Family Values, Or The Value Of A Family.

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UPDATED 23/1/12 (see bottom of article)

OK, so the head-on launch back into full time blogging didn't work. I'm trying again.

There have been a few blogworthy issues that have come up over the past few weeks. In particular, the rest of the world seems to have woken up to the fact that we in Scotland  may have a preference for deciding for ourselves how we live our lives in the future. I'll come back to this.

In the meantime, let's have a look at something of universal interest - money. In this case in the form of child benefit.


In the United Kingdom of Great Britain and Northern Ireland, our benificent government feels able to contribute to the costs associated with bringing up children to the tune of £20.30 for the first child, and £13.40 for every subsequent child. This means that over the last 19 years or so you, Dear Reader, have given me something in excess of £29,000 in unearned, untaxed income. For that, I thank you. Believe me, I never fail to toast you as I raise the glass for which you have paid, and it has allowed me to rise above the Co-op cooking wine.

Or at least it would have done, were it not the case that you have been good enough to donate that generous amount not to my good self to Mrs TP, because Child benefit is paid to the mother. Us blokes are apparently considered too feckless and uncaring to be allowed to receive this munificence. I have long held a suspicion that this would give good grounds for a case of sex discrimination against Her Majesty's Britannic Government but for the sake of domestic harmony I have let this sleeping dog doze on.

Child Benefit is interesting because it is a "universal" benefit, that is it is paid to every qualifying recipient whether or not she is in financial need of it. It is an easy thing to administer, all you have to do is register the birth of a child (a legal compulsion) and the money will follow shortly thereafter. And it continues to flow uninterrupted until the young person who is the trigger for the government's generosity with other peoples' reaches the age of 20 or leaves education after 16. Simple and reliable.

And universal. Every qualifying family in the UK is paid this money, whether it is needed or not. In some families this payment wll be the difference between shoes or going to school barefoot, in others it will defray part of the costs of the livery stable. Some kids will have winter coats, others will have new skis. It's very unfair.

Or very fair indeed, depending on your point of view. Everyone is treated the same, what could be fairer than that? The problem is not that it is unfair, it just seems to be. It makes a bigger diffference to those with little money than those who have piles of gold (to quote Kenneth Horne), so is a worthwhile benefit. And because it is universal it is cheap to administer and easy to understand.

So it has to change. The Coalition government sees a way to save about £1Bn per year (out of about £12Bn) by stopping paying for those skis and livery fees. And in the spirit of child benefit their solution is simple to understand. Any family with a higher-rate taxpayer will lose the payment completely. In the phrase used by that annoying meerkat:- "Simples!".

Except it isn't. Funny how whenever politicians have great ideas to save money and make life fairer, they make life more complicated. You'll have noticed that it's a family with a higher-rate taxpayer. For argument's sake we'll take the cut-off salary as £43,000. Obviously a family with two parents each earning £42,999 still qualify for the benefit, another family with one on £43,001 and one on £12,000 will not.

So bang goes the fairness. So to make it fairer again they're floating all sorts of ideas about tapering the benefit based on household income. And there goes the simplicity.

And that's not the worst of it. To calculate the household income, we'll need to know who is in the household. We're not talking about the 1950's any more: Daddy doesn't go to the office every morning leaving his loving wife at home with the children. No, sometimes Mummy goes off to work, sometimes both, sometimes neither. Sometimes they aren't even married!! So how does Her Majesty's Revenue and Customs service work out who's a family any more so that they can combine the declared earnings to see if one of them has breached the magic number?

At first glance this shouldn't be too difficult, should it? All we would have to do is look through the extensive, highly detailed and faultless PAYE and self-assessment records to find two taxpayers with the same surname resident at the same address: then we have to trawl the CB records to see if one of them (the female) is claiming child benefit.

Except: the records aren't that great (I've worked inside HMRC and was glad to leave). Data matching is an art, and not an easy one. To give you an example, the latest Census  (I worked on that, too) had over 90 different rules to be applied to each personal record to ensure that it could not be confused with any other record. And that was on a clean database, with all data collected in a uniform format on the same day, not cobbled together in multifarious ways over many years.

And there are all sorts of other problems. What if the parents don't share a surname, the two tax payers are not the parents but father and daughter, mother and son, siblings or even completely unrelated? Do unmarried couples count? What about communal homes, with more than two "parents"?

I can see a nice juicy £200M contract for a feasability study here for Accenture or McKinsey or one of that crowd, plus £100M per annum to run it thereafter. And remember that HMRC is the highly efficient organisation that managed to post the entire CB database to person or persons unknown in 2007 (allegedly).

No, George and CMD, these changes not going to fly. Leave CB as it is or scrap it altogether.

UPDATE 23/1/12

I discovered that I had calculated the total CB contribution incoreectly - i had used a monthly payment instead of a weekly one. This has been corrected above. I now need to find out where £29,000 of beer money has gone over the past couple of decades :(

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