Fun Online Polls: Means-testing & in-car entertainment

The results to last week's Fun Online Poll were as follows:

Which taxpayer-funded services or subsidies should be means tested?

State school places - 2%
NHS - 5%
Police and fire brigade - 2%
Child Benefit - 30%
Public libraries - 4%
None of the above - 54%
Other, please - 2%

With the benefit of hindsight, I should have set up the poll to allow multiple answers.

I am relieved that 54% agree "none" (in which case the argument is - how should the government spend or redistribute taxpayer's money) but why means-testing of Child Benefit is so popular is a mystery to me.

For lefties, fair enough, they like means-testing because it is taxation by stealth and means a larger state apparatus to administer. Fine, but why piddle about with shaving £1 bn off welfare spending when you could go for broke and means-test much more expensive things like 'free' state education?

Why so many Conservative or right/libertarian leaning people support it is a mystery to me. I am genuinely baffled.
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This week's Fun Online Poll is just out of personal interest.

"What do you usually listen to when you're driving your car?"

Vote here or use the widget in the sidebar.

Child Benefit

Over twenty years ago, my then wife threw a wobbly and went off back to Germany, taking our two little babies with her.

The Child Benefit was being paid into our joint account, so I waited three or four weeks on the off-chance she'd return, but when it was clear that she wouldn't, I got in touch with the Child Benefit people to tell them about this 'change in circumstances'.

They promptly stopped the payments and asked me to repay the three weeks' worth I had received after the children had left the country, which I did.

Now, this all seemed perfectly fair and reasonable to me. She was, after all, claimimg the German equivalent of Child Benefit.

When did they change the rules that the UK has to pay Child Benefit for children living abroad if one or the other parent lives here? How do they check that the children even exist?

More importantly, should I have just kept schtum on the basis that sooner or later, EU law would swing round in my favour and make it legal?

Tip top tokenist Tory tinkering.

From the BBC:

The Conservatives are considering limiting child benefit to three children, BBC Newsnight has learned… It would save an estimated £300m a year - but Tory MP Dominic Raab said it was not purely about cost but could "send a message about personal responsibility"…

Child benefit can be claimed by anyone responsible for a child under 16, or under 20 if the young person is in education or training - though since 2013 there have been restrictions for families where one parent earns more than £50,000 a year. It currently pays £20.50 a week for a first or only child, then £13.55 for other children.

Deliberately ignoring the elephant in the room as per usual.

Child Benefit is (or was) a splendid benefit, it was small amounts of money (nowhere near the average cost of bringing up a cd) but everybody gets it (until recently when it was withdrawn for higher earners). The total nominal payout is about £10 billion a year and fraud, error and admin costs are so small as to be barely measurable.

The cash value is nowhere near the average cost of bringing up a child (the bulk of which is loss of mother's wages) so eases the pain a bit without actually distorting behaviour.

The biggie is Child Tax Credits, up to £53 a week per child plus bits and pieces, which is a total payout of about £25 billion a year, the bulk of which goes to a small number of large families with low or no (declared) income.

For second and subsequent children, the extra cash you get from having another child is £66, which is probably more than the marginal cost of bringing up a second or subsequent child. If a mother is at home and not in paid employment, then the loss off her wages is a sunk cost. So this does distort behaviour quite a lot.

Fraud, error and overpayments are endemic; admin costs are enormous and they put a sadistic amount of effort into clawing back overpayments from randomly selected people. And it is savagely means-tested, of course.

Now, if you chuck Child Benefit and Child Tax Credits in the pot and divide it by the number of eligible children, it comes out to about £55 per child per week (see pages 8 and 9 of the Citizen's Income Trust booklet), without the need for means testing and so on, which seems fair enough to me.

If you want to cap this at three or four children per family/mother to "send a message about personal responsibility" then that also seems fair enough; any 'savings' from doing so are minimal in the grander scheme of things (£1 billion a year, perhaps?) but possibly worth having.

The other good thing about having a flat rate amount of £50-odd per child per week is that it sorts out the so-called gender pay gap, which is actually a mothers-vs-everybody else pay gap. If you means-test it, then you leave the pay gap as it is.

