Welfare Reform

Lord McKenzie of Luton Excerpts

Tuesday 5th October 2010 Lords Chamber

[Lord Taylor of Holbeach]

I do not have any figures to answer the noble Lord. The current child benefit system is very straightforward to administer, and that must be a great advantage in its favour.

[Lord McKenzie of Luton]

My Lords, the Minister proclaims simplicity for this scheme. How does he respond to a conundrum—one of many posed in today’s newspapers—in which someone asks:

“I earn £44,000 and have two children. Would I be better off with a small pay cut?”.

The answer is:

“Probably. Tax advisers are already devising ways in which people who earn just over the 40 per cent tax band can legally reduce their income so they still qualify for child benefit. It may be possible to reduce your pay through ‘salary sacrifice’ schemes such as buying extra holiday days”.

Is this not going to be horrendously complex? It is going to need a whole raft of anti-avoidance legislation.

[Lord Taylor of Holbeach]

The noble Lord is an expert in these matters. Indeed, I have debated welfare, thresholds and marginality with him at the Dispatch Box before and I respect his contribution. However, inevitably when you draw a line in the sand, you find that there are people on that margin, and it is not unreasonable that they should seek to make sure that their affairs are not adversely affected by it.