Spending review: Osborne’s child benefit sums

The new £2.5billion figure for the Child Benefit raid on higher earners might baffle you.

We were told by the Tories when they announced child benefit changes at their own conference that removing higher rate tax payers would bring in around £1bn. But – hey presto – George Osborne’s just said it will bring in £2.5bn.

Here’s why. Back at the time of the conference, and for some time afterwards, the Treasury was seriously thinking of bringing down the age of CB entittlement from 19 to 16. They modelled that extensively.

They then, accidentally, modelled removing the higher rate earners’ CB on top of that change. So you end up raking in only £1b because you’ve excluded all CB claimants with children between 16 and 19.

George Osborne was less than pleased at the time but now has his gain in black and white, and a sizeable contribution it makes to the extra £7bn raid on welfare payments that George Osborne is adding to the £11bn extracted in the June emergency budget.