I think the Daily Mail, in its campaign to help the middle classes in austere times would love this little e-mail exchange.
A little while ago somebody got in touch with me to say they were worried they’d be losing their child benefit. Well, the coalition has got to find the cash to fund the reduction in the 50p rate from somewhere!
So, quite rightly, she took it up with my successor – her local MP in Gloucester, Richard Graham. We’ll change her name to Suzie, otherwise the full and unedited exchange is published here.
I won’t analyse the response she got back for you, I’ll leave that to you. But its an interesting insight in to the mind of a millionaire tory, and how he relates his own pay freeze and pension contribution increases to the lives of his constituents. I think you’ll find some of it toe-curling and jaw dropping at the same time. Out of touch tories? You decide. Enjoy… and feel free to share…
Dear Mr Dhanda,
I have recently been in contact withGloucester’s Mp Mr Graham regarding the issue of child allowance and the withdrawal of it to “High income earners”.
According to Mr Graham this is not his parties fault but that of their coalition partners. That’s if I totally read the email correctly. Therefore I contacted Mr Hilton to ask him to defend this claim.
Below are copies of my emails and although they will take time to read, I would value your opinion.
FROM SUZIE TO HER MP, RICHARD GRAHAM
Dear Mr Graham, I want to ask you what you are doing regarding the withdrawal of child benifit?
As i understand it, as my husband pays over 40% tax we will loose our child benifit. We are both in the nursing profession and he has worked hard to get to the position he is in. I work part-time to ensure our children have not needed to go into child care for great lengths of time and have a stable home. Something that is always advocated by all political parties. It seems that if my husband were to demote himself to below £42,000 per year and I increased my hours we could earn a joint income of £84,950 and get child benifit. However, with him being in the higher tax bracket and our joint income being £64,000, we will loose our child benifit. How is it fair that a family could earn £20,000 more than ourselves and still qualify for child benifit whereas we would not.
As you will be aware our pensions have taken a knocking as well. I am not totally sure why, as i believe there is enough money in the coffers for us to have our pensions. Having said this we are sensible and if to keep our pension we have to pay a little more, we will have to swollow this. This adds to our anguish though.
We are due to get a 1% pay rise but will have to pay up to 3% extra into our pensions. This is for both of us, so collectively we will get a 2% pay rise but loose up to 6% in pensions! We will, under present proposals, loose child benifit. Why is it we are being punished for choosing a career in the NHS and for my husband advancing in his job? For most families, maybe only one will work for the public sector, so wouldn’t have these worries, but to us it seems we work harder than ever and are getting poorer and poorer at every turn.
The money we get from the government for our children does go to buy shoes, clothes, food. They are not designer clad children but, primark, tesco, asda. It seems to me that if my husband demotes himself and I work more we will be better off financially though the children will suffer from not having the stability they are used to.
So as my MP, what are you doing to help families like mine?
Look forward to your reply, Suzie
FROM RICHARD GRAHAM TO HIS CONSTITUENT
Thank you for your strongly felt mail on this.
I understand why you feel this way, and you are not alone.
Over the last almost two years since I was elected I have had on average 400 e mails a day, every day, on different aspects of the incredibly difficult decisions this government has had to make to get public spending towards what the country can afford.
Almost all of the mails I get on this start by saying they recognise that public spending has to be cut, but just NOT the particular cut that affects them.
To give you some examples – no one in public service was in favour of a pay freeze (even tho many people in business had seen their pay reduced from 2008 onwards); no-one in the RAF wanted to see the Harriers axed or in the Navy see the Ark Royal sold or in the Army see infantry reduced: people on incapacity benefit are often furious about medical tests to see whether they should actually still receive them: housing charities argued that thousands of people would be homeless on the streets when we reduced housing benefit by 10 per cent: teachers argued that changes to their pensions would mean no-one would want to teach: civil servant unions said superannuation payment changes were catastrophic: again charities and many people say that changes to the Welfare Reform Bill, with a total benefits cap, would cause thousands to lose their homes; and the police are fighting hard against changes to eg double overtime rates and automatic annual increments to salary.
