THERE ARE major concerns among Tory ministers within the Conservative/Liberal Democrats coalition about the decision to cut child benefit from middle-income families in three years’ time, despite the claim by chancellor of the exchequer George Osborne that it is a fair measure.
From 2013 one-income families earning more than £44,000 (€50,000) a year will lose child benefit, worth up to £20.30 a week per child. The measure will cost families with three children £2,500 a year – although two-income families will be able to earn far more than the threshold without losing benefit.
The announcement, which was coupled with a pledge to ensure that families living on welfare will get no more than the average working family income, is a direct contradiction of a promise made repeatedly by the Conservatives before and during the election campaign that they would protect child benefit from cuts. Speaking to the Conservative Party conference in Manchester a year ago, Mr Osborne said: “We will preserve child benefit, winter fuel payments and free TV licences. They are valued by millions.”
Conservative transport secretary Philip Hammond, who had opposed the cut which should save £1 billion in payments to 1.2 million families, said it was necessary in order to cut the deficit, which ran to £155 billion last year. Higher income earners, he said, needed “to share the burden”, though the decision to set the cut-off at £44,000 has frightened many MPs who are concerned about the loss of middle-class support. Conservative MPs fret that other universal benefits will be reduced, particularly those for the elderly, and doubt that the coalition’s pledge to repair the country’s finances by cutting £4 of spending for every extra pound raised in tax will be honoured.
Equally, there are fears that the change will encourage unmarried fathers not to live in the family home or put their names on their children’s birth certificates to ensure their earnings are not included in the calculation.
The chancellor, who will announce billions of other cutbacks later this month, acknowledged that it was “difficult but fair”. He said: “I understand these people are not the super-rich but we have to make sure that we’re all in this together.”
Most children’s lobby groups opposed the cut, but Barnardo’s UK chief executive Martin Narey said: “We don’t want to see reductions in child benefit – we are a children’s charity – but we are trying to be grown up about it. We have to do something about the budget deficit, so when a proposal is made that will save significant amounts of money without affecting the poorest, we welcome it.”
However, the respected Institute of Fiscal Studies warned that it could encourage workers not to accept overtime or promotions because the extra income could put them over the threshold for child benefit. “The government’s proposed reform implies that a one-earner couple with an income of £45,000 would lose all their child benefit, but a much better-off couple where each has an income of £40,000 would keep all their child benefit,” said the institute.
State benefits cap: more children could be pushed into poverty, say campaigners
CAMPAIGNERS demanded assurances yesterday that British government moves to cap the amount any household can receive in state benefits would not push more children into poverty.
Sally Copley, head of UK policy at Save the Children, said: "Families will bear the brunt of George Osborne's announcement on capping benefits.
"We already have 3.9 million children living in poverty in this country, and it's not clear what the full consequences of today's announcement will be.
"His cap will certainly hit bigger families - as this measure doesn't take household size into account - and those who live in parts of the country where housing is very expensive."