Memorandum submitted by The Children's
Society (CB 3)
1.1 The Children's Society is a national voluntary
childcare organisation, which works extensively with children
and families living in disadvantaged communities, and in conditions
1.2 We have retained a long-standing interest
in the contribution to their quality of life made by a range of
benefits, including those which are means tested and others which
are universal like child benefit.
1.3 We have been actively involved as members
of the Save the Child Benefit Campaign, and the Coalition for
Child Benefit. We disagreed with the decision of a previous government
to freeze child benefit, and we have sought its reinstatement
to its original value in real terms.
1.4 We believe that Child Benefit is an important
contribution to the well being of many families on low incomes,
and that it achieves this because of a number of characteristics
which do not apply to any other benefit, or mechanism for transferring
resources to children.
2. SPECIFIC ISSUES
2.1 Child Benefit's great strengths originate
from its core principles. It is intended for children, to be spent
on their needs. It is designed to be administered and collected
simply. It is about recognising the additional costs of providing
for children incurred by families. And, it is recognised as a
universal investment on behalf of society in future generations.
2.2 These principles, in turn, point towards
a number of important practical consequences in the way in which
Child Benefit is administered, as well as implications at the
level at which this is set.
2.3 Thus, the method of payment and collection
can be made simple by virtue of the fact that it is a universal
benefit. This ensures that it is among the cheapest benefits to
administer, although introducing any element of complexity such
as differential rates for the eldest child, or taxation, will
incur additional administrative costs.
2.4 It remains important that, by and large,
child benefit is collected by mothers, because that appears to
offer a substantial guarantee that it will be spent directly on
children and their needs.
2.5 Once again, because it is a universal entitlement,
child benefit can be paid without interruption. At times of family
change, or where other sources of income are interrupted, it represents
an important form of continuity in family incomes.
2.6 Although it is at too low a level to compensate
for childcare cost, Child Benefit does contribute towards the
choices parents are likely to make about whether or not to take
up paid work. It is important that they retain this choice, particularly
when their children are below school age.
2.7 The manner of its payment, ensures that
Child Benefit is easy to obtain, and that it is portable and flexible,
so that it can meet the varying needs of households and families.
This also means that where there is a change of family circumstances,
entitlement can be preserved easily.
2.8 If it is accepted that it is legitimate
to provide for a common investment on behalf of society as a whole,
in social cohesion, and in provision for future generations, then
there can be no more straightforward or effective way of achieving
this outcome than through Child Benefit. Any questions to be resolved
therefore hinge on the level at which the benefit is set, and
relatively marginal questions such as whether all children should
get the same amount, and whether it should go direct to older
children and young people who may wish to have the responsibility
of deciding how they spend money attributed to them.
2.9 Other questions have recently been raised,
for example concerning the taxation of Child Benefit, and whether
it should be split where children are spending part of their time
with each parent.
2.10 The Children's Society believes that the
principles of universality, and the simplicity of approach represented
by current arrangements should where possible be maintained, and
enhanced. We do not believe, for example, that attempts should
be made to split Child Benefit between parents according to the
length of time children spend with each of them after family separation.
This is a complex and impractical idea, which can better be dealt
with through a more effective allocation of maintenance by way
of the Child Support formula.
2.11 We have also been invited to consider whether
or not Child Benefit should be taxed, particularly where parents
are high rate taxpayers. We do not believe that this option should
be pursued for a number of reasons. Firstly, it should be recalled
that Child Benefit was originally introduced in part to replace
existing child tax allowances, because it was easy to administer,
and it was more likely to go to children.
2.12 Secondly, however calculations are to be
made, inequities will almost certainly be built into the system.
For example, where two parents are earning below the higher tax
threshold, neither could reasonably be taxed on their Child Benefit;
on the other hand, where one is earning very little but the other
is earning above the threshold, combined household income could
be the same, but Child Benefit may be taxable. Unless there is
a return to joint household taxation, disparities of this kind
2.13 Finally, it is unclear whether taxing Child
Benefit can easily accommodate changing circumstances, where household
compositions change, or children spend part of their time in one
household and part in another.
2.14 The government has said that it wishes
to avoid means testing wherever possible, that it wishes to ensure
that all sectors of society benefit from the welfare state, and
it has expressed a desire to keep the welfare system simple. Child
Benefit achieves all these objectives, and we see little reason
to introduce complexities which might compromise its many positive
3.1 In conclusion, we would just reiterate that
there are a number of important reasons for maintaining the value
and the structure of Child Benefit as it is at the moment.
(i) Child Benefit is a significant investment,
some £7 billion per annum, and is a legitimate statement
of commitment to children as representing our collective future.
(ii) Child Benefit is a form of `social glue`,
providing an economic incentive for families to stay together,
and contributing significantly to income maintenance and the alleviation
of pressures on households on low incomes.
(iii) Child Benefit is reliable, and consistent,
and therefore, unlike most other forms of income support, is an
important bridge at times of difficulty, or where family circumstances
(iv) Because of its title, and the manner
in which it is paid, Child Benefit is usually spent directly on
(v) Child Benefit is simple to administer,
highly resistant to fraud, and very low- cost in relation to the
overall amount paid out.
(vi) Child Benefit, because it is paid in
cash, contributes to the choices families are able to make about
whether to work or to commit themselves to caring for children,
particularly where they are young. It is therefore an important
contribution to flexibility in decision-making within families.
3.2 For all these reasons, then, we believe
that continued and indeed increased commitment to Child Benefit
is of major importance in improving family life, enhancing social
cohesion, and reflecting a proper commitment to all of our children.