Wednesday, October 06, 2010

Very smart or stupid

The level of backlash from their natural supporters must have come as a surprise to the Conservatives. They thought that they had laid a clever trap for the Labour party by undermining the universality of Child Benefit in taking it away from the higher earners. They thought that Labour would launch a full-on attack and would appear to be defending the wealthy. Shrewdly, Labour has been remarkably quiet. Ed Miliband hasn't been all over the media and there has only really been a little comment from Yvette Cooper.

In part, the gamble appears to have worked - a YouGov poll shows 83% support for the Child Benefit restriction - and the Tories have calculated that the annoyance of those on the higher tax rates will have subsided by the election and won't actually affect their votes, particularly if the economy has turned around by 2015. The change can be held up as an example of a government unafraid to make cuts that will affect its own supporters, evidence that we really are all in this together. Only 15% of people pay the higher rate of tax in any case, so that level of support from everyone else is hardly surprising, but rather more will aspire to that level of earning and will feel demotivated by the thought that a few pounds more in pay could set them back thousands in benefit. They will be fuelled by the Tory-supporting press, with the Daily Mail being particularly vitriolic in classifying this as an attack on the middle class - although they seem to consider that the middle class starts with an income of over £80k. Given that Cameron suggested that he and Sam Cam were middle class - with personal wealth into eight figures, that is rather hard to sustain as an argument - it is no wonder that there is a disconnect with reality at all levels on the right.

This doesn't mean that the government isn't open to attack on the change - it goes against explicit pre-election promises from George Osborne and Philip Hammond. It has some glaring anomalies - the most obvious being the fact that a household with two earners both on £40k and a joint income of £80k will continue to receive Child Benefit, while the stay at home parent next door with a partner on £45k receives nothing. Osborne is using a very blunt tool to make a political point. Justifying retaining Child Benefit for higher earners in these tough economic times is very difficult - arguments about the cost-effectiveness of universality or the need to maintain broad support for the welfare state are hard to make, still less can we campaign on the fact that means testing ensures that a good number of those entitled to claim do not do so. Even the process story that this policy shift seems to have come out of nowhere, such has been the surprise amongst Tory ministerial ranks, fails to have ignited much.

Sharing the pain isn't a bad policy from the government by itself but a degree of consistency is required and today's back of an envelope policy shift, hinting at a new married couples allowance, shows an alarming, if unsurprising weakness and incoherence. The main argument that the change would help reduce the deficit has proved specious, as the Conservatives have been forced into promising a married couple's tax allowance that may well consume more than the £1 billion saved by the change in Child Benefit. The apology from Cameron is showing weakness - he would have had more credibility if he had stuck to his original line, rather than whimpering that they forgot to put it into the manifesto (or tell most of the Cabinet).

What must have seemed a good, brave political idea at the time is fast becoming an albatross around the party's neck.

No comments: