Memorandum submitted by Mr Paul Burgess
Child Benefit is presently easily understood,
valued by the vast majority of claimants and taken up. Child Benefit
is a basic element of any "better-off" calculation.
That is to say, welfare rights advisers find that Child Benefit
can make the difference to someone who wishes to start work but
are worried about the withdrawal of welfare benefits. Part of
the reason for this is, of course, that Child Benefit is disregarded
for Family Credit purposes. Taxation of Child Benefit would almost
inevitably introduce complexity and additional administration.
It may complicate and cloud issues surrounding the poverty trap.
For example, it may increase the marginal tax rates for those
on low incomes. Working Families Tax Credit appears more complicated
than Family Credit. To introduce taxation of Child Benefit alongside
the introduction of Working Families Tax Credit may cause problems
for the Inland Revenue, may adversely affect incentives, and may
affect the success of the new benefit at a crucial time.
It is worth noting that there has not been any
universal or contributory lump sum payment for expenses relating
to the birth of a child since 1988. Although there are differing
views as to the relative costs of bringing up children at various
ages it is surely unarguable that the birth of a child is a time
of major expense for parents. Welfare rights advisers have become
used over the past ten years to advising anxious parents who simply
cannot afford the expenses related to the birth of their child.
Family and community networks are not as strong as they were.
Those fortunate enough to qualify for help from the benefits system
will find that the lump sum payment for maternity needs (which
has not increased since 1988 in cash terms) is inadequate for
anything but the most basic needs at £100. There are many
more that slip through this safety net altogether. A significantly
higher rate of Child Benefit for the first 12 months of a claim
would help restore an important element of a welfare state that
sought to support families.
The rationale for this can be supported by reference
to the arguments above. The eldest child in a family can often
be the most expensive one because of the need to purchase items
of equipment and furniture that then last and are used for subsequent
The relationship only exists in a conditional
sense. Child Benefit has no bearing on the level of the Income
Support allowance for children. Technically, it is treated as
reckonable income in the same way as pensions or earnings would
be. Since 1988 entitlement to Income Support child allowances
and the family premium has been conditional upon receipt of Child
Benefit. While in most instances this causes no difficulty, there
are anomalies. Where, for example, the Child Benefit claimant
is temporarily absent and unable to provide care, family members
may provide care but be unable to claim benefit. This, typically,
involves a grandparent. I can think of one case of a widowed grand
father who had to look after his three grandchildren when his
daughter was arrested abroad. He was unable to get any Income
Support for the children until Child Benefit was awarded, several
months later. A less committed carer may have left the children
to the care of Social services, at greater public expense. Some
flexibility in these cases would be welcome.
SUPPORTING 16-19 YEAR
Current provision, or more accurately lack of
provision, in this area and for this group is a serious problem.
Reform that sought to support the educational aspirations of this
age group is to be welcomed. The introduction of a maintenance
allowance to replace the current mixture of Child Benefit and
complicated and underclaimed) means tested/discretionary payments
would be a step forward and may also drive certain success measures
in terms of the wider aims of the welfare reforms.
The payment of Child Benefit to the child's
mother in the vast majority of cases ensures that the most appropriate
person receives the benefit. It is still very unusual for a welfare
rights adviser to deal with fathers who have the sole or main
care of children. Prior to 1988 Supplementary Benefit as it was
then, could be split between parents where the care of a child
was divided. This gave rise to many injustices and was administratively
complex. It did little to benefit children caught in the middle
of "split care".
As already mentioned, Child Benefit is an incentive
to work. The proposed disregard of Child Benefit for the purposes
of entitlement to Working Families Tax Credit undoubtedly will
help people make the transition to work from welfare. However,
any further increase in Child Benefit and its current positive
interaction with Family Credit (and Working Families Tax Credit
as proposed) would depend to some extent for success on its continued
18 September 1998