as long as the coalition survives, then sooner or later their comparative shortcomings as a way of supporting families with children will surface as more of an issue.

Liberal Democrat strategists concede as much (at least in private). Looking to the longer term they are interested in exploring ways of making the personal allowance better reflect household circumstances - for instance through some form of children's tax allowance. This isn't an issue for now, but could well be in the event Lib Dems are in with a real chance of forming another coalition government beyond 2015.

If you think some of this sounds vaguely familiar, you'd be right. We used to have child tax allowances before they were phased out in the 1970s and replaced by the Callaghan government with (you guessed it) a version of today's Child Benefit - a system thought to be much more beneficial to mothers than its predecessor.

Gavin Kelly is a former adviser to Downing Street and the Treasury. He tweets @GavinJKelly1.

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The dog at the end of the lead may be small, but in fact what I’m walking is a hound of love

There is a new, hairy face in the Hovel.

There is a new, hairy face in the Hovel. I seem to have become a temporary co-owner of an enthusiastic Chorkie. A Chorkie, in case you’re not quite up to speed with your canine crossbreeds, is a mixture of a chihuahua and a Yorkshire Terrier, and while my friend K— busies herself elsewhere I am looking after this hound.

This falls squarely into the category of Things I Never Thought I’d Do. I’m a cat person, taking my cue from their idleness, cruelty and beauty. Dogs, with their loyalty, their enthusiasm and their barking, are all a little too much for me, even after the first drink of the day. But the dog is here, and I am in loco parentis, and it is up to me to make sure that she is looked after and entertained, and that there is no repetition of the unfortunate accident that occurred outside my housemate’s room, and which needed several tissues and a little poo baggie to make good.

As it is, the dog thinks I am the bee’s knees. To give you an idea of how beeskneesian it finds me, it is licking my feet as I write. “All right,” I feel like saying to her, “you don’t have to go that far.”

But it’s quite nice to be worshipped like this, I have decided. She has also fallen in love with the Hovel, and literally writhes with delight at the stinky cushions on the sofa. Named after Trude Fleischmann, the lesbian erotic photographer of the Twenties, Thirties and Forties, she has decided, with admirable open-mindedness, that I am the Leader of the Pack. When I take the lead, K— gets a little vexed.

“She’s walking on a loose lead, with you,” K— says. “She never does that when I’m walking her.” I don’t even know what that means, until I have a think and work it out.

“She’s also walking to heel with you,” K— adds, and once again I have to join a couple of mental dots before the mists part. It would appear that when it comes to dogs, I have a natural competence and authority, qualities I had never, not even in my most deranged flights of self-love, considered myself to possess in any measurable quantity at all.

And golly, does having a dog change the relationship the British urban flâneur has with the rest of society. The British, especially those living south of Watford, and above all those in London, do not recognise other people’s existence unless they want to buy something off them or stop them standing on the left of the sodding escalator, you idiot. This all changes when you have a dog with you. You are now fair game for any dog-fancier to come up to you and ask the most personal questions about the dog’s history and genealogy. They don’t even have to have a dog of their own; but if you do, you are obliged by law to stop and exchange dog facts.

My knowledge of dog facts is scant, extending not much further beyond them having a leg at each corner and chasing squirrels, so I leave the talking to K—, who, being a friendly sort who could probably talk dog all day long if pressed, is quite happy to do that. I look meanwhile in a kind of blank wonder at whichever brand of dog we’ve just encountered, and marvel not only at the incredible diversity of dog that abounds in the world, but at a realisation that had hitherto escaped me: almost half of London seems to have one.

And here’s the really interesting thing. When I have the leash, the city looks at me another way. And, specifically, the young women of the city. Having reached the age when one ceases to be visible to any member of the opposite sex under 30, I find, all of a sudden, that I exist again. Women of improbable beauty look at Trude, who looks far more Yorkie than chihuahua, apart from when she does that thing with the ears, and then look at me, and smile unguardedly and unironically, signalling to me that they have decided I am a Good Thing and would, were their schedules not preventing them, like to chat and get to know me and the dog a bit better.

I wonder at first if I am imagining this. I mention it to K—.

“Oh yes,” she says, “it’s a thing. My friend P-J regularly borrows her when he wants to get laid. He reckons he’s had about 12 shags thanks to her in the last six months. The problems only arise when they come back again and notice the dog isn’t there.”

I do the maths. Twelve in six months! That’s one a fortnight. An idea begins to form in my mind. I suppose you don’t have to be a rocket scientist to work out what it is. But no. I couldn’t. Could I?

Nicholas Lezard is a literary critic for the Guardian and also writes for the Independent. He writes the Down and Out in London column for the New Statesman.

This article first appeared in the 28 April 2016 issue of the New Statesman, The new fascism