Budget 2012: Treasury source says child benefit cut 'hugely popular'

 

Nick Clegg says asking people who earn much more money than others to give up benefits is fair

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Changes to child benefit are "hugely popular" with most voters, a Treasury source has told the BBC.

The government will remove the benefit from households in which someone earns more than £42,475 in January 2013.

The source said only 15% of taxpayers would be hit, and polling suggested 77% of voters backed the move.

Downing Street has rejected Labour's call for the "really unfair" plan to be dropped, but says changes may be made to how the new policy is implemented.

Deputy Prime Minister Nick Clegg had earlier told the BBC that the government would "look at how you administer the removal of child benefit from upper-rate earners".

Mr Clegg acknowledged it was an anomaly that a family with a single earner taking home more than £42,475 would lose child benefit but a couple each earning slightly less than the top rate could together take home £80,000 and keep the benefit.

'Speculation'

He said: "What you do when you create these cut-offs is you create some sort of anomalies... there's a specific issue about how you administer the removal of child benefit from upper-rate earners and we've always said we will look at exactly the way that that is administered."

The Daily Telegraph reports the cut-off point might be raised to £50,000, but Mr Clegg said no final decision had been made.

He suggested details would be announced in the Budget on 21 March - adding that his priority was a rise in the threshold at which people started paying tax.

A Treasury source described the latest claims of a government rethink over child benefit as "speculation".

He said: "We have not said how we will implement it (child benefit) but will do in due course."

In January, Mr Cameron gave the first hint of a government rethink when he warned of the "cliff edge" some families might face with the removal of child benefit for all top-rate taxpayers.

Labour raised the planned child benefit cut during a Commons debate.

Shadow chief secretary to the Treasury Rachel Reeves accused ministers of showing a "lack of competence and care" by introducing "crude" changes.

She said: "We urge the government to review and rectify the pressure they are piling on to families, already under huge strain."

Treasury minister David Gauke replied that the child benefit cut for higher earners would redirect money to those "who need it the most".

He said: "I fully understand that child benefit is a vital income boost to parental income for millions of families across the country.

"But at the same time it comes as a substantial cost to the Exchequer, making up around of 7% of total social security and tax credit spending each year, including payments of over £2bn a year in child benefit to higher rate taxpayers."

Labour says it wants to keep child benefit for all, but adds that it cannot pledge to reinstate it in the future because it would depend on the state of the economy at the time the party came into government.

The Treasury has previously said the child benefit changes would save £2.4bn in 2013-14 and £2.5bn in 2014-15.

 

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  • rate this
    +5

    Comment number 922.

    It's time to consider child benefit full stop. More kids, the more money. that's just wrong. It's a state handout. End of. Better to spend on child services which would be more fair and more universal.

  • rate this
    0

    Comment number 866.

    No ordinary household on 45k a year is poor, regardless of if it contains one or two earners. Who subsidises who is largely irrelevent as this isn't means tested.

    Rather than go after the higher tax payers, government would do well to taper the benefit to 2 kids (not retroactive) and cut down the entitlement to child tax credit above 45k instead.

  • rate this
    -2

    Comment number 858.

    I earn £43K and my wife works on a Saturday while I look after our 2 sons so we can afford to live. Below inflation pay rises make it harder and harder to make ends meet especially living in Greater London. To lose the Child Benefit we receive for our 2 children would be crippling. It will have a direct impact on the standard of living for our 2 sons and can only make them suffer in the future.

  • rate this
    +15

    Comment number 846.

    Total of all benefits received by a person should never be more than the minimum wage, otherwise its not fair on those who work.

  • rate this
    +11

    Comment number 708.

    Why on earth do they not use a joint/houshold income of £50k instead of targeting families with one highish earner. I have kids and my wife stays home to look after them. Currently I'm just under the radar but next year I wont be. so if nothing changes I get a pre-tax houshold income cut of nearly £3.5k, jeez and I'm not even public sector worker :P

 

Comments 5 of 15

 

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