Wednesday 14 April 2010

How Nick and Vince both changed their mind on child benefit

"We are not putting child benefit into question. I never have and he hasn't either", as Nick Clegg told Jeremy Paxman on Monday, arguing that both he and his shadow Chancellor had never wavered in their commitment to keeping the benefit universal.

The LibDem manifesto, which was got a pretty good reception overall today, does not propose any change to universal child benefit, which is a policy victory for shadow spokesman Steve Webb on this issue.

Next Left noted on Monday that Clegg had himself told The Guardian that he wanted to examine means-testing child benefit - ""I find it odd that people on multi-million pay packages from the city get child benefit. That's patently silly and patently unfair" - in his Guardian interview on the opening weekend of his party conference, though acknowledging the risk of undermining middle-class solidarity with the welfare state.

Clegg told Paxman that his shadow Chancellor simply misspoke in the Chancellor's debate, and there is no reason to doubt that.

But Cable too, last Autumn, made a much more considered attempt to put universal child benefit into question in his Reform pamphlet 'Tackling the Fiscal Crisis, in which he wrote:

The simplest reform could be to taper the family element in tax credit which the Institute for Fiscal Studies estimates could raise £1.35 billion. This should occur. A more radical reform would be to target child benefit by assimilating it into tax credit. David Davis MP and others have advocated this approach. It is certainly incongruous to many people that the very rich receive child benefit. The IFS estimates that £5 billion or more could be saved by no longer making child benefit universal. The implication, however, of the tapering of child tax credit and the loss of universal child benefit, would be a loss of income for some middle income families. Such a reform would be easier to make if income tax were cut for standard rate payers. I favour making this reform in principle, but more work needs to be done on how to manage offsetting tax cuts.

The Reform pamphlet was clearly billed as in the kite-flying business to propose options for the party to consider. Whatever the risks, that is a good approach to informed public debate about policy options for the LibDems.

Still, it seems very reasonable to hypothesise that the coordinated timing of Cable-Clegg challenge to universal child benefit was a deliberate one to test the water.

Happily, Steve Webb was able to quickly overrule his leader the next day at a Fabian event, where we teamed up to make the case for universalism.

But this was probably the one slip in a good performance from the LibDem leade on Monday. With David Cameron turning down the Paxman invitation, Clegg may benefit further if neither Cameron nor Brown proves ready to run the Paxman gauntlet


Here's the full Paxman-Clegg exchange.

JP: Can we just clear up something on child benefit: in September last year, you said you wanted to get rid of child benefit for high earners. At the start of ...

NC: No I didn't say get rid of it. I didn't say; I've never said that.

JP: You've never wanted to get rid of it for high earners.

NC: No, I've never said that.

JP: But Vince Cable said in the Chancellor's debate,only a matter of two or three weeks ago, that he did want to get rid of it.

NC: No, he made quite clear, within minutes I think of the debate , that he misspoke, and that what he meant was the child component of the child tax credit system.

We are not putting child benefit into question. I never have and he hasn't either.

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