Losing child benefit: A back to work tax?

On this morning's breakfast news the Chancellor, George Osborne announced that as of 2013 child benefit would no longer be awarded to those who earn over £44k. In the sea of bad news this may not seem like a biggy but my first thought was, another few thousand working women bite the dust.

Child benefit is unique in the UK as the only benefit paid primarily to women. Feminists like Eleanor Rathbone campaigned at the turn of the century for women with children to be supported directly and for any tax credit or allowance not to be awarded through the tax system where they might not see the benefit. In 1977 that lobby got their wish through the introduction of child benefit. I hope the new measures will not revert to tax credits paid to the principal wage earner as again women are likely to lose out.

In removing child benefit from middle earners this new measure goes to the heart of everything I have been saying about social value. If you start by trying to save money without examining social impact you run the risk of spending more in the long run.

When I had my eldest and was returning to work the difference between my salary after tax and childcare costs was not much more than child benefit. By the time I had 3 children under school age and a staggering childcare bill, the accumulated child benefit made a real difference. You might argue that it was our choice to have the children, and so close together, and you would be right, but nonetheless if the economy is to repair itself it needs people, and that includes mothers, even fecund ones, to go to work.

You might also argue that with two earners we are in a privileged position, and again you would be right. But my point is, at the time it was tough, and I kept thinking if its tough for us how do people manage whose finances are more acute? I think £44k as the threshold is too low. An average inner London full time nursery place costs over £11k after tax (Daycare Trust 2009). A household earning £44k will have roughly £33k after tax from which you will have to find around £11k for childcare and an average travel cost of a further £1300. As things stand many women do the maths and fail to return to work, or sadly, decide to put off having children. A recent survey carried out by Mumpoll and reported by The Mail found 8 out of 10 women surveyed were putting off having children because it was too expensive. If you take the £1055 that child benefit for the first child gives you it can make a big difference, in any event this is, in my view a return to work tax, directly withdrawing financial support to a potentially productive but beleaguered group, your ‘average working Mum’.

This is to say nothing of the profound inequality for single parents who don't have a second wage coming in but could lose the benefit regardless of the extent of their childcare responsibilities. Will they work I wonder?

I suppose my point is this: We need mothers and single parents to work and should be encouraging them to do so. This might be counter productive and as such end up costing us more because fewer workers means fewer tax payers etc.