Child benefit row erupts

We note that the Chancellor’s proposals for means-testing of child benefit are floundering on the practicalities of the scheme. We are not keen on child benefit in principle, as we take the view that people should not require these hand-outs. On the whole, they give with the right hand money that has been taken away with the left, all at considerable expense. But having put the system in place, means-testing merely compounds the drawbacks. Further costs are added in administration, and at the threshold there is a very high marginal rate; those who are just over the threshold are worse off than those just below it, just as with stamp duty on house sales. The objection is really against means-testing, which is the same argument that applies against ability-to-pay tax systems. With the present proposal, it seems that the nuts-and-bolts of the means-testing are more complicated than the Chancellor appreciated.

We are, however, surprised that he failed to realise this before announcing it in the Budget. Was he warned by the Treasury or did they also fail to spot the difficulties? It does not inspire confidence in those in charge of the nation’s finances.