The furore over curtailing child benefit shows how hard it will be to reform the welfare system. A swathe of the middle-class that thinks other people should be denied state benefits complains vociferously when their own payments are threatened.
We need to remember what welfare benefits are for. They are for the poor. That’s not people earning £60,000 a year – nevermind couples with combined six-figure salaries who think the state should subsidise the upkeep of their children (ie, the upkeep of their own lifestyle).
It is madness to tax people on £25,000 a year and give the money to people earning twice as much. The higher paid should be putting money into the public pot, not taking it out.
A crude rule for a welfare system is that people either pay tax or receive benefits – not both. If most child benefit goes to people who are working then it is going to the wrong people.
Giving money to the government and receiving it back again is inefficient. The state is a leaking bucket: each pound paid in is likely to allow only 80p to be paid out because of bureaucratic costs. It is better that people – especially high earners - spend their own money rather than allow the state to do it.
Yet limiting child benefit should be only the start of welfare reforms. Curbing the rise in payments to 1 per cent has produced similar squeals – even though the rising benefits are financed by taxpayers who may well have falling incomes. The government needs to differentiate between universal benefits that have been paid for by the individual – such as education, the NHS and old-age pensions – and those that are essential to support those without financial resources.
It follows that benefits should provide sustenance rather than luxury to encourage those who can move off benefits and support themselves to do so. And if the nation’s benefits bill can be slashed – not limited to a 1 per cent increase with the well-paid excluded – then taxes can fall and the people lucky enough to earn £60,000 will be able to keep more of their own money to spend on their children.