Chancellor takes unusual step of commissioning a survey which highlights backing for move to slash childcare costs for well off
The chancellor, George Osborne, has taken the unusual step of commissioning a poll to show critics in the rightwing media and on his own backbenches how badly out of step with public opinion they are when attacking his plans to take away child benefit from higher income earners.
Osborne is aware the move is controversial with many key Conservative supporters, as he prepares to send letters through the HMRC to higher income taxpayers starting this week to explain the move.
The poll shows the policy is supported by 82% of those surveyed, 78% of people with children under 18 and 74% of households earning over £69,000. The results of the survey were released as a wider political argument about the costs of childcare moves centre stage this week with publication of research showing that going out to work full-time now is hardly worthwhile for a growing number of second earners in middle and low income families.
In the most extreme case where a second earner takes a full-time job at the minimum wage, a couple who use child care could be just £4 a week better off with two incomes than with one.
The study by the Resolution Foundation, due to be published as part of a wider study into living standards this week, suggests a family with two children in which two earners bring in a total of £44,000 could end up just £4,000 better off than a single family earning £20,000 less. Child benefit is being removed from the top 15% of earners in a move first outlined by Osborne at the Tory party conference two years ago.
It is probably the single most noticed measure the chancellor is taking to target the middle classes and to show the country is collectively suffering the pain of deficit reduction.
The reform comes into force in January and is due to reduce the deficit by £1.7bn a year.
The Conservatives assert they polled the public on alternative ways of raising the cash such as tax increases; cuts to other welfare affecting lower income families; more borrowing; or further cuts to spending on public services. None of these were as popular as removing child benefit from higher rate taxpayers. The policy has been frequently attacked for the “cliff edge” effect whereby two-earner households each making just under the cut-off point keep child benefit while a single earner household just above the cut-off point loses all child benefit, even though the overall income of the household is lower than the double earning household.
The Free Enterprise Group of Tory MPs warned – citing research by the Institute for Fiscal Studies – that the number of higher-rate taxpayers will increase from 3.7 million in 2011 to 5 million by 2014.
Osborne adapted his child benefit proposals in the March budget by raising the cut-off point to £60,000, with a longer sliding scale, instead of £42,475, but the plans have still met criticism.
Child benefit will now be tapered off after £50,000 and completely withdrawn at £60,000.
Asked if a general increase in income taxes would be better, 18% of the poll think it would be better, and 75% worse.
The polling was conducted by Populus between 24-26 October, and the full tables were released by the polling company.
The Resolution Foundation will warn that childcare costs are a disincentive to mothers going out to work. The issue of child care costs is likely to be one of the few areas in which the main parties attempt to make positive offers to the electorate at the next election.
Liz Truss, the minister responsible for childcare,, and previously an advocate of deregulation to cuts costs visited France last week to look at their system of universal pre-school education. Childcare experts said the best way to prevent the rising cost of childcare stopping parents going out to work would be to fund the provision of care, rather than to concentrate on reforming the system of benefits and tax credits.
Kate Groucutt, deputy chief executive of the Daycare trust, said the best short-term solutions to tackle the problem of childcare costs acting as a disincentive to work would be to reverse the coalition government’s cut to the child tax credit and for the policy to expand free nursery education for disadvantaged two-year-olds to be made universal as soon as possible.
But she added: “Longer-term, evidence is emerging that supply-side funding is actually a more effective way of getting higher quality, more accessible childcare rather than providing credit transfers. That’s always been the Daycare trust’s position.”
Mumsnet co-founder Justine Roberts said mothers would ideally like to see something akin to the French system of universal state-funded pre-school childcare, or alternatively help through tax credits proportional to parents circumstances. But she suggested neither solution was likely to find favour within Westminster. She said: “Childcare costs are probably the single biggest concern for Mumsnet users and the biggest barrier-keeping parents from work. In the last month alone there have been over 500 discussions on the cost of childcare. We have a very piecemeal economy of lots of different bits and bobs with the odd tax credit here and something else there. What parents really want is dependable, high quality childcare that is not extortionate.”
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