How good intentions can be counterproductive

Might the coalition’s emphasis on fairness be making it harder to get people off welfare and into work? Not a question that I can answer with confidence, but certainly one which has been thrown up by the IFS’s Budget briefing. Take the government’s action on child tax credits, for instance. By increasing it at the lower end of the income distribution, and restricting it at the upper, some claimants now stand to lose more, more quickly, by moving up the income ladder. Or, as the IFS put it, their marginal effective rate of taxation has increased.

Of course, this will have been offset by other measures such as the rise in personal allowances. But it does present a conundrum for government policymakers, eager to prove that their measures aren’t hitting the poor. And it strengthens the case for IDS’s benefit reforms.