"Huge families on benefits are no myth... oh, hang on..."

From The Daily Mail

CLAIM: Only a tiny number of jobless families have large numbers of children reliant on the State for support.

REALITY: There are 160 families on out-of-work benefits with ten or more children. This figure was cited by the Left during the debate over the case of Mick Philpott from Derby, who killed six of his 17 children in a house fire and whose lifestyle was subsidised by taxpayers.

However, closer scrutiny of official figures shows that there are huge numbers of large workless households reliant on welfare.

There are 194,000 homes with three children; 76,310 with four; 25,980 with five; 8,760 with six; 3,200 with seven; 1,080 with eight; and 360 with nine.

Some 419,370 workless families have two children — which is the average number of offspring for all homes in the UK.

Yes, this is all very naughty of them, and if it were up to me I'd roll Child Tax Credits (awful, awful, awful) into a more generous Child Benefit (non-means tested, non-conditional, non-taxable) but pay that only for the first three children which a woman has (but not pay any for fourth and subsequent children) as a quick and simple way of eliminating the "mothers-versus-everybody else pay gap".

But let's look at the bigger picture:

In April to June 2012 there were 3.7 million UK households with at least one member aged 16 to 64 where no-one was currently working. This represented 17.9 per cent of households and was a fall of 0.8 percentage points, or 153,000 households, on a year earlier, the second consecutive fall. In all, 1.8 million children lived in these households, as did 5.0 million people aged 16-64.

So on average, there are 0.36 children for each workless adult.

How does this compare to the population as a whole?

In England & Wales there are 10.5 million children aged 0 to 15 and 36 million people aged 16 to 64. Add on 11% for whole of UK and knock off the ones from workless households and we end up with 35 million 'working' adults and 9.9 million children, which means 0.3 children per 'working' adult.

So yes, it would appear that workless adults do have slightly more children than their working counterparts. If they had children at the same rate, they would have 1.5 million children instead of 1.8 million. Only half of those are "extra" children (fourth and subsequent children), or put it this way, out of those 3.7 million workless households, only 116,000 have more than three children.

Let's assume that they receive about £60 a week for each child (CTC and CB) that means the total amount redistributed from working adults to non-working adults to pay for these extra children is a shade under £1 billion, i.e. 0.5% of the total welfare budget, and if you capped CTC and CB at three children, the "saving" would only be half that.

Big deal, is all I can say. By all means "do something" about this out of principle (there are social costs to take into account as well, but those are difficult to quantify), but don't pretend it's a cost-saving measure.

The Tories show us how to "reward marriage"

From The Daily Mail:

Thousands of people earning more than £50,000 will lose some of their pay if they move in with a new partner who has children, accountants have warned. Tax experts at Deloitte said the ‘bizarre’ anomaly was the result of government plans to claw back child benefit from homes where at least one resident is a higher earner.

The changes are due to come into force in just 10 weeks, and the Treasury has been forced to insist they remain on track despite hundreds of thousands of families affected being in the dark that they will lose money from January 1. Letters are due to be sent to those affected by HM Revenue and Customs next week...

Under the changes, if one person in the home earns £50,000 or more, the entitlement to child benefit will be gradually cut. If anyone earns more than £60,000, they will lose child benefit all together [sic].

So they're preening themselves for having reduced the (spiteful) 50p tax rate to a marginally less spiteful 45p, but as a quid pro, they are increasing the marginal tax rate on above-average earners by another twenty or thirty per cent (the maths is tricky); bringing in a whole new raft of bureacracy; and as a bonus penalising people who try and make a second attempt at marriage.

Child Benefit: with and without

Some commenters (Sarton Bander, Chef Dave, Onus Probandy spring to mind, UPDATE add Jorge to the list) have often voiced their opposition to the idea of paying out Child Benefit. I'm in favour because I'm strongly pro-family and mildly feminist, plus that's just the way that most countries do things.

