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ZAHAWI Nadhim

Nadhim Zahawi has a new policy idea. Writing for the Mail on Sunday, the MP who’s also a member of No.10’s policy board argues that child-related welfare – specifically, Child Benefit and Child Tax Credit – should be restricted to the first two children that people have. He thinks that the Tories should introduce this cap if they’re in Government after 2015.

Actually, sorry, you should scratch out the word “new”, above – this one has been floating around the Westminster troposphere for some time. This Telegraph story from April does a good job of summing it up. David Davis has called for such a cap. Bernard Jenkin and Mark Reckless have, too. And, most significantly, Iain Duncan Smith suggested it to George Osborne as an option for welfare savings.

Which means that the question we ought to be asking about Zahawi’s intervention is… why now? And I reckon the answer comes in two related parts. First, there’s the Welfare Trap that Osborne is trying to set for Labour (and that Paul Goodman wrote about on Thursday): the Chancellor knows that capping welfare pay-outs is, broadly, a popular and money-saving measure. Second, there’s David Cameron’s “little black book” of policies that the Lib Dems won’t countenance: the Tory leadership is eager to clarify how they would operate outside of Coalition. The Conservatives want to go into the next election with a tough message on welfare that, they believe, will distinguish them from the other parties.

So, how tough would this policy be? It’s worth noting that Zahawi proposes imposing the cap on “all households, both in and out of work”, which goes beyond the “out of work” stipulation that some Tories make. The Institute for Fiscal Studies, writing in February of this year, calculated that this would save the Exchequer around £700 million on Child Benefit payments and around £2.4 billion on Child Tax Credit. But the IFS also observes that “savings would be very heavily reduced if protection were given to particular groups (for example, widows or those with disabilities)”.

Of course, there are questions about this policy other than fiscal ones. Zahawi hints at some of them in his article: “What if a parent lost his or her job just after their third child was born, for example?” But, while he’s right to say that this is about fairness for those families who make such decisions as a matter of course, I worry whether the Tories’ message on benefits will seem fair overall. After all, if taxpayers can’t keep on paying out for those who have more and more children, why should they fund Winter Fuel Allowance for the wealthy?

99 comments for: With his welfare proposal, Zahawi gives us a peek inside Cameron’s little black book

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