Memorandum submitted by South Lanarkshire
Council (CB 12)
South Lanarkshire Council have a strong commitment
to an anti-poverty strategy. Through it's Benefits, Advice and
Advocacy Service the authority provides free, confidential advice
to approximately 21,000 people per year. The vast majority of
this advice relates to Welfare Benefits.
Last year we helped South Lanarkshire residents
to claim over £9 million in previously unclaimed benefits.
As such, we have a great interest in any proposed changes to the
benefits system and in particular child benefit.
In his budget speech, the Chancellor said that
"child benefit remains the fairest, the most efficient and
the most cost effective way of recognising the extra costs and
responsibilities borne by all parents." We welcome this commitment.
There would appear to be little revenue gain
but huge administration problems and potentially huge administration
The net gains to low income families would be
Even middle income families and above can depend
on Child Benefit to meet their children's needs directly, such
as nappies, clothing, or school expenses. Bradshaw and Stimson
conclude that child benefit is a vital contribution to family
finances and in the main tends to be spent directly on children's
needs . . . "There is a moral sense that it should be spent
on the children." (Bradshaw J and Stimson C, 1997 "Using
child benefit in the family budget".)
Taxing Child Benefit would mean it would only
be families with children who felt the burden of paying for other
families with children.
A far simpler and more progressive way of redistributing
income would be to decrease the threshold of higher rate tax and
spend the revenue on increasing child benefit. This would redistribute
from all high earners including single people and childless couples
and not just those with children. With this reform there would
be no need to reform the tax system and the cost of children would
be shared by society as a whole.
Lone parents with children under five will incur
higher childcare costs if they are working and not all families
will be eligible for help under the Working Families Tax Credit.
If the are not working they are likely to be dependent on Income
Support. Evidence from "Small Fortunes, Spending on Children,
Childhood poverty and parental sacrifice" (Joseph Rowntree
Foundation, 1997), shows that parents with children under five
spend 43 per cent more on them than is covered by Income Support
rates. To alleviate childhood poverty, parents with children under
five need higher Child Benefit which is disregarded from means
We support the principle of higher payment for
the first child. This is particularly beneficial for the lone
parent families, fifty per cent of which have only one child.
CB AND IS ALLOWANCES?
An increase in Child Benefit would be of no
help to those in receipt of means tested benefits such as Income
Support, as it is deducted completely on a penny for penny basis.
The only way to help families in receipt of means tested benefits
would be to disregard Child Benefit in full or in part as income.
16-19 YEAR OLDS?
Most 16-18 year olds have no access to benefits
or to the "New Deal".
If the function of the "New Deal for 18-25
year olds" is to assist them in becoming "Job Ready".
Surely supporting 16-19 year olds in education is the best way
of preparing young people to enter the job market or in advancing
to a college / university education.
Access to Child Benefit and other related benefits
acts as an incentive for parents to encourage their children to
continue in education. More young people are therefore entering
the job market with a higher level of education and skills, providing
employers with a higher calibre of new recruits, which can only
benefit the economy in the long run.
For Income Support recipients, the withdrawal
of child benefit for 16-19 year olds would also mean losing the
dependants increase of £30.30 per week for each child, and
any other related benefits.
A report by the Institute for Public Policy
Research entitled "A Complete Parent - Towards a New Vision
for Child Support" (April 1998), concludes that outdated
benefit rules and marriage laws, which leave separated fathers
with few formal parenting duties and limited rights to benefit
payments should be scrapped for the sake of their children. The
report goes on to suggest splitting child benefit between both
parents and that both should be able to claim other benefits for
One Parent Families Scotland agree that splitting
Child Benefit, where care was truly shared, "could act as
encouragement for more fathers to take a significant role after
separation." (Ian Maxwell, O.P.F.S. September 1998).
However, it is likely to continue to be the
case that women spend more of their income on children than men.
A simple time split may not be a true reflection of who takes
primary responsibility for children's needs. It could also be
abused by non-resident parents hoping to demonstrate that they
are no longer liable to pay Child Support.
If Child Benefit was split, the possibility
of splitting other entitlement would have to be considered, (e.g.
local authority school clothing grants, means tested personal
Also, in light of the changing family structures,
a tax on child benefit could create a nightmare scenario of tax
transferring from mother to stepfather to absent father etc. in
search for a higher rate tax payer.
Evidence from Canada suggests that an integrated
Child Benefit system with much higher levels of child benefit
which are withdrawn gradually as income rises would be more effective
in promoting social inclusion, alleviating poverty and reducing
barriers to work. (Joseph Rowntree Foundation research findings,
"Why special tax credits for low income families are being
scrapped in Canada", January 1998).
Greece is the only country in the industrialised
world to tax its Child Benefit.
The state has a responsibility for the welfare
of children in partnership with private responsibility of parents
through child maintenance. Therefore, changes to Welfare Benefits,
and especially Child Benefit, should only be considered if they
perform the following functions; to redistribute income from rich
to poor; to redistribute income over the life cycle; to redistribute
income from those without children to those with, and to prevent
as well as alleviate poverty.