Monday, 22 September 2014

Poor to be hit hardest by Labour

It was good to see one head shaking in the audience for Ed Balls' speech at the Labour Party Conference today. Here's the background. Ed wants to see child benefit rising again in line with inflation but he won't spend money that he can't afford. So if Labour get back to power they will cap the rise in child benefit to 1% which will save £400,000,000. Sounds like a lot but that's when I saw the one incredulous female face. You see large figures do sound large but this delegate was thinking that she relies on her child benefit to keep her head above water and related to inflation she sees it is now going to be cut. She is thinking how can she manage.

The good news, in the next breath Ed told us that all the savings will go towards cutting the deficit, but this lady's expression didn't change. In fact the person next to her also pulled a face as if to say that the deficit  was one thing but her child benefit was another. Ed went on to reassure us that "unlike the Tories, we will ask those who have the most to make the bigger contribution". Hang on Ed, I thought you were talking about a benefit not a tax. You know, it's a bit like calling the bedroom tax a tax when it's a subsidy. (just in case you are wondering about my view on the spare room subsidy, there is nothing wrong with the idea of getting the right-sized families into the right-sized homes. It's implementation has not been good but moves by Liberal Democrat Andrew George should sort this out.

Ed goes on to talk about the 50p tax cut and makes a complicated issue very simple. A Labour government will reverse this tax cut. However, I am confused (and so are two members of the audience). If Labour propose to reduce child benefit (which is the effect of a 1% rise if inflation is higher than 1%) then a something and nothing reduction for the rich will certainly be hurting the poor. So Ed is not asking "those who have the most to make the bigger contribution". He is asking them to take the biggest hit.

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