Osborne stands by child benefit cuts
After David Cameron’s warning of a child benefit “cliff edge”, Chancellor George Osborne confirms he will cut the benefit for higher-rate taxpayers but may change details, as Michael Crick reports.
Chancellor George Osborne has vowed to press on with his plans to scrap child benefit for higher earners, despite other senior politicians hinting that the government might be prepared to modify the plans to make them “fairer”.
Under the changes, a couple with three children could lose around £2,500 if one parent earns just a few pounds over the 40 per cent tax threshold of around £43,000-a-year, even if the other parent is unemployed.
However, if both parents in another couple each earn just under £43,000 and enjoy a total household income of more than £80,000, they would keep all their benefit.
‘Cliff-edge issue’
Prime Minister David Cameron sparked speculation of a major rethink on the plans, after an interview was published in Parliament’s The House magazine, in which he accepted that the child benefit cuts were seen as unfair by some people.
“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,” he said.
The prime minister added: “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.
“But again, I don’t want to impinge on the chancellor’s Budget.”
Another senior Government minister, the Culture Secretary Jeremy Hunt, also said ministers were looking at ways to improve the plan and make it “fairer”.
Saving money
However, Mr Osborne, who unveiled the changes at last year’s Conservative Party conference, earlier insisted he would go ahead with the controversial plans: “We are 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 to pay down the debts so we will be removing child benefit from higher rate taxpayers.
“We haven’t set out how we are going to implement that and we are going to do that in the next few months but the principle that it is not fair to ask someone who is earning say £20,000 or £25,000 to pay for someone who is on £80,000 or £100,000 to get child benefit is one that I think is very important.”
Shadow Treasury minister Chris Leslie said: “We have repeatedly warned that the Government’s current plans to cut child benefit are unfair and highly bureaucratic.
“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.”