Politics as usual

National politics have dominated the UK news recently, which is surprising considering the next elections aren't until 2015.

Three weeks ago, the Liberal Democrats held their party conference in Liverpool, in which the leader had to explain to a very disaffected membership how supporting their arch-enemies the Conservatives while getting nothing in return was actually good for them.  Two weeks ago, Labour held its party conference in Manchester, where the heir apparent not only lost the party leadership to his brother, but then decided to drop out of politics altogether.  And this week, the Conservatives are holding their party conference in Birmingham, where the party leader (and Prime Minister) is back-peddling on his promise not to cut social benefits, by proposing that people who earn more than £50,000/year (US $80,000) not receive a 'child benefit' payment.

Introduced in 1945, the child benefit was a weekly payment for the second and subsequent children. In 1977, the eldest also got a payment, and in 1991 the payment was reduced for subsequent children.  Today, it is worth £20.30 a week (US $1700/year) for the eldest and £13.40 a week (US $1100/year) for the rest.

For a taxpayer making £50,000/year with 3 children, that equates to approximately 7% of net income, a not inconsiderable amount.  But here's where it goes off the rails: Like the stamp duty, it is not a phased reduction -- earn £49,000 and the government gives you $2,500, but make £50,000 and you get nothing.  In addition, the UK looks at each parents' income separately, so a couple earning £98,000 get the credit, while a single mom making £50,000 does not.

Even more interesting, the government is suggesting this be implemented in three years -- not because they want to prepare people for the cuts, but because the cost of changing the welfare system is so high, they can't afford to incur that cost for the next two years.

Part of the reason for the cost is that, in a related move, the government is also trying to simplify work benefits.  Rather than having jobseekers allowance (unemployment benefits), housing benefits, and a raft of other benefits, they are introducing a single 'universal credit' which will be tapered off at 65p per pound.  The idea is that right now, it's a bigger risk to take a low paying or temporary job because you then lose your benefits, whereas under the scheme you will be better off taking any job because you'd still keep a portion of your benefits. Of course, the devil is in the details, and some people will lose out significantly -- especially those who live in high rent areas, like London.  But I applaud them for at least trying to simplify the system, and since my work permit specifically states "No recourse to public funds," it doesn't really matter to me what they do.