Hardworking families

So this is a little bit late because Budget Day was yesterday: sue me, I’ve been at work.

In amongst all the usual bend-over-because-here-it-comes stuff in the Budget statement was something which is clearly throwing a bone to all the middle and upper class people who’re losing out as a result to the recent changes in Child benefit eligibility:

http://www.bbc.co.uk/news/uk-politics-21833929

In short, a two parent family, both working (or a single parent in work) who are earning enough not to need Universal Credit up to a ceiling of £150,000 per parent (yes, you read that correctly) will be able to claim back up to £1200 per child per year towards the cost of childcare. Let’s just leave aside the inconvenient details that a) this will be less than a tenth of the total cost for anyone with a baby in full-time nursery, and b) apparently earning more than £50,000 a year means the taxpayer shouldn’t be paying you £1055 a year in Child benefit because you earn too much to need it, but earning £149,000 a year means we should be paying you £1200 childcare because HARDWORKING FAMILIES for a minute because there is a more pressing point.

Parents who are low-paid or in part-time hours (or both) and who qualify for tax credits help currently or Universal Credit once that is rolled out will be offered help under a different scheme:

http://www.guardian.co.uk/money/2013/mar/21/childcare-policy-excludes-poorest-families

The scheme for families on universal credit, being introduced this year to bring together key benefits and tax credits under a single payment, will extend the refund of childcare costs available to households from 70% currently to 85% for families in which both adults pay income tax, up to a maximum of £300 a week of childcare bills for two children.

That sounds good, right? It is good. It’ll be a massive help for those who earn enough to qualify for it. But there’s the catch. You have to be earning enough to pay income tax. And they’ve just raised the personal tax threshold, and they’re going to raise it again soon. So if you’re a single parent and you don’t earn more than £10,000 a year, or if you’re a couple, one working full-time and the other working say 20 or 30 hours a week and thus not quite making the tax threshold, you don’t qualify. You’ll still be eligible for the up to 70% of childcare costs that is offered under the current tax credit system. But let’s just look at what that 30% that you do have to pay for actually means in cold hard cash terms.

 If you were (say) a single parent working 30 hours a week at minimum wage you’d be earning less than the tax threshold (£9672) and if you were using paid childcare you would need to be paying for a minimum of 4 full days depending on how your hours were spread, maybe more. If you have a child under school age that’s around £9152 per year (my son’s nursery costs £44 per day for over twos, more for under twos…). So tax credits pays 70% of that, that still leaves you having to find £2746 per year, or £52 per week out of your wage of £186. That’s almost a third of your wage. And that’s only one child. 30 hours a week is a lot of hours for someone who is also in sole charge of a child the rest of the time, probably getting woken once or twice a night on a regular basis, perhaps with an older child or children too (more childcare costs…) having to make sure everyone gets to school on time, does homework etc, doing all the housework and shopping and cooking inbetween those 30 hours a week when they’re out at work. But apparently a person in that situation isn’t a hardworking family, doesn’t want to get on, and isn’t deserving of the extra help that someone in a two-parent family with a combined income of twice what that single parent earns should have. 
This is why the much-trumpeted ‘lifting more people out of tax altogether’ is actually a wolf in sheep’s clothing. For the low-paid, part-time worker, they probably weren’t ever earning enough to pay much tax in the first place so they gain little or nothing from it, and on top of that the tax threshold is now going to be used to deny them access to benefits which are available just above it. But for high earners, they now get a nice pocketful of tax-free income. Another dividing line between the undeserving feckless lazy poor (even if they work) and the deserving hardworking family who wants to get on.
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About furcoatnaenicks

Rants. Sporadically.
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5 Responses to Hardworking families

  1. headinbooks says:

    I have yet to meet anyone who feels that they meet the criteria of “hardworking family” such that they come out of all of these changes better off.

  2. And the best thing about this, as with so many things, is Ed Milliband’s customary silence about it. All you can hear is his brow furrowing as he thinks ‘I wish I’d thought of that.’

  3. You wouldn’t expect the Tories to raise the Personal Allowance without being able to hit the poor somehow as a result, would you?

  4. annemarie.oneplus@hotmail.co.uk says:

    I really wish the government would ask what we need and how. I work full time, on £12,000 a year, can’t afford any childcare so family fill that gap. Even with the personal allowance it means nothing to me as he will take my little tax credit off me. Not fair at all.

  5. ivybones says:

    Every time I try and say the phrase ‘hardworking families’ my mouth fills up with spit. It actually makes me grimace.

    Fabulous takedown as always, and the facts are as depressing as always.

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