But it's no big deal really and it doesn't actually make much difference, it merely affects the timing of payments. In very round figures, let us imagine that we have £200 billion surplus LVT receipts that we have to dish out somehow to 40 million adults and 20 million children as a Citizen's Dividend, and let's assume that a tenth of adults don't (or can't) have children. To simplify things further, let's assume that all adults live in two-adult households.

1. Following SB, CD and OP's approach, 40 million adults would get £5,000 a year each, or £10,000 per household (whether they have children or not), and children get £zilch.

2. If we pay children half the adult rate, then 40 million adults get £4,000 per year each and 20 million children get £2,000 per year each.

3. If a tenth of adults never have children and the other nine-tenths have 2 2/9 children each and those children stay with their parents for half their parents' lives (let's ignore retirement age and upwards), then there will be three types of household:

- Two adults, who never have children = £8,000 a year each.

- Two parents, who have on average 2 2/9 children living with them = £12,444 a year each

- Two adults, who will have children in the future or whose children have left home = £8,000 a year each.

4. Over the lifetime of the household of 40 years (like I said, ignore post-retirement age):

- Childless households will receive £8,000 x 40 years = £320,000.

- Parent households will receive [£8,000 x 20 years] + [£12,444 x 20 years] = £409,000.

5. So let's compare this with option 1. where there is no Child Benefit (or where the Citizen's Dividend doesn't kick in until you are adult):

- Childless households receive £10,000 x 40 = £400,000.

- Parent households receive £10,000 x 40 = £400,000.

6. So yes, childless households might feel a bit miffed, they receive £80,000 less over a lifetime. But parent households end up a princely £9,000 better off.

7. I (personally) don't think that if a parent couple receives £9,000 more over 40 years, that's an average of an extra £2 per parent per week, that this is in any way some sort of big financial incentive to have children, or that it even makes a small dent in the cost of having children (the bulk of which is the loss of mothers' wages), which has been stated to be hundreds of thousands of pounds.

8. It is, as I said, largely a question of timing of payments. Unless I've missed something, we were all children once anyway, and in a sane world, people tend to have children towards the start of their adult lives, so you get a bit more earlier on in life when money is tighter and a bit less later on when it isn't.

Tories finally "recognise marriage in the tax system"

As I was explaining recently, the welfare system and the tax system are the same thing, or at least two halves of the same thing (being some sort of redistribution of income), there is no real or fundamental difference between a welfare benefit and a tax break. There is no point in e.g. stopping Winter Fuel payments to wealthier pensioners if the sole purpose is to fund an equal and opposite tax cut for wealthier pensioners.

The Tories got into government muttering something about "recognising marriage in the tax system", which most people understood to mean at least a transferable personal allowance, which would have particularly benefited single-earner couples with little or no investment income (i.e. married couple with young kids), so politically pretty good. Or at least, maybe a married couple's allowance, like they used to have (and which still exists for people born on or before 5 April 1935).

Fair enough, that idea has fallen by the wayside, but what they now propose is pretty much the opposite of what people were expecting:

Child benefit will effectively be withdrawn on a tapering scale for households where one earner has more than £50,000 income; if one earner has more than £60,000 income, it will be lost altogether. This will be done through an increase in income tax rather than by withdrawing the benefit.

1. Yup, they will continue to pay out the benefit to the mother and adjust the husband's PAYE code so that he pays +/- the same amount in extra tax as is paid to her: the bonus is that the marginal rate of tax/NIC on incomes between £50,000 and £60,000 will increase by 17% if you have two children etc.

2. The official reason given for withdrawing Child Benefit was to reduce government spending (heck knows what the real reason was), but as we see (welfare and tax being two sides of one coin), this hasn't actually reduced the "spending' side by one penny; it has actually increased the 'tax side' (although it comes to much the same thing).

3. And how much did they hope this would save? Originally they said that no higher rate taxpayer (or his or her spouse) would receive Child Benefit, which is maybe one-in-ten recipients and that this would save about £1 billion a year (i.e. one-tenth of £11 billion a year total Child Benefit). Now they've raised the threshold and introduced the taper, with all sorts of fraud, error and admin, the saving (i.e. the extra tax raised) will be half that much, £500 million a year or something.

