High-income Child Benefit Charge

Jim Shannon Excerpts

Tuesday 3rd September 2019 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

Thank you, Mr Hollobone. It is always a pleasure to serve under your chairmanship.

I thank the hon. Member for South Thanet (Craig Mackinlay) for setting the scene with such detail, informationally and correctly. I am here not because I feature in Westminster Hall so regularly but because the issue is important to me and my constituents. I deal with it regularly in my office.

The hon. Gentleman set the scene well with examples of what has happened to his constituents. I would mirror those examples, and I will express similar concerns. It is unfortunate that more Members are not present for the debate, but obviously there are enticements elsewhere and reasons for people’s attention to be committed to the main Chamber. That does not detract in any way from the importance of this issue. I am pleased, as always, to see the Minister in his place. We look forward to hearing his comprehensive response.

The child benefit payments issue is of great concern to many of my constituents. Although many might not qualify for good reason, I will give examples of those who probably should qualify but for the paperwork, the potential penalties for getting it wrong and then having to catch up. That applies not just to child benefit but to tax credits—people fill in a form, their circumstances change in the year and they find themselves owing money back. Tax credits are not the subject of this debate, of course, but I make that comment about what puts people off. When a system is going well, it is marvellous, but when it goes wrong, it can be a real stinker.

Child benefit makes a difference to many families in my constituency. From the outset, I must say that I am an advocate of the current threshold and the importance of having that system. I know of many women who gave up their jobs or went part-time to mind their child and therefore rely almost entirely on the wage of their partner. The weekly child benefit supplement helps with the day-to-day bills that need to be paid. Without that, households would simply not function. The Government might argue that that is not the purpose of the child benefit system, but I think that its purpose is to enable parents to look after their children in whatever way they feel is right.

I am concerned about some cases in which one partner is just over the threshold and has to start to do self-assessments. I know of a few cases in which couples earn well below the £99,000 that they could earn when taken together—for example, one partner on £50,000 and the other on £15,000—but decide to forfeit their child benefit. Over-cautious, and in fear and trepidation, they would rather that than face the hassle and possibly do the paperwork incorrectly. That is wrong—people losing the benefit rather than have the hassle. I am therefore keen to endorse what the hon. Member for South Thanet said and to seek ministerial guidance on how we can help such people.

Something is wrong with a system that sets out to help people genuinely, sincerely and honestly, but fails those who could qualify. How do we enable those people to fit into the system? Some might say that they can afford to live on what they have, but as they put it to me, “We are firmly middle class.” Over the past few years in this House, I have often said that one of the categories of people to suffer greatly in society, because of everything that has happened during recent times, is the lower middle class—the ones not far enough up to qualify. For that squeezed bunch of people, the child benefit system is there to help, but unfortunately it does not. One constituent said:

“we are firmly middle class. We will never be able to afford to pay all our bills and also help our children with buying a car, or tools for their trade, or books for university”—

or student grants—

“so we attempt to save from child benefit so there is money for the child when they need it.”

They use that system with the clear and singular purpose of benefiting their children. That is an example from my office; the hon. Gentleman referred to similar examples, and I suspect that once I sit down, other hon. Members will do too. I fear that the self-assessment mechanism precludes their getting that money and, in the long term, that that disadvantages the child and the family. But that is not its purpose, so the system must improve.

HMRC issued around 97,500 penalty assessments to around 37,500 customers, amounting to almost £15 million. When people consider the penalties, the self-assessment and the amount of money, they must think, “I’m not going through that. I don’t want to get it wrong inadvertently.” People do not set out to get it wrong, but they start the process, get it wrong through no fault of their own and end up with a large bill. Those figures show that some people are paying very large bills. Although it is not the Government’s intention, people decide not to pursue their claim.

I believe there is a different way of ensuring that high earners can have access to what they are entitled to. People whom the Government say are entitled should apply. How do we help those who are entitled? Every year, the Government tell us that so much money is returned to the Treasury because it is not taken up. It could be all kinds of benefits, not just child benefit: attendance allowance, personal independence payments, employment and support allowance, community care grants or pension credit—all the things that people may qualify for. If the money is not used, it goes back. I always say to the person, “You know something? You’ve worked hard all your days. You’ve paid your national insurance stamp; you’ve paid your tax every year; you’re a contributor to society. If you qualify for something, for goodness’ sake, apply for it.” It is important that we encourage people to do that.

Some people feel that they need to see an accountant. That is fine for those who have an accountant for their business. For those who are employed with a set wage and cautious of the penalty notices, if they make overtures to an accountant to see what they can do for them, there is a cost factor that can be off-putting. People are looking at whether they can be better off; they do not want to pay a cost for something that may lead to nothing. What has been done to enable those who would qualify to receive their money?

I will conclude, and well in advance of the end of the speaking time that you indicated, Mr Hollobone. Will the Minister indicate how we can streamline the process, bearing in mind that families are entitled to this benefit? I see families who are entitled to something but do not pursue it because they are uncertain, cautious or worried that it may disadvantage them somewhere down the line. While the money may not necessarily go on nappies or similar, it does go to providing for children, which is what the Government are determined to do.

The Minister has committed to ensuring that everyone who wants the benefit can apply for it, but in my constituency, that of the hon. Member for South Thanet and the constituencies of other hon. Members, there are many examples of people who do not pursue it because of the uncertainty. The current system is overly onerous and off-putting. I believe we can and must do better.