Nov 11 2009
Child care and tax relief
It is a startling juxtaposition. A few days after the government announces a stunning, unaffordable and needless £40,000,000,000 for the state banks a letter turns up at Downing Street signed by senior Labour MPs complaining about the withdrawal of tax relief on child care expenditure through the voucher system.
This last phase of Labour’s excessive spending and borrowing is just occasionally punctuated by little acts of gratuitous meanness which are most revealing. There is no apparent limit to the cash for the banks, for foreign car purchase, for quango heads and new quangos, for surveillance on the general public, for ID cards and centralised computers, for glossy brochures, regional governments, EU payments and for consultancies. There is great pressure on the cash for supplies and troops for Afghanistan, and now on the support for child care costs.
The government has always wanted to cut the spending on the military. The question of child care is more difficult to grasp. It appears to be a distate for middle class parents taking advantage of the scheme. Labour always sees tax relief as the same as public spending – or worse, as it goes to people they on the whole do not like. The rumours are flying around that someone dared to spend the money it saved them on horse riding lessons. No wonder the relief is doomed then.
Backbench MPs are more nervous. They remember that Tony Blair, by suppressing some of the left wing instincts of his party, attached middle class voters to his coalition. They need them still to win many a marginal. This latest meanness reveals something about the party that is never knowingly underspent in every other direction.
John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College...
My suspicion is that they’re only talking up the “reduction” on spending so that they can pretend to be magnanimous in not withdrawing it.
Even if a saving on child-care tax relief is made, the money will be wasted elsewhere. It’s a drop in the ocean when compared to Labour profligacy as a whole.
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The idea that you can make government handouts, whether in the form of cash or in the form of services, universally available has always been an absolute nonsense.
The government should be applauded for making a start in removing the entitlement to child allowances from all but the needy.
Eventually they might be applauded from removing child allowances completely but that is another argument.
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There are so many holes in Labours’ sinking ship they are scurrying everywhere to plug a few. Meanwhile the gaping economic torpedo hole is ignored!
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The reason why many voters hold our MP’s in contempt, is this constant changing of the rules or moving of goalposts, with the drip, drip, drip of new initiatives.
Trying to organise your life, when Government Policy is a shambles, but by neccessity part of it (and childcare would be part of it for many) is absolutely maddening.
The goalposts for almost everything are now almost constantly moving, with the introduction of new rules, new regulations, the ever changing and the increasing complication of the Tax, Benefits, Allowances, Tax Credit System for Political purposes.
Most people would prefer some sort of stability from our Government, any Government, as it means you can with some degree of planning and foresight, try to organise your life and finances in a sensible way and live within your means.
Constant change from one direction to another just causes chaos and uncertainty for everyone, other than perhaps those with large amounts of disposable income.
Many people are on some sort of fixed income, be it pension, or wages/salary (without bonuses or the opportunity to work paid overtime) where does the Government think they are going to get all of this increased money from, when they have planned their life with a certain amount of known outgoings, and perhaps a provisional sum for some variables.
We all know things are going to have to change come the next General Election in a few months time, so let us hope that whoever gets in, will then bring in some form of stability with a properly thought out programme.
Please remember, the more simple the system, the better for everyone, including a much lower cost to run it.
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This tax relief is nuts!
We already had a perfectly good system of ‘nursery vouchers’ (which the Tories introduced in the 1990s, and which Labour promptly re-branded something else like SureStart to prevent people realising that ‘education vouchers’ for 5 – 18 years olds would work just as well), which are worth about £70 a week.
It’d be far better to scrap the faffy tax breaks for employer vouchers and just increase the time-honoured “nursery vouchers” by £20 a week, job done.
It would be a good idea to do the same with Childcare Tax Credits, they can be scrapped and rolled into nursery vouchers or education vouchers as well.
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Fundamentally it shows the attitude of the government ~ all money is theirs, you are allowed to have some (after tax) but if you spend it on something they don’t approve of, you can look forward to further, what you might call “fit of pique” taxes.
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Distate for middle class? Most of the UK’s middle class have more than their fair share of mortgage debt and Gordon Brown is printing money to get them out of a bind.
Though, against reasonable store of values, sterling has/will drop, so the price of houses vs a. n. other commodity will look like a dramatic drop.
