Monthly Archives: March 2012

Elizabeth Rigby

Labour MP Sharon Hodgson was given short shrift from the prime minister today when she asked David Cameron whether the following statement was true:

The problem is policy is being run by two public school boys who don’t know what it’s like to go to the supermarket and have to put things back on the shelves because they can’t afford it for their children’s lunchboxes. What’s worse, they don’t care either

The prime minister told the MP for Washington and Sunderland West to celebrate the fact Nissan is building a new car in Britain rather that focusing on “whatever nonsense” she had read out.

That “nonsense” actually came from his own benches in the form of the rebellious and outspoken Nadine Dorries – she made the comments to my colleague Kiran Stacey this week when asked to discuss child benefit. Hers is not a lone voice: Mark Pritchard, MP for the Wrekin, also made similar remarks to the FT about the prime minister a few days ago. 

Kiran Stacey

After a couple of questions on Afghanistan, following the news that six British soldiers are presumed dead, Ed Miliband turned his attention to more domestic, and combative topics: specifically welfare.

What would the prime minister say, asked the Labour leader, to Tim Howells, a man from Dartford with a wife and three children, who faces losing his working tax credits when the minimum number of hours that must be worked to claim them rises from 16 hours to 24?

David Cameron had a reply: the 24-hour threshold was for couples, meaning each one only has to work 12 hours.

The problem is, replied Miliband, that his wife spends her time looking after the couple’s three children. And Howells simply can’t find the extra hours the government is asking him to do.

Cameron effectively acknowledged the unfairness, but was able to turn it to his own advantage: 

Kiran Stacey

I wrote earlier this week about the options open to ministers for solving the child benefit conundrum.

To recap, the government’s current proposals to axe child benefit for higher earners lead to two problems:

  1. Families with one person earning above the threshold (around £42,000) will lose their benefit, but those with two earning just below it will keep it.
  2. The lack of any tapering means it will become a disincentive to earn a promotion that takes you just above the £42,000 mark.

The most likely answer appears to be that George Osborne will find some extra money to move the threshold to £50,000 instead. But that solves neither issue, only moves the problem higher up the income scale.

But another proposal is floating round the Treasury: to reverse the plan altogether and instead cap child benefit at a certain number of children (most likely to be three). 

Kiran Stacey

The government is struggling with two problems arising from its decision to cut child benefit for higher earners. They are:

1) The fairness issue. Under the current plans, a family where one person earns £43,000 and the other person receives nothing would lose the benefit, but one where both people earn £42,500 still received it.

2) The cliff edge. If you earn just below the higher-rate threshold, you actually lose money by getting a small pay-rise, because you will suddenly lose all your child benefit.

Various solutions have been floated to these two problems.

The first is that you could lift the threshold for losing child benefit to £50,000, essentially making sure it hits a smaller, wealthier section of the population. But apart from the money it costs, this actually solves neither of the above problems. Ministers might see it as a good and simple way to generate some more positive feeling around this policy, but it doesn’t fix the major issues at all.

 

Jim Pickard

This week’s meeting of the cabinet was a robust occasion, with heated argument across the long lozenge-shaped table in Downing Street. Eric Pickles was criticised for failing to transform the planning system quickly enough; Caroline Spelman was taken to task for failing to push back on an EU habitats directive; there was a lengthy debate about whether Vince Cable’s department has done enough to get help to small businesses. We described the occasion as a kind of “star chamber” in our FT coverage. I’m also told there was a discussion over whether the coalition should abandon its pledge to be the “greenest government ever“, although the details on who said what are a bit sketchy.

One issue which came up was infrastructure, and whether the coalition is inching towards Osborne’s grand plan to get £20bn of pension fund money into public and private schemes in transport, energy, communications and so on. Apparently the chancellor asked why progress is not faster on the A14 upgrade – a key arterial route connecting the port of Felixstowe with the rest of the country. The process of getting in private funding to build a new toll is moving slowly, with publication of options not until this summer. 

Kiran Stacey

David CameronGavin Kelly, a former adviser to both Tony Blair and Gordon Brown, has written a withering critique of David Cameron in today’s FT. That might be expected, you might think, from a former Labour adviser. But his points are deliberately non-partisan, and worth noting.

Kelly argues that Cameron and his Number 10 operation has little strategic direction, except for a desire to cut the deficit – and a new and intriguing suggestion – saving the union. He says:

Only the lodestar of deficit reduction gives the coalition government a sharp sense of defining mission, though we now need to add to this the future of the union. Both absolutely crucial, neither enough.