Child benefit change is right approach, David Cameron says

 

David Cameron: "This will raise £2 billion a year"

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David Cameron has said the decision to remove child benefit from better-off families is "the right approach".

He told BBC One's Andrew Marr Show "85% of families" would get the payments in "exactly the way they do now".

The prime minister also said the government was "absolutely right" to limit most working age benefits to a 1% rise, which will be the subject of a Commons vote on Tuesday.

Labour's Ed Balls called the child benefit changes "perverse".

Mr Cameron's comments come ahead of the coalition's mid-term review on Monday.

Changes coming into effect from Monday will see families with one parent earning more than £50,000 lose part of their child benefit.

It will be fully withdrawn where one parent earns above £60,000.

'Fundamentally fair'

Analysis

If you or your partner get child benefit and either of you has an income of above £50,000 a year you may have to pay more tax from Monday.

The income that counts is confusingly called 'net-adjusted income'. In fact, it is your gross income before tax from all sources but minus pension contributions, child care vouchers, and gift aid donations.

If you live as a couple it is the higher income that is counted not your joint income.

If that income is more than £50,000, the person who earns it will have to pay a new tax called 'high income child benefit charge'. It will be collected through self-assessment and you must register with HMRC by 7 October.

If that income is £50,000 to £60,000, the charge will be less than the child benefit received on a sliding scale - at £55,000 it will be 50% of the child benefit received.

If that income is £60,000 or more, the charge will equal the child benefit received. In other words, one partner will get the child benefit but the higher earning partner will pay it all back in the new tax.

Q&A: Child benefit changes

Defending the policy, Mr Cameron said: "I'm not saying those people are rich, but I think it is right that they make a contribution.

"This will raise £2bn a year. If we don't raise that £2bn from that group of people - the better off 15% in the country - we would have to find someone else to take it from."

He added: "I think people see it as fundamentally fair that if there is someone in the household earning over £60,000 you don't get child benefit... I think it is the right approach."

Asked about government plans to cap working age benefits at 1% - including the rise in the pay of public sector workers, out-of-work benefits, and tax credits - Mr Cameron said "those are all in my view absolutely right decisions".

"We need to control public sector pay... we need to limit the growth of welfare payments overall - and that must include the tax credit system, and for those out of work it's right that their incomes aren't going up faster than people in work."

The prime minister also insisted the government was going "full steam ahead" with a packed agenda in the second half of its term.

In the wide-ranging interview, Mr Cameron made a number of major points, including:

  • He promised British voters they would be offered a "real choice" on Europe at the next election
  • On the economy, he said it was vital for a country to be able to pay its debts - maintaining "a low rate of interest" so it could borrow money cheaply
  • He said he was "absolutely determined" to overhaul the deportation system so the radical cleric Abu Qatada and others could be deported from the UK before they appeal
  • The prime minister also said he was "absolutely clear" Britain would defend the Falkland Islands in the face of mounting pressure from Argentina
  • He also confirmed he wanted to remain prime minister until 2020
'No pleasure'

Writing in the Mail on Sunday, Chancellor George Osborne said he took "no great pleasure" in reducing people's benefits but that it was needed to ensure a "brighter future".

Labour's Ed Balls says that the government should tax the richest people

Conservative Party chairman Grant Shapps told the BBC's World at One: "I have three children I've filled in the form. I totally understand and get how frustrating these things are."

Mr Balls, Labour's shadow chancellor, told Sky News the changes to child benefits were "perverse".

"It's a complete shambles," he said.

"We're going to have many many hundreds of thousands of people who will end end up filing in tax returns because they didn't realise they were supposed to apply by today not to get the child benefit.

"I've always supported a principled approach to the welfare state which we would call progressive universalism."

 

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  • rate this
    +1

    Comment number 500.

    I just wonder if any genuine wealth creation initiatives are being undertaken ?
    I look but they must be pretty small scale because I don't see them.
    There is that dubious fracking Oil venture, but what about craft or manufacturing industry?
    Thats were the long term wealth lies, if you want your Pounds to be worth anything !
    Kind of disappointed that no ones tried bribing me yet. Hey ho !

  • rate this
    +6

    Comment number 499.

    £2billion is a drop in the ocean compared to the tens of billions being spunked into off-shore tax havens. It's sad to see us go the way of America.

  • rate this
    +4

    Comment number 498.

    463 steve
    £50k is not that much
    no not for a caviar lifestyle, but the majority who earn half that would think they were rich with that income.
    but greed is something nobody will admit to, maybe everyone needs a reality check.

  • rate this
    +3

    Comment number 497.

    I leave the house at 6.25am and return home at 8.00pm. I pay higher rate taxes and already do my bit.