4. Hmmm, let me think. If the government wants to raise another £500 million a year tax from higher earners with children, isn't there a simpler way of going about this, without increasing marginal tax rates on earned income? Maybe have a couple of extra Council Tax bands for higher value homes and do a bit of rebanding or something? Surely, higher earners with children will either live in expensive houses, big houses or both? And if not, I'm sure that some of those single pensioners trapped in fuel poverty in big houses will be happy to swap places with them; the pensioners can cut their Council Tax and fuel bills; the higher earners with children get to live in the bigger houses? Win-win, that sort of thing?

Reader's Letter Of The Day

From today's Evening Standard (page 61):

I am a public sector worker and have worked and paid tax for all but 10 months in 36 years. I object to my tax going towards people who refuse to work or towards child benefits for families earning far more than me. If my pension has to suffer under cuts I want the right to refuse to pay for such undeserving recipients.

Claire Harding

It's a great template, isn't it? See also:

I have been out of work for 10 months. I object to tax going towards people who have a cushy public sector job or towards child benefits for families earning far more than that. If my dole money has to suffer under cuts I want the right to refuse to pay for such undeserving recipients.

Wayne Slob

or

I am a high paid earner in the private sector and have worked and paid tax for all but 10 months in 36 years. I object to my tax going towards people who refuse to work or towards public sector non-jobs. If my child benefit has to suffer under cuts I want the right to refuse to pay for such undeserving recipients.

Disgruntled of Tunbridge Wells

etc.

One-nil to my Welfare Reform Minister

A couple of weeks ago, Adam Collyer summarised thusly:

You will remember that George Osborne announced some time ago that child benefit would be scrapped for higher rate taxpayers. That was later clarified to mean that any family with at least one higher rate taxpayer would lose the benefit. And that means all of the benefit. If you go over the higher rate tax threshold by a single pound you lose all your child benefit – which for a family with three children is £2,500 per year. In other words, this would create a massive benefit trap with a huge spike in effective marginal tax rates to 2500%...

... my especial contempt on this is reserved for George Osborne. This is, as I said, a ridiculous proposal in the first place. But even if you accept what he wants to do, there is a much better way to do it. The tax credit system is an appalling mess. But it exists. So if Mr Osborne wants to means test child benefit, all he has to do is scrap it and add the same amount to the child tax credit.

Tax credits are already means tested, so no new bureaucracy to add. In fact, it would remove the small amount of bureaucracy that is currently needed to administer the child benefit system. Tax credits are already based on household income rather than individual income, so no anomalies about two-earner versus one-earner households. Tax credits are not cut off bang when you go above some arbitrary threshold. They are tapered, so as you earn more, the credits are gradually removed. So no benefit trap.

From the BBC today:

The IFS criticises the government's plans to withdraw child benefit from households with a higher-rate taxpayer from 2013, on the grounds that it would create a "cliff-edge" that would mean 170,000 families could increase their income by earning less. The think tank suggests that the government should instead gradually reduce child benefit as household income rises, using the existing means-testing system that is used to pay child tax credit.

George Osborne talks nonsense on Child Benefit

From the BBC:

Chancellor George Osborne has said child benefit for higher rate taxpayers will be removed, after ministers' hints the policy could be made "fairer". But he said he would set out in the next months how the policy would be "implemented"...(1)

Asked if any further changes to the policy were sought, the chancellor said: "We're very clear that it is fair that those who are better off in our society make a contribution to the saving of money we need to make... so we will be removing child benefit from higher rate taxpayers. (2)

"We haven't set out how we're going to implement that and we're going to do that in the next few months. But the principle that it's not fair to ask someone who's earning say £20- or 25,000 to pay for someone who's on £80- or £100,000 to get child benefit is one that I think is very important.(3)"

Mr Osborne has said the proposed cuts could save up to £1 bn a year.(4)

1) Given his apparent complete lack of understanding of basic maths and logic, or ability to come up with a workable solution to a relatively simple proposal in a reasonable time frame, I'm not sure we ought to be putting him into bat when it comes to negotiating the terms of Scottish independence, eh?

