Double dealing on benefits

CONSISTENCY is not thought to be a major political virtue. But inconsistency on the scale seen last week in the Commons is unusual.
In the early hours of Wednesday morning the Commons debated the reintroduction of child tax allowance. The reason for doing so was simple.
It is clear that child benefit will not be increased this side of the next general election. And rumour has it that the Tories will then seek a mandate to abolish it entirely.
1, together with colleagues on both sides of the House, tabled a
new clause to the Budget. Its aim was to allow parents a tax allowance of £100 9 year for each dependent child up to the age of 19.
One reason for tabling this new
clause was to embarrass the government. It drew attention to their failure to increase child benefit along with all other benefits and tax allowances.
Another reason was that it provided an opportunity to show how the burden of taxation has shifted on to • households with children over the period since 1979 a trend well in evidence before Mrs Thatcher came to power.
There was another reason for the new clause. if the government wins the next election and phases out child benefit, it is clear that the money will go in tax cuts. Taxpayers without children will only benefit equally to taxpayers with children, although the tax cuts will be financed by a benefit which went exclusively to families with children.
To get a child tax allowance re-introduced now to run alongside child benefit would act as an insurance policy. A
government set on abolishing child benefit would be hard pressed not to put the savings into a generous child tax allowance.
The new clause was defeated. But later the same day the Commons returned to debate the government's introduction of a tax allowance for elderly people buying private health insurance. This part of the government's programme was defended by the Financial Secretary to the Treasury who had only hours earlier warned the House about voting for a child tax allowance.
It was Calum Macdonald who spotted the inconsistency of the government's position. He recalled, that, in rejecting the child tax allowance clause, the government's spokesman had said -governments have to choose in a world of limited resources. The government were right to decide to deploy resources more to help families in greatest need".
Calum Macdonald is not thought of as one of Labour's brightest new members for nothing. He pointed out that the tax relief for medical insurance would not help those pensioners in greatest need.
The government made much of the fact that a child tax
allowance would not help parents who do not eat-n enough to pay tax 200,000 out of 5.4m taxpayers. Vet two-thirds of pensioners pay no tax and would gain no help from this concession.
The government also claimed that a child tax allowance would help most taxpayers on the highest rate of tax. But exactly the same will apply to the tax relief on medical insurance. The measure will be highly regressive.
Calum Macdonald won the argument but lost the.vote. But it was clear from the way the government answered the debate that the Treasurs is unhappy about this relief.
Indeed, I asked the government at Treasury question time why it did not go for a radical strategy, abolishing all tax allowances, to finance a standard tax rate between 12 pence and 15 pence in the pound. In reply the government listed all the stops they have put on various tax reliefs over the past couple of years. So why the introduction of a new tax allowance for pensioners? Is this just another example of the Chancellor being overruled ht the Prime Minister?