    Now David, you have just taken all of my family allowance from me and my family. Fortunately for me however, you are my local MP as I live I Witney. I look forward to returning the favour in person at the next election.

  • rate this
    +3

    Comment number 496.

    The new system is ridiculous but we can expect little else from government.

    I agree that benefits shouldn't be given to the well off but how can a family earning £99000 combined still qualify when those with a single income of £50000 don't? Utterly, utterly ridiculous.

  • rate this
    +3

    Comment number 495.

    I have had to go overseas to work due to not being able to find work in the UK. And even with my basic salary being tax free my take home pay would struggle to match someone who earns £50kpa not least a couple with X2 salaries this big. If you cannot afford children then you shouldnt have them furthermore if you get £90kpa then what are oyou if not a sponger?? get a grip..............

  • rate this
    0

    Comment number 494.

    370.Violet Mildred
    Comment number 370 is an Editors' Pick

    The idea that we collect tax from people and then pay out the same people in benefit

    Is not a sound one

    We not only waste money collecting the tax but there is a real danger that we collect from poor people and give to people who can not demonstrate a need for the benefit

  • rate this
    +2

    Comment number 493.

    456. jgm2
    "It could be even better mopped up by abolishing the BBC and putting 4bn quid a year directly into voters pockets."

    Except it wouldn't - we'd end up having to pay more I'll wager for others to provide the same (or, more likely, an inferior) service - fine if you're chums with the likes of News International (DC, JH, etc) but for the rest of us, pointless.

  • rate this
    +8

    Comment number 492.

    I have friends who are 'self employed'. They have a big house, 3 cars, 3-4 foreign holidays per year, massive pension contributions and of course a great accountant who shows that they earn little/no income so will be claiming full CB! All completely legal. How is this fair?
    Government needs to deal with TAX evasion/avoidance that is happening as a priority.

  • rate this
    +4

    Comment number 491.

    @455.BillyM
    It's one of the reasons why this country is in a state because of that same selfish, greedy me me me mentality.
    Amazing how many greedy rich still want their cake and eat it and are happy to leave the tax bill to the working singletons!

  • rate this
    +3

    Comment number 490.

    Cameron wants to save the country, his policies are hitting hardworking families, we could save money as a country if we cut his and any member of the cabinet who has at least £1M in the bank.
    I would call that fair, when he is making cats that will hurt the country and its future, children are the future, we need to make sure that they have a good start in life.

  • rate this
    +1

    Comment number 489.

    342 - Totally agree, also scrap the winter fuel allowance for this year as the weather hasn't been bad enough to warrant free money to pensioners, most of which do not need it.

  • rate this
    +3

    Comment number 488.

    Tories highlight their concern for the family 'unit'. While poorly designed policies and pompous self-importance gets in the way of making good decisions, people who are greedy or desperate will search out the loopholes and quick cheats to make their lives easy. This runs from the hapless junky to the selfish MP. No class is exempt from the blight of greed.

  • rate this
    +4

    Comment number 487.

    Will he restrict child benefit to the new colonists?

  • rate this
    +3

    Comment number 486.

    I hear that people can increase their pension contributions to take their taxable income inside the limit, so they increase their pension and get child benefit, this was mentioned on radio on Friday, there is always a way for the well off...

  • rate this
    -2

    Comment number 485.

    This is yet another pathetic attempt to steal from Peter to Pay Paul. nless the govenment stands up fpr the people and looks at the latest european bail out things will not improve. Whats the next measure to be taken be enforced by a corrupt government.

  • rate this
    +3

    Comment number 484.

    Most agree that cuts have to be made but do it fair and properly this process of dealing with the CB cut is morally wrong. Cameron would like to stay in governemnt for another term. Well, think again Cameron your days are numbered. Its UKIP for me, a former life long Tory supporter.

  • rate this
    +3

    Comment number 483.

    Since the country is becoming over-populated, wouldn't it make more sense to switch from Child Benefit to Child-free Benefit - to help those out who are helping society by not breeding?
    As a person struggling to get by on £16000 per year, while not being eligible for any benefits at all, it disgusts me that anyone earning £50000 can automatically get extra money just for having a child.

  • rate this
    +7

    Comment number 482.

    @469Anne
    I think you are completely missing the point.

    It is the corruption in the political and banking systems that has caused the need to introduce austerity and review benefits.

  • rate this
    +1

    Comment number 481.

    16.Jeni : "When two people can each earn £49,000 per year and they still get the child benefit but one person earning over £50,000 doesn't, where is the fairness in that?"
    Sorry Jeni, this Government doesn't do "fairness".

 

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