Is Osborne really about to give people on £100k a tax cut?

The coalition’s travails over child benefit mean Osborne may revisit his decision to raise the perso

As we close in on the Budget, most eyes are still fixed on the fate of the 50p tax rate. Ignore for a moment some of the squeals from Labour on this issue (more in excited anticipation that it will be axed than horror) and spare a thought for the dwindling band of true Tory modernisers. Their two central ambitions over recent years have been to demonstrate an unswerving commitment to the National Health Service, and to show that they could govern the economy – and tax policy in particular – in the interests of the broad majority rather than the affluent elite. They are struggling to believe that, having watched the coalition conspicuously squander the first of these strategic objectives, it could be planning to deliver the last rites to the second, too.

Yet whatever the decision on the 50p tax rate, the heated debate over it risks obscuring another more nuanced, but still highly revealing choice facing Goerge Osborne. Who should benefit from the widely expected and costly increase in personal tax allowances: the vast majority of all taxpayers, including individuals to over £100,000 a year (and indeed households on £200,000), or just basic-rate taxpayers? It's an important issue in its own right – and one that has been given fresh impetus by the coalition's travails over child benefit.

To understand why this is the case, turn the clock back to 2010 when the personal allowance was first increased and the decision taken to limit the gains to basic-rate taxpayers. This was achieved by lowering the income threshold at which the 40p rate starts in order to cancel out the gains for higher-rate taxpayers – leaving them no better or worse off. Creating more 40p tax-rate payers has obvious political downsides. However, it makes the personal allowances policy both less regressive and significantly less costly. The savings could be used to help reverse this year's cuts to tax credits.

One of the main reasons why there was such a hostile reaction from many quarters to the initial decision to target the gains from the personal allowance in 2010 was the disastrous way it got caught up with Osborne's proposal to abolish child benefit for households with a higher-rate taxpayer. It meant those basic-rate taxpayers who found themselves shunted into the 40p rate not only faced a higher marginal tax rate but were also set to lose £1,750 of child benefit if they had two children.

This was pure political poison. Consequently, when a further increase in the personal allowance was announced in 2011, a different approach was adopted and the gains went to higher-rate taxpayers, too.

Which brings us to next week's Budget and how the decision that is set to be made on revising the policy on child benefit could also affect the one on personal allowances.

To date, the coalition's argument on child benefit has been that, given the scale of the deficit, the state can no longer afford to pay it to households with someone earning above £42,500; indeed, it is also argued that it is morally unfair to ask low-income families to contribute towards higher earners' child benefit. In which case you might well ask why we can afford tax cuts for individuals earning £100,000 (and households with a joint income over £200,000), regardless of whether they have children. You might also ask why it is fair to ask the same low-income family to contribute towards the cost of these tax cuts for the affluent.

I don't know how the coalition proposes to answer this. But as things stand they'll need to do so next Wednesday. Pity the poor soul in the Treasury being tasked with drafting the "lines to take" for ministers.

There is, however, a potential get-out clause for them. The approach now being touted as the likely change to Osborne's child benefit policy is to means-test the benefit at a higher level of income – say, £50,000 rather than £42,500. Whatever other problems this creates (and there are many), it will make it possible to restrict gains from an increased personal allowance to basic-rate taxpayers without creating the toxic side effect of stripping child benefit from those who get tipped into the 40p tax band. The coalition could, if it so wished, show that its priority really is basic-rate taxpayers (and in doing so save money).

We'll know soon enough. My tentative hunch is that the government won't opt to restrict the gains from increased allowances to 20p tax-rate payers – even though it is clearly more progressive and cheaper. I doubt the Chancellor will be willing to incur the price of creating more 40p taxpayers. If this is the case, the coalition will have some explaining to do, not least to its own backbench rebels on child benefit, about why a family on £50,000 should lose cash support while individuals without kids earning double that amount should get a tax cut.

And all this, of course, is before we get to the decision on whether to abolish the 50p tax rate . . .

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

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"We repealed, then forgot": the long shadow of Section 28 homophobia

Why are deeply conservative views about the "promotion" of homosexuality still being reiterated to Scottish school pupils? 

