Jane Devine: The reform of child benefit

It WOULD be hard to describe the programme to reform the benefits system in the UK as gentle or even as being eased in.

George Osborne. Picture: Getty
George Osborne. Picture: Getty

In fact the changes, brought in by Chancellor George Osborne and Secretary of State for Work and Pensions Iain Duncan Smith have been more accurately described: swift, harsh, extreme and even devastating. So much so that councils across Scotland and the Scottish Government have set up funds and their own methods of “exempting” people in order to mitigate against the worse effects.

But not all the reforms are like this. One reform in particular could easily be described as being implemented gently, almost gingerly, in fact, and that is the reform of child benefit.

Sign up to our Opinion newsletter

When it was initially announced, anyone earning over £42,725, the 40 per cent tax threshold, was to lose all their benefit. But the Tory backbenchers threatened revolt and Osborne backed down. There has been no such climbdown on the bedroom tax.

Then there is the way in which child benefit is being cut. Families either opt out, or pay back the proportion they owe through the self-assessment part of the tax system a year later. This effectively gives people an interest-free loan, which they are then being trusted to pay back.

No such concessions are being made for the other welfare reforms which the Child Poverty Action Group in Scotland estimates will plunge 65,000 additional children into poverty by 2020 as families struggle to manage with less money.

Now, everyone’s circumstances are different and it is dangerous to extrapolate fact from anecdote, but it is equally difficult to see how anyone earning just under a grand a week could argue that they need state handouts.

Yet, these “high earners” are being treated so much better than those with low or no earnings. The benefits which people rely on to feed and clothe themselves and their families, heat their homes and pay their rent are the first to be savagely cut; while the cuts to child benefit which many of those affected do not rely on at all, but use to top up their kids’ bank accounts, are being eased in a year later with favourable repayment terms, and in a way in which many with a good accountant can probably avoid. It is entirely the wrong way round.

In fact the reform of child benefit is of such little consequences to these “high earners” that thousands of them have failed to register for self-assessment by Saturday’s deadline. It takes a few minutes to register with HMRC and avoid the penalty which could be up to 100 per cent of the benefit received.

This sums up the issue perfectly: on one side we have people having to chose between food and heating; and on the other we have people risking a penalty of up to £1,000 because they can’t find five minutes to fill out a form.

George Osborne clearly favours the second group, and I just wonder whether he’ll let them off with the fine, too.