Child benefit cut will go ahead, says Osborne

 

George Osborne says details of how the child benefit changes would be put into place are being considered

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Chancellor George Osborne has said child benefit for higher rate taxpayers will be removed, after ministers' hints the policy could be made "fairer".

But he said he would set out in the next months how the policy would be implemented.

David Cameron acknowledged there was an issue with the £42,475-a-year threshold - amid criticism the changes unfairly hit single earner families.

Labour said the policy was "unravelling already" and was an "utter shambles".

'Unfairness' criticism

Child benefit is available for every child in the UK below the age of 16 and is one of the few remaining non-means tested benefits.

ANALYSIS

The prime minister has been under pressure from many of his MPs who think axing child benefit for higher rate taxpayers next year is a vote loser.

So he used an interview in a magazine edited by - and aimed at - MPs to signal he understood their concerns.

But we're not going to see a massive U-turn. Higher rate taxpayers can still expect to lose child benefit.

However the PM has asked the Treasury to look at problems at the margins of the policy.

I'm told it is feasible there will be changes but the PM is leaving it to the Treasury to work out whether they are affordable.

The Treasury tells me they haven't decided on any options and people on higher incomes shouldn't get their hopes up.

So, it's possible nothing will change

David Cameron has recognised there is a big political problem but economic problems may stop him solving it.

It is worth £20.30 every week for a first-born child and £13.40 for each subsequent child. It is paid to the parent directly responsible for care of the youngster - in practice, it is most often claimed by the mother.

In October 2010, Mr Osborne announced plans to scrap child benefit for any household with a parent above the 40% tax threshold - currently about just over £42,400.

Critics say it would unfairly hit a single earner family which is just over the threshold - while a couple both earning just under £44,000 a year each would keep the benefit.

In an interview with Parliament's House Magazine, Mr Cameron said: "Some people say that's the unfairness of it, that you lose the child benefit if you have a higher-rate taxpayer in the family (but) two people below the level keep the benefit.

"So, there's a threshold, a cliff-edge issue. We always said we would look at the steepness of the curve, we always said we would look at the way it's implemented and that remains the case."

Asked about the issue in an interview with BBC Radio Surrey's Breakfast programme, Culture Secretary Mr Hunt said: "We are looking at ways to make it fairer."

But, asked if any further changes to the policy were sought, Chancellor George Osborne said: "We're very clear that it is fair that those who are better off in our society make a contribution to the saving of money we need to make... so we will be removing child benefit from higher rate taxpayers.

Start Quote

The government's current plans to cut child benefit are unfair and highly bureaucratic”

End Quote Chris Leslie Shadow Treasury minister

"We haven't set out how we're going to implement that and we're going to do that in the next few months.

"But the principle that it's not fair to ask someone who's earning say £20- or 25,000 to pay for someone who's on £80- or £100,000 to get child benefit is one that I think is very important."

Mr Osborne has said the proposed cuts could save up to £1bn a year.

But Labour says they have caused "huge anxiety" and that all families need support in tough times.

Shadow Treasury minister Chris Leslie said his party had "repeatedly warned that the government's current plans to cut child benefit are unfair and highly bureaucratic".

He said it appeared the policy was unravelling - potentially leaving a "black hole" in the public finances and threatening more bureaucracy if people were to be means-tested for the benefit.

"These ill-thought-through plans are due to hit families in less than 12 months' time, so David Cameron and George Osborne urgently need to come up with some new proposals," he said.

Child benefit is taken up by 96-97% of the eligible population.

It is not yet clear how the government intends to implement the planned cuts, but it could involve HM Revenue & Customs, which administers the child benefit system, cross-referencing all claimants against their tax records.

 

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  • rate this
    +7

    Comment number 1242.

    Thinking it through - how much is it going to cost to administer the system of finding out whether you should/shouldn't be eligible.....

  • rate this
    +12

    Comment number 1240.

    What many people don't know is that approx 75% of the population are net beneficiaries of the system - i.e. their benefits, NHS care, state education, defence, rubbish collection etc cost more than they put in in tax and NI. Only 25% of the population actually pay money IN to the system! (BBC Radio 4, More or Less.)

    Reform definitely needed - intent is good, but may need to tweak a bit...

  • rate this
    +2

    Comment number 1208.

    Why go after parents with children first? The elderly all get a free winter fuel payment even if they're hugely wealthy. Why not start with those non-means-tested benefits before going for the very people who are largely funding the benefits system?.

  • rate this
    +14

    Comment number 1179.

    I do agree that benefits should be cut for high earners, but there needs to be a bit of reality here as £44k in the South East will not go as far as some other areas of the country. Taking into account that houses for familys are expensive (where i live for a small 3 bedroom house £200k+, or rent at about £1000k per month) and you stand no chance of social housing.

  • rate this
    +55

    Comment number 665.

    For those "single" people moaning about having to support other peole's children (child benefit, education, healthcare etc) - remember, your parents received these for you. And probably additional tax relief for having children and a mortgage. Our children will probably have to pay for your healthcare and pension + support the next generation's kids.

 

Comments 5 of 19

 

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