2) How is this "saving of money"? Who is saving money here? Some people will clearly be worse off, so somebody else will end up a smidge better off. Child Benefit is a transfer payment, not government spending as such, and the chances are that government spending will be merrily nudged upwards by "up to £1 bn a year" accordingly (rather than taxes being cut on whoever). The government spends money far less wisely than higher rate taxpayers with children, I rest my case.

3) Wot? Higher rate taxpayers are paying a third of all taxes and being paid a tenth of all Child Benefit. The net transfer is from higher rate to basic rate taxpayers, that's basic maths and logic*. The same can be said for just about any universal benefit. Taking it away from higher rate taxpayers does not benefit basic rate taxpayers by one red cent.

4) "Could save up to..."? In other words, he doesn't have a clue how much money higher rate taxpayers will lose as a result of this, does he?

* OP in the comments points out that it is also a transfer from childless to people with children, which is true. In round figures, Child Benefit is £10 billion. Higher rate taxpayers chip in £3 billion; basic rate taxpayers chip in £7 billion. HRT's with kids get £1 billion, BRT's with kids get £9 billion. Let's assume half of working households have kids, and that there are 4 million HRT's and 36 million BRT's, the net transfers per year are thus:

HRT, no kids, lose £1.5 bn (£750 each)
HRT, with kids, lose £0.5 bn (£250 each)
BRT, no kids, lose £3.5 bn (£97 each)
BRT, with kids, gain £5.5 bn (£306 each).

With apologies to ‘Yes, Minister’

From The Citizen's Income Trust Newsletter:

Minister: Undersecretary …

Undersecretary: Yes, Sir?

M: What did you think of the Chancellor’s conference announcement?

U: Which one, Sir?

M: The one about Child Benefit.

U: Masterful, Sir.

M: I agree. Saves money, and it’s good for our social justice image.

U: We’re very pleased.

M: You are?

U: The Department, Sir.

M: How so?

U: We’re going to have to collect huge amounts of information on who’s living with whom. We’ve been doing that amongst the lower classes for years, but we’ll now have to do it for the wealthy as well. That will be interesting. And then we’ll have to connect that information with data on who’s paying higher rate tax, and on who’s receiving Child Benefit. Do you think we should ask the company which tried to computerize means-tested benefits if they can do it?

M: Shouldn’t it go out to tender?

U: Of course. I’ll see if anyone knows how to write a specification.

M: But do you think we need to do all that? Can’t we just ask Child Benefit claimants to tell us if they’ve got someone in the household who’s paying higher rate tax?

U: Yes, we could. But then we’ll need to check up on them. So we’ll need a wonderfully large fraud department, and we’ll need to train some more snoopers. Now that will be really interesting.

M: O dear, do you think so?

U: And we’ll need to collect millions of changes of circumstances every year. And we’ll need a department to look after underpayments and overpayments. We don’t have to worry too much about that at the moment.

M: Don’t HMRC have all that trouble with tax credits?

U: They do, Sir. I’m sure we could ask them to give us lessons. … And we’ll need tribunals, too. They take quite a bit of admin. So we’re really very pleased; and so are the unions, because we’ll be able to redeploy all the people we were going to have to get rid of.

M: I wonder if I should have a word with the Chancellor?

U: I think it was the Prime Minister’s idea, Sir. And they both thought it was a good one. But don’t worry. I’m sure we can manage it. I’ll have a note of the extra admin. costs for you by tomorrow so you can tell the Chancellor how much he won’t be saving.

M: It hope it won’t be too embarrassing.

U: I’m afraid it already is quite embarrassing, Sir. But at least we won’t need to employ consultants. We’ve all the all expertise we’ll need in the means-testing sections of this department, and in tax credits at HMRC.

M: I suppose that’s a help. … But the argument’s right, isn’t it? That it’s wrong for low earners to be paying for Child Benefit for the wealthy?

U: Of course, Sir.

