The end of family policy?

 

What’s in a name? A hopeless factual and logical muddle. Call something a ‘benefit’ and who is it for? The ‘needy’, of course. Anyone else getting it? Dreadful! Take it away and ‘target’ the ‘deprived’ and ‘disadvantaged’.

A word’s connotations – rather than reality - seem to be providing the rationale behind plans to take way Child Benefit from ‘undeserving’ middle-class parents. Never mind that this cash ‘benefit’ replaced child tax allowances and the small family allowance in the late 1970s, when the system still more or less adhered to the principle of horizontal equity. This was family policy, as distinct from welfare policy. Going back to Adam Smith – it dictated that, since it costs far, far more to support two adults and children than it does a single childless person, the proportion of income necessary for a family’s subsistence should be free of taxation.

In the post-war decades, the child tax allowance was more or less equal to the personal tax allowance by the time children were in their teens; freeing a father on average income from tax. There was a minimal safety net of public assistance for those who fell through this system of universal recognition for dependent costs and the sickness and unemployment insurance. Allowances for self, children and spouse help to ensure that net wages are well above the floor of benefits or public assistance; providing a base on which to build as money is not being taken away as you better yourself. No policing is required, since there is nothing to take advantage of. All is inexpensive to administer, with no continual adjustments to make as personal circumstances change. Careful families can maintain a living standard that does not make children into an impoverishing handicap or curse compared with their childless peers.  

It was those like Barbara Castle in the Labour Party who insisted that the child tax allowance merge with the family allowance, be converted into cash and given to mothers. The reason: fathers could not be trusted to provide for their families, as they spent the money in the pub before going home to beat their wives. Labour feminists seemed to imagine that women and children starved at the end of the garden. They further dreamed that recycling a tax allowance away from fathers to mothers in cash would expand to make them and their children self supporting.

What a poisoned chalice! Instead of families keeping their own money to support their dependents, this was confiscated and some grudgingly passed back as a ‘handout’.

The associated strategy of ‘targeting the needy’suggested acheap and precise way to deal with a problem. Bang, bull’s eye, solved! It was a moronic ‘one stop’ solution taken up by successive governments who, bit by disconnected bit, assembled the tangled mess that New Labour would nurture into its surreal hydra of redistributive welfare.

Each time Child Benefit was cut in the 1980s more families moved below the poverty line and onto means tested welfare, which whispered – do not work, do not bother to raise your earnings and do split up. Nobody qualified as so ‘needy’ as a mother alone, so ‘targeting’ meant the growth of a specially protected clientele as the direct responsibility of the state, which assumed the role of breadwinner.

Nobody seems ever to have looked at the dynamic consequences and, putting two and two together, asked why child poverty, welfare dependency, economic inactivity and the welfare bill were inexorably growing.

Outside the ministerial or politically correct researchers’ office it is accepted as a fact of life that people maintain or declare separate residences in order to maximise benefits and housing; ‘strategic single parenthood’ accounts for over a quarter of (identified) benefit overpayment.

There is not a finite supply of ‘needy’ or even ‘truly needy’ people, but always a multitude of hopefuls on the margins clamouring to be let in on any provision; altering their circumstances, dumping their assets, and staking their claim to be ‘more needy than thou’. Put qualifying conditions on a benefit and the predictable effect is to cause migration onto another, so lone mothers make for disability benefits as their children grow up and the unemployed become incapacitated.

Around a third of government spending is now on welfare benefits. If ‘targeting’ or means testing is so cheap and useful, why is the vast accumulating expense of targeting the needy drowning us in debt as much as it has done little other than encourage further social dislocation? A system that is ‘need’ based must, perforce, destroy morality as much as it will bankrupt a country. The assault upon interdependency, success and honesty has rotted social bonds, contribution and enterprise at the bottom of the income distribution.

Nick Clegg recently saw fit to mock the married father with the image of the man in the suit coming home to dinner made by his wife; in other words, a good, reliable husband and father dutifully supporting his family. Is it better he is an unemployable tattooed yob dropping in on the welfare dependent young Mum putting out the fags and lagers? Why mock and penalise the very kind of behaviour that keeps people out of poverty in the first place? Unfortunately, there are all too many who cannot let their illusions die and prefer we be ruined than saved. Having declared war on family policy, welfare dependency wins.

This story illustrates Mises' insight that government interventions lead to unintended consequences that lead to further interventions, and so on in a destructive spiral of more and more government control. The only solution is to stop government interventions. Until more people understand this, the situation will continue to get worse.

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