The child benefit tax could be a disaster for the coalition

More than 300,000 households have not been informed that they must either stop claiming child benefit or pay a new tax.

2013 will be a year of dramatic changes to the welfare system: the introduction of the benefit cap, the abolition of Council Tax Benefit and, most notably, the national rollout of Universal Credit. But the first test for the government will come next Monday when the withdrawal of child benefit from higher earners begins. From 7 January, payments will be tapered away from individuals earning over £50,000 and completely withdrawn at £60,000 (however, a household with two earners each on £50,000 will keep the benefit in full). Those households affected will either need to stop claiming the benefit or pay a new tax (known as the High Income Child Benefit Tax Charge) to cover the cost of the payments. Families will lose £1,055.60 a year for a first child and a further £696.80 a year for each additional child, meaning that a family with three children stands to lose £2,449.20 - the equivalent of a £3,500 pay cut (since child benefit is untaxed)

With the changes announced as long ago as the 2010 Conservative conference, the government has had no shortage of time in which to inform those who will lose out. But as today's Telegraph reports, almost a third of the families affected have still not been formally warned that they will no longer be eligible for all or part of the benefit. Of the 1.1 million households due to be affected by the change, 316,000 have not yet been contacted by the tax authorities. As a result, having missed the opportunity to opt out of the new system (as 160,000 have done), they will have to fill in self-assessment forms or face fines running into hundreds of pounds.

A spokesman for HMRC insists that "extensive advertising, media and online activity" means those affected will know about the changes. However, it's not hard to imagine that some families will get a nasty surprise when they discover that they owe hundreds of pounds in additional tax.

But then the Conservatives have long appeared complacent over the policy. Last year, in a bid to assuage Tory MPs fearful that the party could be heading for a 10p tax moment, George Osborne released private polling showing that 82 per cent of people favour the plan, with just 13 per cent opposed. But as I've argued before, more important than the question of how many oppose the policy, is the intensity of their opposition. If even a small chunk of the 13 per cent opposed to the move vote against the Tories in protest at the next election, the party will suffer significant losses. And those who lose out certainly won't be feeling charitable if the government hasn't had the courtesy to inform them of as much.

George Osborne announced the coalition's plan to remove child benefit from higher earners at the 2010 Conservative conference. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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Jeremy Corbyn urged to intervene in Momentum's feud

Pressure is growing on the Labour leader to attend to the troubled organisation's splits. 

Jeremy Corbyn is being urged to intervene to help settle the breach in Momentum, as the troubled organisation’s internal divisions again spilt into the open after a fractious meeting of the organisation’s national committee left Jon Lansman, the organisation’s founder, contemplating exercising his “nuclear option” and shutting down the group completely.

Proposals to give decision-making power to the whole of Momentum’s membership were narrowly defeated, with the organisation resting on a delegate system. The public argument advanced by Lansman’s allies, who backed the one member, one vote system, was that the e-ballot would give greater control to members as opposed to bogging the organisation down in hidebound procedures.

But privately, insiders admitted the plan was a gambit to see off Lansman’s internal critics, including the Alliance of Workers’ Liberty, a Troskyite grouping, who are small but well-organised, giving them an advantage over the rest of the membership.

In a blog, Laura Murray, the newly-elected women’s representative, said publicly what allies of Lansman have been saying privately for some time: that the plan of the AWL and its allies is to take over Momentum with a view to setting it up as a rival party to Labour.

Lansman’s critics, however, say that he is treating Momentum as his personal fiefdom and is stifling the internal democracy of Momentum. The division, which first flared into life following the row over Jackie Walker’s remarks at Labour party conference, has taken on an additional dimension due to the growing frustration of some at what they see as the leadership’s right turn on immigration, free movement and taxation. Clive Lewis’ remark that free movement “has not worked” and John McDonnell’s support for the 40p rate cut are particular causes for alarm.

However, Jeremy Corbyn’s popularity remains largely undimmed, and the Labour leader is coming under pressure to intervene in the row. Lansman has also met with Andrew Murray, who as well as being the father of Laura Murray is Unite general secretary’s Len McCluskey’s chief of staff and a key link into the Labour leader and McCluskey himself.   One trade union official said “I think it’s time for Jeremy and John to intervene to straighten out the situation, so we can get on with the job of holding the government to account”.

Should Corbyn refrain from wading in, Lansman still retains the ability to shut down Momentum, taking its valuable maillist with him, and starting again from scratch. However, the so-called “nuclear option” would mean crippling the left in its internal battles with the Corbynsceptics ahead of crucial clashes about conference delegates and parliamentary selections. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.