George Osborne announced plans to axe child benefit for higher-rate taxpayers as part of tough measures to clear Britain’s £109bn structural deficit.
Until now, all parents were entitled to receive £20.30 a week for the eldest child and £13.40 for all other children up to the age of 16, or 19 for those in full-time education.
The change means that couples with one parent earning over £44,000 and paying 40% tax will no longer be entitled to receive the benefit, while households where the joint income of two parents exceeds £44,000 will not be affected.
“It’s a big decision for us but we think it’s absolutely necessary and fair given the financial situation we face,” Mr Osborne told the BBC.
“it’s very difficult to justify taxing people on much lower incomes in order to pay the child benefit to some of the better off in our society.”
The change means that two parents earning £88,000 would still receive the benefit, while one parent earning £50,000 would lose it.
Mr Osborne said the decision had not been taken lightly and that child benefit was being set up in this way to avoid having to implement a “very complicated means test” on household income.
The move is expected to save the Government around £1bn but Mr Osborne insisted it was not the beginning of the end for universal benefits.
“This is a one-off measure. I think the glue would be tested – it would start to melt – if actually people thought we were going about this set of decisions to reduce the benefit in an unfair way; that the burden was being targeted at low-income people or middle-income people exclusively,” he said.
The Children’s Society responded to today’s announcement by saying it was important that the Government support the most vulnerable people through the change.
Rafi Cooper, spokesman for the charity said: “The needs of the most vulnerable are important. We’re concerned about that.”
Chancellor says it's 'fair' to scrap child benefit for higher earners
George Osborne cuts child benefit for higher-rate taxpayers; Children's Society says the vulnerable must be supported.
Published 04 October 2010 | Jenna Lyle and Maria Mackay