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I have two children and my wife claims the voucher as a percentage of her earnings. I wonder if it will be worth both of us working by the time I have totted up the income tax, NI, Fuel Duty (rural dweller), and the horrible cost of childcare. I have to go 80 miles a day just to get the kids to school, and then run my own business in the opposite direction, while the government drives the price of everything up with stupid taxes to the point where it is unaffordable.
This policy move is just more of the same scorched earth trash that aims itself at anyone who aspires to anything.
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John
I read you everyday and often nod my head in agreement but as with too many other MPs you need to think more laterally on this subject.
1) Bad news balance of payments and more needs to be done to get us exporting again
2) The net cost after Vat receipts to Govt is at worst zero. The Vat rate should never have been 15% as the reversal will hurt
3) It gets a lot of customers into Car Operations which have a lot of jobs at stake and are suffering from the downturn. The “traffic” has been good for us
4) Some of the cars sold are made here and more would have been if Governments had made UK Car Making much more of a policy priority from 1980 on. What about a posiive approach for the future so it can flourish
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Excellent analysis and shows Labour resorting to type again whenever they have any sort of a decision to make – tax & spend.
I’m not sure how this tax relief works as my wife is a housewife so no need for childcare but I imagine it is like mortgage relief, viz. if I pay £100 per week for child care I can collect that money tax free so in actuality it is costing me £100 – £40 (if I am a 40% tax payer).
If this is the case (or some similar scheme ran on the same principles) then this is another step along the road of dissuading people on the margins of benefit / work analysis to make the decision to stay at home. I can’t imagine such a scheme would also apply to single parents as it would be absolute madness to reduce any sort of tax relief for a single parent who has a job paying somewhere near the minimum wage – taking hosing benefit, council tax benefit, childcare relief, into account you’re asking people to put in a full-time week of work to come out at more or less the same place as if they sat at home watching Jerry Springer.
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Meant pension relief above, not mortgage relief.
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Never mind the child care issues, bad though they are, look at what the government are doing to family courts by holding them behind closed doors away from prying eyes and our concerns.
It’s 1984 again.
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Really, John, did you think this was being touted as a saving? According to the BBC, the intention is to spend the money saved on providing free nursery for two-year-olds.
Mr Brown has never, never been knowingly underspent and has no intention of breaking this record.
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One of New Labour’s biggest cons is the middle class (Northern “e”) myth.
They ARE the middle class!
Stephanie Flanders on Newsnight said that she was a “single Mother”.
The BBC is full of people asking whether they are middle class or not!
They should know. As should the MPs and MEPs of the Socialist persuasion on more than £60,000 a year (before generous expenses).
Well, today I was teaching some Polish mothers English. They were poor, usually not working, but supporting their working husbands at home, and dressed smartly and cleanly. Their children are well behaved and obedient. They laugh. They ask questions and look you straight in the eye.
Are they middle class?
Maybe. Maybe not.
The trouble is that they are not under the foot of the government.
They even laugh sympathetically about our bureaucracy which does not, they say, exist in their countries……
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Is all this printing a ploy to break the Pound and drive us screaming under the skirts of the Euro? At this rate the coming currency crisis could actually start with Sterling.
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Off Topic but you may wish to note John:-
393 responses in 8 days on 15 topics
1/3 of the replies, 122 were on two topics
Those two topics were both about the EU.
Do you and DC get the message about what the paramount concern of the electorate is?
Reply: I fully understand people’s frustration about the EU, and their anger about the government’s refusal to allow us the referendum I voted for.
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“There is no apparent limit to the cash for the banks, for foreign car purchase, for quango heads and new quangos, for surveillance on the general public, for ID cards and centralised computers, for glossy brochures, regional governments, EU payments and for consultancies. There is great pressure on the cash for supplies and troops for Afghanistan, and now on the support for child care costs.”
Let us know when your leader Dave Cameron decides he is against any of this.
Last week he was suggesting bring consultancies inside the government itself, paying them enormous sums to do jobs we already pay people to do and vastly increasing their use.
All they will tell you to do is privatise and outsource. You have no need of them. Consultancies are like the bank bailout in slow motion. Its phenomenal corruption over an extended period of time.
