Children "sharing in the wealth of their parents"
Who has the rights - the children or the Treasury? It won't be both!
The reformed scheme - the conflict between childrens' rights & the Treasury
The cases being considered here
It is right to consider the taxpayers' position when changing the way benefits such as Income Support are handled, but even the proposed reform of child support in the UK continues to be heavily influenced by Treasury concerns, and here this interferes with the concept that children should share in the wealth of their parents.
To be fair, this issue is primarily about PWCs on means-tested "out of work" benefits - Income Support and Job Seeker's Allowance (income based). These are a reducing proportion of the PWCs handled by the CSA - 41% in November 2000. This article is only about that 41% of PWCs - about 400,000 PWCs with about 630,000 children. It is further reduced to those cases where NRPs earn more than perhaps £140 per week gross, enough for the child support to be greater than the £10 benefits disregard.
What does "sharing the wealth of the parents" mean?
Presumably it should mean that as parents get better off, their children see the advantages of their parents' extra wealth in some continuous manner. Although there is no rigid formula for what happens in an intact family, there is no doubt that, on average, the children of better off parents are themselves better off in a number of ways.
The government's stated intention is that this should continue in some way even after the parents have separated. But for a PWC on Income Support, what will actually happen with the reformed scheme is shown below:
There are 2 good reasons why the Income Support disregard should be limited, so that the PWC/children's household is not better off by the full amount of the child support:
But if the second reason is the main one, it may be useful to tweak the proposal for a £10 Income Support disregard. It is much harder for a lone parent to get back to work before the children are at school. They are likely to have to buy childcare, and while they can get a childcare tax credit as part of WFTC, it doesn't pay the whole amount, just 70% of it (capped at £70 credit for 1 child, and £105 for 2 or more). This counters the incentive supplied by the extra child support they will get. There is also some research (but no consensus) that it is better for the children to have a stay-at-home parent until the children are at school.
Perhaps the disregard should be shaped by the children's age, or by whether they are at school. For example, it could be £15 (or even £20) per week if there a child under the age of 5, and £5 thereafter. The £15 would be much better wealth sharing at the hardest time for a lone parent to work, while the £5 would emphasise the relative advantage of WFTC over Income Support once it becomes easier and cheaper for the PWC to get to work. This could be adjusted to be the same cost to the Treasury as the proposed flat £10 disregard.
Another possible improvement would be to vary the disregard according to the number of children. After all, the amount paid by an NRP increases as the number of children increases, so why shouldn't the disregard increase too?
|Page last updated: 4 July, 2004||© Copyright Barry Pearson 2003|