Grim stories of LGBTI children being bullied in school are all too common. But one which emerged over the weekend garnered particular attention - because of the echoes of the infamous Section 28, nearly two decades after it was scrapped.

A 16-year-old pupil of a West Lothian school, who does not wish to be named, told Pink News that staff asked him to remove his small rainbow pride badge because, though they had "no problem" with his sexuality, it was not appropriate to "promote it" in school. It's a blast from the past - the rules against "promoting" homosexuality were repealed in 2000 in Scotland, but the long legacy of Section 28 seems hard to shake off. 

The local authority responsible said in a statement that non-school related badges are not permitted on uniforms, and says it is "committed to equal rights for LGBT people". 

The small badge depicted a rainbow-striped heart, which the pupil said he had brought back from the Edinburgh Pride march the previous weekend. He reportedly "no longer feels comfortable going to school", and said homophobia from staff members felt "much more scar[y] than when I encountered the same from other pupils". 

At a time when four Scottish party leaders are gay, and the new Westminster parliament included a record number of LGBTQ MPs, the political world is making progress in promoting equality. But education, it seems, has not kept up. According to research from LGBT rights campaigners Stonewall, 40 per cent of LGBT pupils across the UK reported being taught nothing about LGBT issues at school. Among trans students, 44 per cent said school staff didn’t know what "trans" even means.

The need for teacher training and curriculum reform is at the top of campaigners' agendas. "We're disappointed but not surprised by this example," says Jordan Daly, the co-founder of Time for Inclusive Education [TIE]. His grassroots campaign focuses on making politicians and wider society aware of the reality LGBTI school students in Scotland face. "We're in schools on a monthly basis, so we know this is by no means an isolated incident." 

Studies have repeatedly shown a startling level of self-harm and mental illness reported by LGBTI school students. Trans students are particularly at risk. In 2015, Daly and colleagues began a tour of schools. Shocking stories included one in which a teacher singled out a trans pupils for ridicule in front of the class. More commonly, though, staff told them the same story: we just don't know what we're allowed to say about gay relationships. 

This is the point, according to Daly - retraining, or rather the lack of it. For some of those teachers trained during the 1980s and 1990s, when Section 28 prevented local authorities from "promoting homosexuality", confusion still reigns about what they can and cannot teach - or even mention in front of their pupils. 

The infamous clause was specific in its homophobia: the "acceptability of homosexuality as a pretended family relationship" could not be mentioned in schools. But it's been 17 years since the clause was repealed in Scotland - indeed, it was one of the very first acts of the new Scottish Parliament (the rest of the UK followed suit three years later). Why are we still hearing this archaic language? 

"We repealed, we clapped and cheered, and then we just forgot," Daly says. After the bitter campaign in Scotland, in which an alliance of churches led by millionaire businessman Brian Souter poured money into "Keeping the Clause", the government was pleased with its victory, which seemed to establish Holyrood as a progressive political space early on in the life of the parliament. But without updating the curriculum or retraining teaching staff, Daly argues, it left a "massive vacuum" of uncertainty. 

The Stonewall research suggests a similar confusion is likely across the UK. Daly doesn't believe the situation in Scotland is notably worse than in England, and disputes the oft-cited allegation that the issue is somehow worse in Scotland's denominational schools. Homophobia may be "wrapped up in the language of religious belief" in certain schools, he says, but it's "just as much of a problem elsewhere. The TIE campaign doesn't have different strategies for different schools." 

After initial disappointments - their thousands-strong petition to change the curriculum was thrown out by parliament in 2016 - the campaign has won the support of leaders such as Nicola Sturgeon and Kezia Dugdale, and recently, the backing of a majority of MSPs. The Scottish government has set up a working group, and promised a national strategy. 

But for Daly, who himself struggled at a young age with his sexuality and society's failure to accept it, the matter remains an urgent one.  At just 21, he can reel off countless painful stories of young LGBTI students - some of which end in tragedy. One of the saddest elements of the story from St Kentigern's is that the pupil claimed his school was the safest place he had to express his identity, because he was not out at home. Perhaps for a gay pupil in ten years time, that will be a guarantee. 

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