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Means-testing child benefits will hit the poor, not the rich

This article is more than 14 years old
Evidence shows that the complexity and stigma involved would reduce take-up

Jackie Ashley considers the difficulties the government is having distinguishing "Labour cuts from Tory cuts, in a way that mobilises the maximum support" (Labour's cuts should start with the middle classes, 14 September). But it's not massive loans to banks or bonuses that are being targeted, but universal benefits, public services and Sure Start. These ideas were triggered by a report from the Institute of Directors and Taxpayers' Alliance calling for "a 10% cut in the civil service, 'non-frontline' cuts in health, education and local authorities, and a one-year freeze in public sector pay".

"Middle-class welfare" is also in the firing line. Ashley says: "If there have to be cuts, then taking away child benefit from the better-off, and the winter fuel payment from richer pensioners, would seem sensible ideas." But is this an effective way to redistribute wealth, or a slippery slope that will damage the poorest families and do little to generate social stability or economic growth?

Ashley misses the point of universal benefits. Simple, straightforward and easy to claim, child benefit reaches more children living in low-income families than any of the complex means-tested benefits or tax credits intended for them. With a take-up rate of 98%, it provides financial security in households that are struggling to keep afloat.

Means-tested benefits are costly to administer and prone to high levels of error. Complexity and stigma reduces take-up. Given the hostility displayed by political parties and the media towards benefit claimants, it's hardly surprising that families are loth to apply for them.One parent told the Child Poverty Action Group: "You're made to feel like you're sponging off the system."

Others have written to us praising the reliability of child benefit: "Tax credits are difficult to apply for and you always worry you're going to lose them. Child benefit is paid into my account every month so there's always something there for the children." The simplicity of the system means that child benefit reaches virtually all the families that need it most. Start means-testing it and many poorer families will miss out.

Your columnist Deborah Orr also takes issue with the notion that "some very, very rich parents" receive child benefit and "bung it in the Tuscan holiday fund", and pours scorn on the notion that "if everyone doesn't claim it, then it will be stigmatising" (What does it mean to be middle class?, 24 September).

Removing child benefit from affluent families might make us feel that justice has been done, but there is a better way to ensure that those with the broadest shoulders bear more of the burden: increase means-testing in the tax system.

A hesitant approach to tax increases has resulted in a society which, as Ashley points out, "prefers spending cuts to higher taxes", because the better-off assume that cuts will not be aimed at them. But this is a rash assumption in a world in which economic instability and a contracting labour market is increasing everybody's reliance upon the support of social, educational and health services. Removing the better-off from the welfare system does nothing to change the attitude of the rich to paying more tax, and damages social solidarity just when it is needed most.

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