Letter: Impact of taxing child benefit

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The Independent Online
Sir: 'Child benefits may be taxed' (20 July) reports correctly the words I used, but when I said I would not necessarily be against the taxing of child benefit, provided the money so raised was pumped back into the system, I meant the child benefit system, not the social security system in general.

To tax child benefit and use the revenue raised to make an increase in child benefit over and above its annual increase would, in effect, redistribute resources from richer parents (those paying 40 per cent tax) to other parents, and it would redistribute from taxpaying parents to the mother, who invariably picks up the child benefit. The extent of this redistribution would need to be worked out carefully to see whether the impact of taxing child benefit was really worth the effort.

What I am totally opposed to is the taxing of child benefit and for the revenue to be allocated to tax cuts. This would result in the redistribution from families with children to taxpayers - most of whom are not currently responsible for looking after children. Similarly, to use the proceeds from taxing child benefit to meet the Government's obligation to increase annually most social security benefits in line with prices, would result generally in a transfer from families to single people and childless couples on benefit.

That the Government is contemplating these options shows the importance of the Labour Party becoming proactive under John Smith. It will be a change of some magnitude to see the Government having to respond to Labour's agenda. This could prove a new, crucial phase in British politics, but it depends on a willingness for Labour to think beyond its traditional intellectual tramlines. Failure to do so will mean yet another five years - on top of the period since 1979 - when Labour is content to cry foul at every Government move and then grudgingly accept the changes after yet another pasting at the hands of the electorate.

Yours faithfully,

FRANK FIELD

MP for Birkenhead (Lab)

House of Commons

London, SW1

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