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Stop paying state pensions and child benefit to the wealthy

2 Comments 24th July 2010

It was decided recently by the government that Child Benefit is a 'Universal benefit' and that any proposal to means-test it, is more costly than the cost of  continuing to pay it to the wealthy. 

I do not believe this is fair comment, but have none-the-less written a proposal to get round costly means testing……..

Jilly Cooper once famously remarked that  Child Benefit paid for the extra bottle of champagne from Sainsbury' each month. Along with many wealthy recipients of the 'Universal' benefit she seemed free from any moral conscience in accepting the state sponsored bottle of champagne. Other wealthy people have had a conscience and have declined the payment or donated the monthly amount to charitable causes without drawing attention to their actions.

I can only presume that the same reasoning is applied to state pensions payments to Millionaires – that to means-test it is more costly than continuing payment to the wealthy .

 For Child Benefit, my proposal is to avoid costly time consuming means testing. Every year in April when the P60 is produced, the Inland Revenue passes this information by email to the relevant Child benefit office. Anyone who is seen to earn over say £150,000 pa ( the small percentage of the population who actually earn over £150,000  – it really is a small percentage)  has the benefit stopped. Likewise, if the person takes a huge cut in income in a following year and falls below the £150,000 threshold the benefit is reinstated for the next year….and so on. For couples both p60s are taken into account

For the people who for some reason do not have a p60 the Inland Revenue has the information of a persons tax return relating to income from investments and savings and this can be used by the child benefit department. 

You then have people like the Prime Minister and the Deputy Prime Minister who apparently earn below the threshhold of £150,000 who are, on that basis, eligible for Child Benefit payments but who also have enormous wealth in savings and investments. Therefore, there is an obligation on the Inland Revenue to pass on the annual declaration of interest earned on savings and investments as well as the income from paid employment. (I suspect under my proposal they would not get the Child Benefit due to the wife's income being taken into account)

 On the pension issue, anyone wanting to receive the state pension must also agree to the Inland Revenue submitting their annual Tax return information to the Pensions Agency and like the Child Benefit system, can only gain the state pension if they are below the £150,000 income from all sources threshhold.

My threshold for both examples is an arbitary figure for purposes of the debate. The detail is for others to determine!

Everyone has a statement of earnings. If people are on benefits they get a statement of income and tax paid each year from the relevant benefits office. All employees on PAYE get a P60 and everyone else, including the self-employed and the retired has to make an annual declaration of income to the Inland Revenue with resulting Inland Revenue statement of tax to be paid.

These are all things that currnetly happen so they are not new paper generating costly ideas. i merely suggest the information is passed from one dept to another.

Why does this matter?

The government has made a big issue out of the FAIRNESS soundbite.

It is not fair that the wealthy accept a benefit because the government claims that costs of means- testing outstrips the costs of paying it to millionaires.

My proposal does NOT make more paperwork than is already generated by the Inland Revenue.

My proposal does not involve more cost in so-called means-testing it merely requires the emailing of information from the Inland Revenue to the Child Benefit dept., or the Pensions Agency.

It is not FAIR to continue paying child benefit and pensions to people who can manage without. Think of the banking figures and other wealthy individuals who currently receive a state pension or child benefit because the government argues it is too costly to set up a system to stop it.

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2 Responses to Stop paying state pensions and child benefit to the wealthy

  1. Mick Rowland says:

    I agree that on the face of it there seems a kind of unfairnes about the current arrangements, however providing the payments are taxable this is to a great degree put right by the inland revenue. As for Child Benifit payments I think these should be scrapped and replaced with a Child Bearing allowance paid to all females between the ages of 16 and 40 regardless of whether or not they have children. The present arrangement acts as a breeding incentive to maany of those least able to provide properly for the resulting children in the long term, and is grossly unfair on those medicaly unable to have children who nevertheless find themselves via income tax subsidising those who can.

    • Catherine Hester says:

      Totally agree with you that women should receive this allowance, especially people like myself who worked full-time for years and had no children because we were too busy working to have the time to breed. The problem is that there’s plenty who breed as single parents in order to receive benefits and as a means to escape work. I know of plenty of people who have lived like this, the man living away from the women who has their kids, neither of them working and living off the taxes people like me generated to finance the welfare state.

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