M: Do you really think so? … You don’t, do you.

U: It’s as good as the argument that we should stop higher rate taxpayers using the NHS.

M: O dear … You’re really quite keen on universal benefits, aren’t you.

U: If I can speak in a personal capacity and off the record … It’s much more efficient to give Child Benefit to everyone. The wealthy are paying far more in tax than they receive in Child Benefit so there’s really no problem. But the Department rather you didn’t make that argument too clearly, Sir.

M: I can see that.

U: On the other hand, if you’re interested, there is another strategy. You could tell them how cheap Child Benefit is to administer and suggest that they turn tax credits into a universal benefit. But only do that if you can be sure that this department gets to run it. Which means that you’ll need to get the PM to understand, and not the Chancellor.

M: Do you think he will?

U: I think he can.

M: That’s not what I asked.

U: I agree, Sir

Newsarse on top form

From here:

There has also been concern among the electorate about the decision not to mention child benefit cuts in the Conservative election manifesto. A government spokesperson explained:

"We’re sorry we didn’t include child benefit cuts in the manifesto, but if we included all of the unpopular things we were going to do in our election document, then you would never have voted for us. It’s actually pretty straight forward when you think about it."

Government officials have expressed confidence in the prime minister’s ability to show the necessary levels of remorse in making decisions he is secretly quite happy about.

"He has an excellent poker face, during the last cabinet game he took George Osborne for thousands - not that this means much, the man’s a simpleton. But when it comes to convincing the public that he cares about something for which he could not give a single toss, there really is no-one better."

Former Lib Dem supporter Graham Knowles said, "If you could boil down the Conservative party raison d’etre to just three words, they would probably be ‘fewer public services’ - so why this is a surprise to anyone, I have absolutely no idea."

Handy chart on benefit spending

From the BBC. What they don't tell you is that the bulk of Tax Credits are in fact Child Tax Credits, which are payable whether you are working or not. I can't remember the exact split, but I think it's about £20 billion Child Tax Credits.

Yasmin Alibi-Brown on VAT

Oh, the sheer and unadulterated Righteouness of it all:

“Zero-rated items, such as food (1), books (2) and children's clothing (3), shouldn't have VAT applied to them as it would hit the most vulnerable members of society the hardest."

Wot? Of course, we 'shouldn't' have VAT on anything, but let's look at those three items in turn:

1) We would get an average household's food bill down by hundreds of pounds a year if we left the EU.

2) Books? What is she talking about? Has she never heard of public libraries or second hand book or charity shops? I'm not aware that that the ultimate - and as yet undefined - victim group, 'the most vulnerable' would be 'hardest hit' if the price of a new book went up by a quid.

3) Children's clothes are stupendously cheap, cheaper than they have ever been. In any event, has she never heard of hand-me-downs, charity shops etc? Or is she thinking more of Nike trainers? And don't we have Child Benefit (or, G-d forbid, Child Tax Credits) to part-pay the cost of children's clothes?

Problem is of course, it wasn't the Yazzmonster (TM JuliaM) who said that, it was Stephen Robertson, Director General of the British Retail Consortium.

Transfer payments vs government spending

Adam Collyer explains the difference.

Or as I would put it: what's the point in taxing or means testing away Child Benefit in order to finance a modest tax cut for the people who now no longer receive it? That doesn't reduce the size of 'the state' one bit, and given all the extra admin and hassle involved, it probably increases the size of 'the state'.

Readers' letters of the day

Both from The Metro

So, the first child trust fund savers will soon receive £250 top-ups from the government (Metro, Tue

It has been suggested that these funds may be used to help pay for university education. Wouldn't it be simpler not to bother with them at all and [reduce] the amount students have to pay for university education? The many insane money-go-round schemes this government has come up with have resulted in a huge waste of money when you consider the army of administrators needed to look after them

Charles Tritton, London W4.

and:

I saw a sign in a bus station that said 'One bus takes 35 cars off the road'. Personally, I think it depends how aggressive the driver is.

Josh, West Yorkshire.

And you thought the Tories won't be as bad as the other lot ...

