Means Testing Child Benefit

The government have begun the long-awaited process of means-testing Child Benefit.

David Cameron, yesterdayAt first glance this may seem like a fair decision – why should rich families receive state support to help raise their children?

But it’s not quite so straightforward.

For starters, many rich families never claim their Child Benefit entitlement anyway. So the state isn’t supporting them.

Then there’s the rather embarrassing ‘loophole’ in the government proposal – which intends to stop any family with a single wage earner of £50,000+ from claiming Child Benefit, but doesn’t stop families with – for example – two wage earners of £49,999 from claiming; so it isn’t necessarily preventing the very wealthiest from claiming.

That isn’t real problem with these proposals however.

This week the government is sending out one million letters to households explaining that they may lose their Child Benefit. How much is this going to cost us?

Well the cost of the letters could reach £500,000 in postage alone at second class rates (and even bulk mailing discounts will only reduce that so far – even if cuts the cost to £250,000 that’s a quarter of a million we aren’t saving due to these proposals). Then we need to pay the wages of the staff who type and mail the letters in the first place, and who administer the responses. How much do 2 million envelopes cost? 1 million typed letters and 1 million forms? And that’s just the initial extra stationery cost.

Even more costly, we now need to pay the expense of actually means-testing these parents – paying the wages of civil servants who will assess each individual claim, and the wages of those who will respond to the inevitable mistakes, appeals and changes of circumstance that come with a means-testing programme.

You see, Child Benefit at the moment is incredibly simple to administer – everyone gets it. As soon as we begin means-testing, we need to bring in more staff, send out more letters and massively increase the cost of execution.

So how much will this measure actually save, being as it affects a mere 15% of the population?

Enough to justify the increased civil service costs? Enough to justify the loss of efficiency (and subsequent rise in costs as complaints, appeals etc. increase) in the rest of HMRC as civil servants are transferred to work on Child Benefit delivery?

Almost certainly not.

So why do it?

Because it opens the door to further Child Benefit cuts.

As soon as Child Benefit ceases to be universal, the government can discuss cutting it further – as they have already begun to do, suggesting that families with more than two children are somehow feckless and wilful (when in fact they are the only families in the UK selfless enough to help grow our population!).

2 thoughts on “Means Testing Child Benefit

  • 30th October 2012 at 07:55
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    That is a trick very popular these days. It also opens up another vector of attack – whenever a political party considers it useful for their agenda, they can pull out the “welfare system X costs so much” card, where the listed cost obviously includes all the bloated and unneccessary beaurocracy. And then they propose reducing the benefits, not the beaurocracy.

    I once read (not sure if it is true, but it sounds plausible) that if the current unemployment aid system in Germany would remove all parts of the administration that is just there to control and check and sometimes even stalk people receiving benefits just to make sure that a) no one ever gets a single cent more than absolutely legally required and b) people who are deemed “uncooperative” or “unwilling to work” get sufficiently punished (which means they will receive substantially less than the subsistence level for at least 3 months; in extreme cases they might get nothing at all for such a length of time); if all that beaurocracy were removed and just the money paid to anyone who plausibly states they need it (i.e. most basic check like their monthly income, which the finance office already knows anyway, so it should not need more than a few seconds to check that, we have computers), the system would cost less in total than it does now.

    This means that the very purpose of the system is not to make sure no tax money gets wasted, but to keep all receivers of unemployment aid on their toes, make sure they know who is boss, and that they remain always in fear of punishment should net not put up with whatever stupidity the beaurocracy throws at them (of which there is a lot).

    Reply
    • 30th October 2012 at 11:39
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      Definitely.

      I know that a lot of the effort put into the UK benefits system to stop people fraudulently claiming sickness benefits costs the taxpayer £billions

      We pay a private contractor, Atos Origin, to assess claimants – but they have a 60% failure rate, which results in expensive (for the taxpayer) appeals and tribunals and also makes it incredibly difficult and stressful for disabled people to claim…

      I further suspect that all doesn’t actually make it any more difficult for a determined fraudster to ‘play the system’ anyway – it’s part- public relations (“look, we’re cracking down on benefit fraud!”) and part-ideology (“it should be difficult to claim benefits, even if you need them”).

      Reply

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