A Tale of Two Benefits: Britain 2010-20

The coalition government, 2010-15, agreed Chancellor George Osborne’s ‘Age of Austerity’. The first phase, 2010-3, froze benefits and public sector wages. The impact was startling for child benefits and the state pension for different reasons. Conservative chancellors have reduced child benefits and increased state pensions in real terms since 2010.

Child Benefits

….we have decided to freeze child benefit for the next three years….ensuring that everyone across the income scale makes a contribution to helping our country reduce its debts.”*

In 2010 child benefits were paid for every child in a family with the eldest attracting a higher benefit (see Addendum one). Osborne froze payments from 2010 to 2013. In phase two they were frozen again from 2016 to 2020. The ten ‘Age of Austerity’ years meant child benefits rose by 3.7% from £20.30 to £21.05. Inflation in those ten years was 29.05%.

Successive Conservative chancellors have reduced child benefits by 25.35% in real terms whilst “….helping our country reduce its debts.” The squeeze continued in April 2017. After this date only the first two children qualify for child benefits. This is a British version of China’s ‘one child’ policy using disincentives to dissuade people from having three or more children.**

State Pension

“….many people don’t realise that the largest amount is actually spent on pensions at £111 billion.”***

Osborne decided pensioners wouldn’t make a contribution towards “….helping our country reduce its debts.” Pensions were enhanced. The mechanism was the ‘triple lock’, which “….guarantees that the basic state pension will rise by a minimum of either 2.5%, the rate of inflation or average earnings growth, whichever is largest.”****

The effect of the triple lock has been staggering. The 2010 state pension was £97.65, which rose to £134.25 in 2020. A 37.48% increase over ten years comfortably beating the inflation rate of 29.05%.

Discussion

Households with children in the poorest 20% of households receive more than half of their income from benefits, compared with almost zero in the richest 20% of households.*****

George Osborne’s ‘Age of Austerity’ skilfully blended statements to give a false equivalence. He themed his 2010 budget speech around the slogan ‘We’re all in it together’. Only in the crudest reductionist sense can a child benefit freeze be described, “….[as] ensuring that everyone across the income scale makes a contribution to helping our country reduce its debts.” The ‘contribution’ the poor made has crippled them unlike the rich (see Addendum two). And when the rich were effected he caved in. His original proposition was that those earning £50,000+ would immediately lose child benefits. Under pressure he introduced a taper through to £60,000 p.a.

Pensioners are a key demographic at elections and Osborne’s 2010 budget and all subsequent budgets have acknowledged this fact. Osborne exacerbated child poverty: deliberately. British children became pawns in an extremist ideology. The long-term social cost of poverty is well known but politics and ideology have trumped that knowledge.

Addendum one: Table of child benefits 2010-20

Rates and tables « How much can your client get? « Guidance « Child Benefit (revenuebenefits.org.uk)

Addendum Two: Benefits as a proportion of household income

Public-Spending-on-Children-in-England-CCO-JUNE-2018.pdf (childrenscommissioner.gov.uk) p13

Notes

* George Osborne 22nd June 2010 Where it all started « Policy « Child Benefit (revenuebenefits.org.uk)

** With curious symmetry the Chinese policy finished in 2014 and the British look-a-like policy began in 2016.

*** How is the welfare budget spent? – Office for National Statistics (ons.gov.uk)

**** Scrap pensions triple lock to help save UK finances, says influential thinktank | Money | The Guardian

***** Public-Spending-on-Children-in-England-CCO-JUNE-2018.pdf (childrenscommissioner.gov.uk) p13

Sources

For the triple lock see Prime Minister to protect the triple lock (pensionsadvisoryservice.org.uk)

For the State Pension 2010-20 see Basic state pension rates – Royal London for advisers

For the Chinese one child policy see An Overview of China’s One-Child Policy (thoughtco.com)

For the two-child rule for child benefit see Families with more than 2 children: claiming benefits – GOV.UK (www.gov.uk)

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1 Response to A Tale of Two Benefits: Britain 2010-20

  1. Pingback: Gordon Brown and the Winter Fuel Allowance | Odeboyz's Blog

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