And as you will both know well, the amount of opposition to changes in the NHS that will enable it to continue, when demand increases 7 per cent a year, by reducing costs through reducing the numbers of managers and organisations (like SHAs and PCTs).
Then there are all the changes to local government services, with some people making a huge fuss about modest changes to eg library services.
I mention all this so that you realise you aren’t getting penalised because you work for the NHS, or because you both work in public service, or for any reason at all except that almost every aspect of public spending has to be shrunk to get down first our budget deficit (annual spending) and then the mountain of debt accumulated.
When the plans for these cuts were produced in 2010-11, the Treasury was asked by George Osborne to calculate how all these changes would affect each quintile of salary earners, so that he could see whether everyone was genuinely all in this together.
This showed that higher rate earners were equally affected, but not if they continued to receive child benefit. If they carried on getting it, middle and lower earners would be more affected.
Many of us then argued, in private, that while this was true for individuals it would create an imbalance against couples where one was a higher rate earner and the other a modest earner relative to other couples.
I had hoped that this would be balanced by introducing (or bringing back) an old allowance – that married couples could ‘gift’ a marriage allowance to a higher rate earner and that this would be worth the equivalent of child benefit. I hoped this would be sorted by 2013 which is when the child benefit rules change.
But I believe our coalition partners, who are not keen on recognising marriage in the tax system, have ruled this out. I regret that.
You ask, again understandably, what I am doing to help people like you. The reality is that I hope there is lots I can do to help individual difficulties – I think my office has supported about 3,500 constituents with various issues in the last year – but changing spending cuts is a hard ask.
However if you compare your income tax on salaries since 2010 you’ll see that because we’re trying to lift lower earners out of tax your tax free amount has increased quite a lot – over 600 pounds this year alone (or 1,200 for both of you). So there is some good news for you financially as well as the bad news.
Lastly I should add that my own situation at home is very similar to yours. Sometimes people imagine that MPs are not involved in the real world – but the reality is that my salary is frozen, my pension is in the process of being changed like yours and with one higher rate earner the child benefit changes will affect us too.
My way of looking at this is that this has to happen. We have to go through some lean years after a period which was too good to last. In Ireland public wages have been cut about 15 per cent. In Greece various perks are all being chopped. All over Europe we can see a sense of waking up to financial reality. And it could still go pear shaped yet.
It’s not fun but I knew that’s what was needed – and why I got involved on the basis that politicians had allowed things to get out of control and we needed a whole team of newcomers with experience from outside to sort things out sensibly – and not being mini Father Christmases doling out sweets out to everyone from money that didn’t exist – and expecting just to tax people more to pay for it.
Meanwhile the other key role is championing Gloucester and getting in new companies here to invest in our city, create jobs and make the city a better place to live in.
On that side I think good progress is being made, and the evidence is that Gloucester is punching above our weight. It will take time for everything to be visible, but already there are a lot of improvements – including at the hospital.
I’ll keep doing my best to help, but I’m sorry that for the time being it will be tough for everyone in different ways.
I hope this (long!) Mail reassures you that at least I do understand your situation, that it is part of a bigger picture, and that there is an overall plan to get us back into a better place.
FROM SUZIE TO HER MP, RICHARD GRAHAM
Dear Mr Graham,
Thank you for you reply to my email regarding child benefit payments.
Although you have given me a response, I feel I have not got a definitive answer to my question or what the government proposes will be fair.
I highlighted as my husband and I were NHS employees, we already were taking on the burden of a minimum pay increases of 1% each and higher pension payments of a predicted 3% each. Meaning our family income will be 4% worse off than usual. Although you have said we should be £600 a year each better off with the increase of tax allowance (2010) this still does not equal itself out and we are getting poorer by the year.
I did read your email with interest and am sorry you share the same burden as we do, but that still does not address the problem. Do you honestly think it is fair a couple under the high tax bracket could earn £84,950 and still receive child benefit however, a couple where one person is earning £42,476 would not get anything? I believe, if I read your email correctly, you believe this is the fault of your coalition partners and I will be contacting our local Liberal representative to ask them to defend this claim.
