Children play outside an estate in Govan, Glasgow.Photo: Getty Images
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Good news for families? The costs of the Conservatives are higher than you think

Children have been the biggest losers over the last five years - and as a new report shows, there is more to come.

“Good news for family budgets” is how the Chancellor welcomed this week’s (negative) inflation figures, but the pinch parents have been feeling in the pocket can’t just be put down to rising prices. It’s also about how we’ve been short-changing our children.

In recent years, the support that families receive to help cover the extra costs of children (the cost of meeting the basic needs of a child are £164 a week) has diminished in value. For some, it has evaporated altogether: higher earning parents lost their child benefit in 2012. For the remaining 4.1 million families who are eligible, the value of children’s benefits has been slowly but surely eroded by year after year of freezes (child benefit) and under-inflation uprating (child tax credit).

Losing a pound here and a penny there is something most of us don’t immediately notice, but over time, it does add up. Remember the year-on-year damage wreaked on the basic state pension when the link with earnings was broken in 1980?

New research published today ‘Short-changed: The true cost of cuts to children’s benefits’ by Child Poverty Action Group and other members of the End Child Poverty coalition shows that a typical working family will lose £513 this year alone as a result of the decisions made in the last parliament to uprate children’s benefits below inflation. For many, this can make a genuine difference: being able to send your child on a school trip, for example, heat your home and even eat properly. The research found that over 2 million children live in families who have had to cut back on food or heating their home as a result of the falling value of children’s benefits.

The way that children’s benefits have been uprated stands in stark contrast to the treatment that pensioners have received in recent years. The Coalition Government didn’t just restore the link with earnings, it gave the basic state pension ‘triple lock’ protection (pensions would be uprated by prices, earnings or 2.5%, whichever is higher)  in a move attracting widespread support and seen by many as an important way to maintain income and reduce pensioner poverty over time.

 With children twice as likely to be poor as pensioners, why is there no triple lock for children? The glib answer is that children don’t vote, but it’s more than that.

Anyone familiar with online comment threads will be aware that a small minority of people see children as a private luxury rather than a public good: “If you can’t feed ‘em, don’t breed ‘em” may be an unpalatable way of putting it, but deep down some seem to share the view that if you have children you should carry all the costs yourself. By that measure, having  children would soon become the preserve of only the rich.  Surely no one wants that.

It can’t just be cost either – the Chancellor has spent billions on raising the personal tax allowance, with most of the money going to people higher up in the income distribution. (Surprised? Thought this policy is all about lifting the low paid out of tax? Read page 13 of this IFS note – the low paid either don’t benefit at all or benefit least because the benefit system claws back much of the gain.)

Thankfully, most of us recognise that we have both individual and collective responsibility for children. Most people consider it important to reduce child poverty, with eight in ten seeing this as very much a responsibility of the state.  Likewise, recent polling as shown that only one in ten parents in the UK thinks that children’s benefits should continue to be increased below inflation. Investing in children makes sense to most, appealing as it does to the head (children are Britain’s future workers and tax-payers) and the heart (children are not responsible for their own economic well-being).

Last year, Iain Duncan Smith claimed he was on track to end child poverty by 2020, but most see the target getting ever further out of reach.  Our analysis is that a triple lock for children’s benefits would result in more than a quarter of a million fewer children living in poverty by 2020. That’s more children lifted out of poverty than the Government claims its flagship Universal Credit policy will eventually deliver.

It’s time we stopped short-changing our children.  


Lindsay Judge works for the Child Poverty Action Group. Short Changed: The True Cost of Cuts to Children’s Benefits can be read here.

Lindsay Judge is senior policy and research officer for the Child Poverty Action Group.

Photo: Getty Images
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Autumn Statement 2015: whatever you hear, don't forget - there is an alternative

The goverment's programme of cuts is a choice, not a certainty, says Jolyon Maugham.

Later today you will hear George Osborne say there is no alternative to his plan to slash a further £20bn from lean public services by 2020-21. He will also say that there is no alternative to £9bn cuts to tax credits, cuts that will hit the poorest hardest, cuts of thousands of pounds per annum to the incomes of millions of households.

But there is.

As I outlined here the Conservatives plan future tax cuts which benefit, disproportionately or exclusively, the wealthy. Suspending those future tax cuts for the wealthy would say, by 2020-21, £9.3bn per annum.

I also explained here that a mere 50 of our 1,156 tax reliefs cost us over £100bn per annum. We don't know how much the other 1,106 reliefs cost us - because Government doesn't monitor them. And we don't know what public benefit they deliver - because Government doesn't check.

What we do know, as I explained here, is that they disproportionately and regressively benefit the wealthy: an average of £190,400 per annum for the wealthiest.

And we know, too, that they include (amongst the more than 1,000 uncosted reliefs) the £1bn plus “Rights for Shares Scheme” - badged by the Chancellor as for workers but identified by a leading law firm as designed for the wealthiest.

Simply by asking a question that the Chancellor chooses to ignore - do these 1,156 reliefs deliver value for money - it is entirely possible that £10bn or more extra in taxes could be collected without any loss of  public benefit

To this £19bn, we might add the indiscriminate provision - both direct and indirect - of public money to wealthy pensioners.

Those above basic state pension age enjoy a tax subsidy of up to 12% on earned income.

Moreover, this Office for National Statistics data (see Table 18) reveals that the 10% of wealthiest retired households - some 714,000 households - have gross pre-tax and pre-benefit private income of on average £43,983. Yet still they enjoy average cash benefits from government of £11,500 per annum.

Means testing benefits to exclude that top 10 per cent of retired households would save £8.2bn per annum. And why, you might wonder aloud, should means testing be thought by the government appropriate for the working age population, yet a heresy for retired households?

Add in abolition of that unprincipled tax subsidy and you'll save even more. 

So there are alternatives. Clear alternatives. Good alternatives. Alternatives that enable those with the broadest shoulders to bear some share of the pain. Don't allow yourself to be persuaded otherwise.

Jolyon Maugham is a barrister who advised Ed Miliband on tax policy. He blogs at Waiting for Tax, and writes for the NS on tax and legal issues.