Sir: The current debate about Child Be- nefit in your
columns is greatly to be welcomed; and the quality of the contribu- tions has been excellent.
Noel Malcolm (Politics, 14 November) rightly picked out the point that the greater the emphasis on means-tested benefits the wider gape the jaws of the poverty trap. Basing such benefits on net, rather than gross, income eases but does not eliminate this problem. The freezing of Child Benefit from April 1988, for example, will draw an extra 10,000 families into dependence on the new 'family credit', and hence poten- tially into the poverty trap — a strange outcome for a government wishing to encourage independence and incentives. An even more worrying factor in the move towards 'targeting' is that, on the Government's own estimates, family credit will not hit its 'target' — low-paid working families — in two out of five cases; Child Benefit, on the other hand, reaches those poor families that means-tested benefits fail to reach.
But Noel Malcolm's doubts about the utility of universality obviously must be met. He seems to be confusing various different functions of benefits, only one of which is to provide relief for those already struck down by poverty. Child Benefit — as Tony Marlow MP has again pointed out recently — performs the task of a tax allowance: it aims to equalise (to some extent) the tax burden on those with and without children. If the better-off should make a bigger contribution to the welfare of the poorest, then it is surely only fair that all the better-off should share this contribution, not just those who happen to have children. In the technical jargon, Child Benefit is now the only way to achieve 'horizontal equity' between fami- lies on the one hand and the single and childless on the other. Changes in income tax rates and allowances are the right way to achieve greater 'vertical equity' between those on different incomes — if that is what is desired. We await the Budget with interest, to see whether the concern to 'target' resources on the poorest is also the primary aim of the tax changes announced then.
Fran Bennett
Director, Child Poverty Action Group, 4th Floor, 1-5 Bath Street, London EC1
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