I definately agree something has to happen to turn our country around and I assure you that I would never refer to any government with the money as Father Christmas’s, In my present situation scrooge would be more appropriate. Here are some changes that I think would benefit our society and increase income. I value your opinion on each.
1. Lets say EVERYONE pays a fair tax. If this was policed fairly I know my tax rate would drop for sure. Is it fair people like Amazon can trade in this country and not contribute anything? Tescos seem to do very well at paying the minimal amount ever. If we get an outstanding, sportsman, singer, businessman, why are they able to opt out and bank overseas?
2. why don’t we scrap education fees all together? If you benefit from the education in this country, be you born or bred here or an overseas student you are obliged to pay a higher rate tax in this country for 10years. Say 2% over tax rate for higher education and 1% for other education. We have a good education system which is taken advantage of by lots British born and overseas students, if all contributed this tax, it would be fair. If a young adult leaves school for an apprenticeship at the age of 16 they would pay the 1% higher rate tax until they are 26. If they wanted to take advantage of the university system they would be paying 2% until they are 31. I’m sure if you put this to students who will leave education with massive debt hanging over them, they would jump at the opportunity. This would also encourage the students from less fortunate financial backgrounds to go on to further education. If they become a rich and famous sportsman, singer etc and had benefited from any education, infants, junior, senior, they would pay the higher rate of 2% over for 10 years regardless on how long they stayed in education.
3. Lets make things a little more difficult for bankers. Only in that if they have made a profit, they may have 2% of that profit divided into bonuses for employees. However, if they have not, they get nothing. Does this not make sense, it can’t possibly be only me who thinks this? I know we get the, they’ll leave the country and go elsewhere. Goodbye is my response. There is always someone who can do your job and probably better if they knew they could earn bonuses rather than just get them. It’s interesting how the NHS gets a battering all the time, money is far less forthcoming however, expectations are far greater from everyone. Bankers seem to be above reproach and that is sickening. I actually know a banker who’s bonus was £250,000 when things were bad for the rest of us. Has a B and Q down the road from her house, but when her light bulb blew could not possibly go to there to get one, travelled to Harrods instead. Totally out of touch with the real world.
4. A countrywide admission procedure for patients coming into hospital. Paperwork that takes all the good bits from each and every hospital and joins them into one. Here’s the procedure at the moment, patient get admitted to hospital and notes taken by A&E nurse/doctor and recorded. patient then transferred to ward and asked same question by junior doctor and notes written up, then gets asked same questions by admitting nurse, who has to fill out the majority of care plans and paperwork and finally the senior doctor comes to see and asks same questions and writes up his notes. What a waste of time and more importantly money. If the NHS needs reforming this area is a key area in which to start. I would be happy to help you in any way.
5. We have some lovely roundabouts and flower arrangements inGloucester, but to be honest if it saves money I would rather see cut grass than anything fancy. What about getting businesses to adopt a roundabout or street and contribute to floral decoration? This could mean that children in our county will have access to a book as their local library will not be closed. In this present climate I do not think pretty things should outweigh a child’s education or anything else. So we’ll be dullGloucester, better dull and educated than beautiful and dumb.
Lastly, I would also like to challenge you on this statement: “And as you will both know well, the amount of opposition to changes in the NHS that will enable it to continue, when demand increases 7 per cent a year, by reducing costs through reducing the numbers of managers and organisations (like SHAs and PCTs).”Changes or proposed changes to the NHS are, in my opinion, not going to reduce costings but put a strain on an already underfunded organisation. I totally back the Doctors in this. Health care delivered is already a lottery and this can only make the matter worse. Who is going to put the alcoholics, drug users or far more importantly the people who, through no fault of their own, have extensive medical problems, on their books. These people will use up far too much of the budget. I can also say, quite factually savings are being made, but mainly on the nursing level. Once nurses reach retirement or transfer to another work area, they are not being replaced. Here is your saving, where it is needed in front line care and NOT reducing the numbers of managers.
A little bit longer than I anticipated. I am obviously an MP in the making. However, I would appreciate an answer to fairness of child benefit, yes or no, rather than the MP standard if I go off in several directions maybe my constituent will be placated……this one wasn’t