Labour needs a big, credible promise in its manifesto that will get the party noticed. Families need a big lift in their living standards after a decade of stagnant incomes. Put the two together and the logic takes you to a really significant election offer for parents. And that offer should be Child Benefit: Labour should pledge to increase it, a lot.
Here’s the plan. The party should promise to raise child benefit by £15 per child per week over the course of the next parliament: £3 in every Budget. For a family with two children that equates to £1,500 a year extra, tax free. The policy would cost £10bn annually, which shouldn’t come as a surprise: any reform that’s going to make a serious difference to living standards will cost a lot of money.
But there’s a way to pay for it without raising tax rates. The increase in child benefit can be funded by freezing all income tax and national insurance thresholds for five years, which the Institute for Fiscal Studies has calculated would generate £10bn by the final year.
Child benefit is the right way to spend this money because it is a unifying, universal payment which goes to almost all parents to support the costs of raising kids. The plan therefore echoes recent proposals to give free school meals to all primary pupils, but goes much further. By supporting virtually every child it is a social security reform that can bind people together rather than sew division.
Raising child benefit will help the very poorest families with little or no work, who are really struggling. It will help families with low earnings: the sort of people who the statistics say are in poverty but who would never say it about themselves. And it will help people in the middle and upper-middle who are getting by okay but have not seen their living standards rise for a long time.
Of course, the money could be more precisely targeted if it was spent on strictly means-tested benefits. But raising child benefit will still lift a lot of children out of poverty and Labour needs to show that it is a party for everyone. And the international evidence, examined by the London School of Economics, proves that putting money into…