Child benefit cuts for better off are fair - Cameron

David Cameron defends changes to child benefits

David Cameron has defended plans to cut higher rate taxpayers' child benefit, saying it is fair to ask them to contribute to cutting the deficit.

He said he knew cutting the benefit for people on more than £44,000 would not make him popular - but it was the "right thing to do".

Labour's Yvette Cooper described it as an "unfair attack on child benefit".

The BBC understands the government plans to introduce a tax break for married couples in this parliament.

The BBC's political editor Nick Robinson said government sources had told him that there would be a tax break for married couples introduced in this parliament - which is due to run until May 2015.

He said that although the original Conservative policy was to limit the tax breaks to basic rate tax payers, the coalition agreement did not repeat that and the chancellor might seek to partially compensate the stay-at-home mothers who feel aggrieved by the child benefit cut.

On Monday Chancellor George Osborne said that from 2013 the benefit would be removed from families with at least one parent earning more than about £44,000 a year.

Hours later children's minister Tim Loughton told Channel 4 News the move to cut the benefit from 1.2 million families might need revising, with possible compensating measures for those "genuinely in need". He later said people were "over-excited" by his comments and he was not calling for a review.

However, Ms Cooper, the shadow work and pensions secretary, said the government's policy was "now unravelling" adding: "They have clearly been taken aback by the reaction of parents across the country.

"George Osborne and David Cameron obviously don't understand what it means for families on middle incomes to lose thousands of pounds a year."

The child benefit threshold was aligned with the higher-rate 40% income tax threshold to avoid complex means testing but there has been criticism that the move will penalise some families where one parent stays at home to look after the children.

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While families with two earners on just under £44,000 each - but collectively about £80,000 - would keep child benefit, those with one earner on more than £44,000 would lose it.

'Makes sense'

Conservative former shadow home secretary David Davis told the Daily Mail the policy would encourage mothers to go out to work adding: "It would be fairer to consider family income rather than that of individuals."

The prime minister said he wanted to protect the poorest and neediest as the government tackled the £155bn deficit but told the BBC earlier that stay-at-home mothers could benefit in future from "some sort of transferable tax allowance to help couples".

Mr Cameron told BBC Radio 4's Today programme that while people on £44,000 were not rich - they were "a lot better off" than those trying to raise a family on £25,000 a year adding that the cut - estimated to save £1bn a year - "makes sense".

"In the spending round we're having to make difficult decisions. This is £1bn I don't have to take off the education budget.

Siobhan Freegard from the parenting site Netmums talks about the concerns she has heard

"I want to make sure in Britain we have real social mobility and life chances given to the poorest children in our country so they can go to the best schools and the best universities and we can have a truly mobile Britain.

"That does mean in a spending round you have to ask better off people to make a contribution so you can protect the most vulnerable and help them have a better life."

He said it was "an argument about fairness" and pointed out Mr Osborne also planned to cap the amount of benefit people could receive - so they never got more than the average working family brought home in pay - estimated at about £26,000 a year.

That would mean benefits would be restricted to £500 a week from 2013 and would be thought to affect 50,000 households, who would lose an average of £93 a week.

The limit would not apply to people on disability living allowance, war widows' pensions and working tax credit.

Mr Cameron said 85% of people would continue to get child benefit and assessing the whole family's income would have necessitated "an incredibly bureaucratic and expensive" and "intrusive" system, means-testing every family in the country.

Accusing the previous Labour government of having "bankrupted the country", he added: "It is difficult. I wish I wasn't having to do this, but we have to deal with the problems in front of us."

Asked about speculation that other universal benefits - like winter fuel payments and free bus passes for pensioners - might be cut, he said: "Obviously you have to wait for the spending review announcement but I made some pretty clear promises to pensioners in our country, and those are promises I want to keep."

Impact of child benefit cut
Tax rate Annual income Benefit Keep or cut?
1x Lower
£42,475 or less
£1,752.4
1x Higher
£42,476 or more
0
2x Lower
£84,950

(2 x 42,475)
£1,752.4
1x Lower
1x Higher
£84,951

(42,475 + 42,476)
0

Note: higher rate tax begins after earning £42,475 (£35,000 + personal allowance of £7,475)

Source: HMRC

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