"We did not outline all those cuts, we did not know exactly the situation we were going to inherit," he told ITV news. "But I acknowledge this was not in our manifesto. Of course I am sorry about that."And Osborne has had to write to all Tory MP's outlining the reasoning behind the move.
Osborne wrote: "I know some have pointed out that this approach will leave households that do not contain a higher rate taxpayer, but whose joint income is above the higher-rate threshold, still in receipt of child benefit. The only way to assess these joint income families would be to create a new complex, costly and intrusive means test that would spread right up the income distribution."In other words, you can means test the poor, but not the middle classes. That would be "intrusive" and utterly unacceptable.
This subject really does seem to have knocked the Conservatives sideways as, in order to calm their backbenchers, they have gone on to talk about extending tax allowance for married couples to those paying higher rate income tax, another pledge which was missing from their manifesto. And, I presume, was not budgeted for.
For, if they carry through with this, it could wipe out all the money saved from removing child benefit from high earners.
You really do get the feeling that they are making this up as they are going along. And, as I have always said, whatever the motivation, it's hard to believe that it is truly financial if the scheme ends up costing them money because they extended tax allowance for married couples to high income tax payers.
When it was pointed out that the Tory pre-election plan to help married couples had been aimed only at basic-rate taxpayers, and would therefore not compensate higher-rate taxpayers for the loss of child benefit, government sources rapidly shifted ground.
The sources suggested the wording in the Lib Dem-Conservative coalition agreement left open the possibility of higher-rate taxpayers also being helped by the marriage tax allowance, which will be introduced by 2015.
The initial proposal had been calculated by the Institute for Fiscal Studies as costing £550m and was worth £120 a year – a figure far lower than the loss due to the removal of child benefit.
Extending the scheme to higher-rate taxpayers might push the cost as high £1bn, wiping out nearly all savings from withdrawing child benefit and rendering the exercise highly costly in political terms for zero financial reward.
All in all this has been a bloody mess. And it needn't have been. Most people can see the logic of removing child benefit from those who don't need it. But the way they have done it has been a disaster, and the way they have scrambled in an attempt to please their base has risked rendering the whole exercise financially futile. It's been an unedifying spectacle.
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