From Sky News, Sunday Live

CHRIS ROBERTS: Labour at the moment are promising, and there is a big announcement on this coming up I think this week, that every young person aged between 16 and 24 who has been out of work for at least ten months I think it is, will be guaranteed a job.

THERESA MAY: What they are going to do is guarantee them a place in training or in work of some sort for a short period of time. Now what we want to do …

CHRIS ROBERTS: So it’s a con are you saying?

THERESA MAY: Well no, what I’m saying is I hope it won’t be, I hope that what it will be is something that will help those young people then get in to sustainable work.

CHRIS ROBERTS: So what could you guarantee all those 16 to 24 year olds, how many of them, 17% of them out of a job isn’t it, something like that?

THERESA MAY: Yes, well one of the things we’d do for example is introduce a 100,000 new apprenticeships each year, that would be providing opportunities for those young people. We would set £100 million aside as a fund for the NEETs, the young people not in education, employment or training, specifically to be supporting them to get them into the work place.

How on earth is the government, of whatever party, supposed to "introduce apprenticeships"? They seem willing to chuck another £100 million of taxpayers' finest at it, but wouldn't it make a bit more sense to take a step back and look at what caused the problem first?

1. The whole welfare and tax systems are geared up to discourage this sort of employment, i.e. you lose Child Benefit (£13 a week for second and subsequent child) and Child Tax Credits (up to £43 a week) and the Education Maintenance Allowance (up to £30 a week) unless your child is in a certain narrowly defined type of training, which makes the whole exercise pointless for a proper NEET from a low income or workless family.

2. Maybe "apprenticeship" will be on the list of jobs which don't make you lose these benefits - in which case I see massive opportunities for fraud. Why not have apprenticeships in shelf-stacking or table-wiping? If the employer knows the market rate is £120 a week but if they fill in all the forms properly, they can get away with paying £34.

3. The whole PAYE system and Elfin Safety malarkey discourages employers from taking on low paid employees, of course, but for low paid apprenticeships, the actual tax wedge is probably not that big.

3. I suppose we ought to mention immigration at this stage - the wages that e.g. East Europeans are prepared to accept is often lower than what native Brits demand, firstly because they look at the value of those wages in terms of what they can save up for and buy once they return home; and the wages that native Brits demand are inflated by the fact that basic welfare is so generous and so harshly means tested, that as a rule of thumb, you have to earn at least £15,000 gross to be better off taking a job.

4. And right now, the immediate problem is that we are in a recession and unemployment is rising anyway, and until they are prepared to be honest about the root causes of the recession and deal with them accordingly, there's not much point tinkering with "apprenticeships".

Just sayin', is all.

Belated Friday Funny: The Farrah Fawcett Society

As we know, the lefties, in particular Harriet Harman and The Fawcett Society, constantly whine on about "the gender pay gap", and even David Cameron jumped on board a couple of years ago (whether he has jumped off board again is unknown). They salivate at the prospect of having compulsory gender pay audits and the like, which will generate thousands more jobs for taxpayer-funded meddlers and burden businesses with yet more red tape.

Now, as anybody who knows anything about anything knows, it isn't a gender pay gap as such, it is a mother-versus-everybody else pay-gap. And if your own observations aren't enough evidence, the ONS published detailed tables that confirm this assumption, which Tim W picked up on and used in a recent article in The Guardian.

I therefore nearly fell off my seat when I read the following article in Friday's London Paper, of which an abbreviated version was published in The Metro:

Research (1) for campaign group (2) the Fawcett Society showed that childbirth marked the start of a "great divide" on earnings (3), which continued even after children left home. Before becoming parents, men and women were equally likely to be employed but, after having children, 57% of mothers of under fives were in paid work, compared with 90% of fathers (4)...

Dr Katherine Rake, director of the Fawcett Society, said: "The choice of whether and when to return to employment is, of course, a very personal one. However, it is critical that those mothers who choose or need to be in paid work should (5) be able to do so without suffering a pay penalty (6)."