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Childcare vouchers as one of the few universal benefits are under attack because of the growing swell of opinion “if were poor everyone should be poor”……. MP’s should get the minimum wage, Bankers are all crooks and don’t deserve to be paid etc etc.
The truth is with the massive cost of child care these vouchers can mean the difference between it being worth (one or both parents) going to work and not, even for families that others would see as affluent. As responsible parents, we want our child to see us go to work and contribute to society and the use of vouchers like these make many borderline decisions work (just)
I also feel it leads onto what will be fervent policy debate in the coming months (whichever party is in power) about removing benefits for the “middle classes”
Whilst on the face of it, it would see hard to argue about means testing something like “child benefit” where does it stop ? “Free” prescriptions and check ups whilst pregnant or for your children ? “Free” school places ? “Free” NHS care ?
I say “free” in quotes because the reality is all these services are paid for by the very people who bother to go out and work and contribute.
Even in these times when nuLabour have mortgaged the country to the brink of bankruptcy, do we really want to be sending the message to our children that if you work hard and earn a good living you will be bleed dry and if you don’t you will looked after above all others ?
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Wouldn’t it be more sesnible to scrap the child welfare allowance and instead give tax relief to couples living together with children earning money?
Otherwise we’re just encouraging people to breed for money and punishing those who do work and do have children in sensible relationships.
In all, Mr Redwood, I’m utterly sick of my taxes being thrown away for nothing. Yet again Labour have ruined England, but this cannot continue. Radical acts should be taken to utterly shred whole government departments. Has any Conservative politician the courage to sack 90% of the department for defence? If they suddenly drop on the dole the money still comes from the same place – me – except instead of £36,000 a year it’s now £47 a week.
Do you? Will anyone in Tory HQ genuinely reduce the cost of the state before raising taxes?
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In principle I oppose all state benefits, vouchers and “credits”. I also want a flat tax system.
However if we must have benefits I would very much prefer that they NOT be means tested. There are several reasons why:
1) Means testing increases the involvement and intrusion of the state in people’s lives.
2) People are judged by the state as “wanting” in some fashion which degrades and belittles people. and also creates a class of state workers who’s role is to judge people.
3) The admin costs of means testing are often quite large.
Can’t we find a way to get rid of state benefits and return to the friendly societies?
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Interesting to see how the Tories with their obsession on Europe, inheritance taxes and their financial paymasters are going to make the life of the average person in Britain better.
I said average not someone on 30k plus. I had to laugh at an article in the Observer on how hard some people find it is to live on 75k a year. Is that you? You need working on boy!
Many people have an income from the state working in the bureaucracy and industries that John mentions which allows them to live a middle class existence whether it be working for the state directly or in the form of a directly or indirectly subsidised industry. Subsidised can also mean getting soft government contacts that scam the taxpayer. This has led to phenomenal corruption over an extended period of time by an elite totally out of touch with the man on the street. This combined with a bleating middle class who think as DavidNcl thinks, that a flat tax with no benefits degrading the poor, middle classes are not however degraded as they pay to much tax anyway. I suppose Dave also believes that the poor should support themselves by working until they drop or saved from starvation by charity, often if they are working, funding the above’s subsidised lifestyle. This is the real problem. Some bankers have been heard to say that they cannot manage on on 250k a year as they cannot afford the school fees. Maybe they need some sort of voucher to help their poverty. Cannot manage their own money. Who would have thought….?
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dear john,
as a single person, i am very willing to help talented hard working middle class parents who go out to work and contribute to the economy and society with their child care costs. their children will grow into well adjusted adults who in turn will contribute to our society. i am not so sure whether taking money off them and giving it to the ‘needy’ might be creating what mervy king calls a ‘moral hazard’.
i also don’t have a problem with grannies going out and spending their heating allowance on gin and whisky, as long as they buy their drinks in british off licences and pay the duty. it all helps the economy go round and if they spend the money locally better still. compare their spending habits to a banker with a fat bonus salted away in an off shore tax haven and the heating allowances are better spent that way than in paying bills to all our foreign owned utility companies.
universal benefits are good, means testing discourages saving and self-improvement, only the dogmatic fail to understand this self evident fact.
if gordon brown and labour voters out there think denying the middle class the benefits of the welfare state will be to their own long term gain, they are even more stupid than i feared.
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