Budget hits the poorest hardest, says IFS

nickmason

Malcolm. wrote: »

Hi Nick, why is the coalition means testing child benefit. Nursery costs in the UK are far higher (cost over 12k year in my area) than abroad and the Conservatives promised to be family friendly?

The tories appear to only favour poor people having offspring.

Urghh - have just come back from dinner with a friend (who works in childcare) and was getting beaten up over this! I don't know the answer. I think it's simply that we can't afford as many universal benefits as we have had. Which means you either cut them or means-test. No option is perfect - indeed frankly all options are pretty damned painful.

As for nursery costs - I agree that they are swingeing. The default blame for that seems to be laid against Health & Safety's door, but that's another damned difficult one to do anything about.

By the way, your last point is a bit daft. It's just that we don't do eugenics etc - and I'd rather spend limited resources on a poor child than a rich one. Seems sensible...

Malcolm.

nickmason wrote: »

By the way, your last point is a bit daft. It's just that we don't do eugenics etc - and I'd rather spend limited resources on a poor child than a rich one. Seems sensible...

I'd rather spend the same on both. Seems fair...

Means testing benefits leads to public sector non-jobs, and individuals lying about their circumstance.

nickmason

Generali wrote: »

I think part of the argument the Tories have, which is one to which I am sympathetic is that if you make people stand on their own two feet then it may be a little painful at first but ultimately they will usually be better off.

I've said this before, but tied in with this is that one should expect an individual's earnings to increase at a faster rate than benefits. So the long game should be to take the pain now. But it seems quite difficult to persuade some people of this. My father would say that pride had a role in it.

nickmason

Malcolm. wrote: »

I'd rather spend the same on both. Seems fair...

Means testing benefits leads to public sector non-jobs, and people lying about their circustance.

YOu've correctly identified some of the problems with means testing. There are more.

But that doesn't mean spending the same on both is right. As I said, all the options are painful. And I do wish that everyone would stop chasing "fair". fairer is the best we can hope for. we're not starting from a fair taxation base - and we'll never get there.

Malcolm.

nickmason wrote: »

Urghh - have just come back from dinner with a friend (who works in childcare) and was getting beaten up over this! I don't know the answer. I think it's simply that we can't afford as many universal benefits as we have had. Which means you either cut them or means-test. No option is perfect - indeed frankly all options are pretty damned painful.

As for nursery costs - I agree that they are swingeing. The default blame for that seems to be laid against Health & Safety's door, but that's another damned difficult one to do anything about.

By the way, your last point is a bit daft. It's just that we don't do eugenics etc - and I'd rather spend limited resources on a poor child than a rich one. Seems sensible...

Both myself and my wife contribute a large amount in taxation and yet we are stung by childcare costs. To be honest, high earners wanting families appear to be far better off taking their talents abroad. The UK does not appear to be child friendly and the conservatives are not helping.

<I'm being slighlty more blunt than normal due to alcohol, hic>

Malcolm.

nickmason wrote: »

YOu've correctly identified some of the problems with means testing. There are more.

But that doesn't mean spending the same on both is right. As I said, all the options are painful. And I do wish that everyone would stop chasing "fair". fairer is the best we can hope for. we're not starting from a fair taxation base - and we'll never get there.

It's not fairer, the extreme top end is full of tax loopholes which are not being closed.
The bottom end is full of benefit fraudsters, many of which could be prevented by taking biometric data.

Those between the two polls are being stung.

O.K. it's a bit of an over-generalisation, however I'm sure you get the gist.

nickmason

Malcolm. wrote: »

It's not fairer, the extreme top end is full of tax loopholes which are not being closed.
The bottom end is full of benefit fraudsters, many of which could be prevented by taking biometric data.

Those between the two polls are being stung.

O.K. it's a bit of an over-generalisation, however I'm sure you get the gist.

Presumaby you're greatful then for the budget, the effect of which is the u-shaped curve of the poorest and the richest being, in relative terms, stung hardest?

Malcolm.

nickmason wrote: »

Presumaby you're greatful then for the budget, the effect of which is the u-shaped curve of the poorest and the richest being, in relative terms, stung hardest?

I know enough about modelling to appreciate the u-shaped curve is only as good as its assumptions.

I very much doubt it does what it says on the tin.

nickmason

Malcolm. wrote: »

Both myself and my wife contribute a large amount in taxation and yet we are stung by childcare costs. To be honest, high earners wanting families appear to be far better off taking their talents abroad. The UK does not appear to be child friendly and the conservatives are not helping.

<I'm being slighlty more blunt than normal due to alcohol, hic>

And I know a lot of very high earners - those with household incomes of #100k or more - who are doing exactly that, leaving. Which is why you can't just hammer the rich.

Don't you get to enjoy tax breaks on your childcare, though? If you contribute a large amount, then I would think you are getting a #100 "voucher" for #60. Which is of course pushing the price up, and allowing it to appear higher than it really is.

nickmason

Malcolm. wrote: »

I know enough about modelling to appreciate the u-shaped curve is only as good as its assumptions.

I very much doubt it does what it says on the tin.

Is this where I say "the IFS is a very well respected and independent body, so their figures showing a u-curve on relative costs of the budget must be right?" To be honest, it looks right to me - although I do agree that there's a lot of tax evasion at one end and avoidance at the other.