(1) It's not 'research' as such, by their own admission, it "is a new survey of existing research, drawing together the most recent data from academic and government sources.", i.e. they used the same ONS figures as I did, which I will assume to be reliable.

(2) "Campaign group"? Nope, it's a prime example of a FakeCharity. The Society's entry at fakecharities.org woefully understates the extent to which it is government funded.

(3) So they've finally admitted that it's a mothers-pay-gap, not a gender pay gap, which is a bit of a breakthrough, really. Now all I have to do is explain why having additional rights for pregnant women makes it harder for young women to get jobs ...

(4) Which is another way of saying that 43% of mothers choose to take time off to stay at home with their young children, and that 90% of fathers are in work. What on earth is wrong with that?

(5) Ah ... the s-word ... which usually invalidates whatever it is that the person is trying to say.

(6) OK, this is the key to all this. As we know, couples tend to pool income and expenditure, so the gap between fathers' and mother's pay is not that important either. But as a moderate feminist, I do ask myself, is there perhaps a simple way of sorting all this out without all the bureaucracy and crap and in a way that is fiscally neutral for the taxpayer?*

Anyways, I do wonder why The Fawcett Society named themselves after Farrah Fawcett, who's hardly a leftie-feminist icon, which reminds me of a joke I heard on Friday:

Farrah Fawcett went to Heaven and St Peter told her that as she had led such a blameless life, she would be allowed one wish. After giving it some thought, she replied "I would like all children in the world to be safe". A few hours later Michael Jackson was dead.

* Ah yes ... there is. We scrap Child Tax Credits (which are primarily a straight bung of £42 per week per child for unemployed single mothers); we scrap the Child Trust Fund nonsense and increase Child Benefit (currently £20 per week for the first child and £13.20 for subsequent children) into an enhanced flat-rate, non-means tested, non-taxable Child Benefit of (about) £30 per week (or whatever is fiscally neutral).

In the longer version of the article, it was said that women earn 22% less than men (which is a red herring, of course - the proper comparison is between mothers and women who have never had children), but let's go with 22% for now...

If an average mother with two children would have been earning an average gross salary of £25,000 (£19,174 after tax), but now only has a gross salary of £19,500 (£15,379 after tax) she's out of pocket by £3,795. But she'd also get 2 x 52 x £30 a week Child Benefit = £3,120. So overall, her family unit would be £784 a year worse off, which is hardly worth worrying about, is it?

Or you could say, mothers do an average of twenty hours paid work per week, so that £3,120 equates to extra pay of £3.25 per hour, tax free.

Bring out your prejudices!

Tim W has a nice article up at Comment Is Free today, highlighting a few facts'n'figures on the "gender pay gap", aka "the mothers' pay gap", and how the welfare system largely compensates for this.

Most of the comments are the usual drivel, of course.

Sophie Raworth tells it like it is

From the BBC:

Presenter Sophie Raworth said having children badly affected women's pay. Men and women are level on pay in their 20s, but once they hit 30 the gap starts to widen and by the time people are in their 40s the average woman is earning 20% less than a man, she said.

"I think it's no coincidence that the gap starts widening when women tend to settle down and have children," said Ms Raworth "And interestingly women who don't have children tend to continue earning virtually the same as men as they continue in their careers."

Exactly! It's not really a 'gender pay gap', it's a 'mothers vs everybody else pay gap'. Whether or not something 'should be done' about this is a different topic, but assuming there should, whatever they come up with ought to address the actual gap there is and not some imaginery gap which, on closer inspection, doesn't exist.

To the extent that something 'should be done', all I can say is scrap Child Tax Credits and roll them in to a much higher Child Benefit of about £30 a week per child for the first three children per family, and pay that directly to the mother. In cash terms, that will probably make up the 20% earnings differential.

Here's a picture of Ms Raworth, just out of interest:
In other news, "Only 7% of men would be prepared to stay at home with a newborn baby if maternity benefits were replaced with parental ones, according to a survey. Even fewer women - 4% - would hand over the role at home to the father, while two-thirds of working mothers said they only kept jobs out of necessity.".