The Tory Party conference is in full swing, and new proposals to cut child benefits are making the headlines.
George Osborne, the Chancellor, announced yesterday that child benefit will be removed from families where one parent earns more than about £44,000 a year.
It is though that around 1.2 million families will lose payments currently worth £20.30 a week for the eldest child and £13.40 for each subsequent child, saving around £1bn a year for the Treasury.
Before the election Osborne said he would preserve universal child benefit – for decades paid to families regardless of their income – as it was “valued by millions” of families. Now it seems he has changes his mind.
Labour has argued that families will be made to pay for the government’s over-zealous approach to cutting the deficit. “Whatever people’s income, it is families with children who are paying most – through cuts in child tax credit, maternity allowance, child benefit and housing benefit,” said shadow work and pension secretary Yvette Cooper.
The idea of removing benefits from the better off may seem like a reasonable measure. But the crude way in which this cut will be imposed could come back to haunt the Tories.
What about someone earning just below the threshold who has three children? They would continue to receive around £2,500 per year. But a new job or a promotion that earns them an extra £1,000 each year, taking them over the new limit would mean they lose all their child benefits and are therefore much worse off.
And the fact that only one income is counted will create anomalies too.
A family with one earner who is paid £45,000 will lose child benefit. But a family with two earners each on £40,000 will continue to receive the payments despite their much higher total income. There are thought to be around 900,000 families in this latter category.
David Cameron this morning defended this unfair aspect of the policy, claiming that it would be too difficult to work out entitlement on the basis of family, rather than individual, income. Lame, Prime Minister. Very lame.
The politics of this one is just as difficult for the Tories. While cutting payments to the rich would be largely popular, many of the losers will be the kind of middle class voters who may well have supported the Tories at the election.
Already the Telegraph has called the plans “brutal” and the Institute for Fiscal Studies has said that the manner of implementation is “rather unfair”. The Daily Mail meanwhile pointed out that the measure will take money out of the economy.
Former Tory front bencher David Davis became the first senior party figure to raise concerns about the move, arguing that it could damage families. And last night Children’s Minister Tim Loughton said the move to cut the benefit from 1.2 million families might need revising. Even the Chancellor’s cabinet colleagues are worried, it seems.
George Osborne has taken a gamble by cutting from the middle class. He hopes that the losers from this cut will simply accept that they have to do their bit – and will forget about it when it next comes time to go to the polling station.
This is only the start of the details of government cuts, and there will be far worse to come. Perhaps the Chancellor should get used to being unpopular now.