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Child benefit cut will go ahead, says Osborne | Child benefit cut will go ahead, says Osborne |
(40 minutes later) | |
Chancellor George Osborne has said child benefit for higher rate taxpayers will be removed, after ministers' hints the policy could be made "fairer". | Chancellor George Osborne has said child benefit for higher rate taxpayers will be removed, after ministers' hints the policy could be made "fairer". |
But he said he would set out in the next months how the policy would be "implemented". | But he said he would set out in the next months how the policy would be "implemented". |
David Cameron acknowledged there was an issue with the £42,475-a-year threshold - amid criticism the changes unfairly hit single earner families. | David Cameron acknowledged there was an issue with the £42,475-a-year threshold - amid criticism the changes unfairly hit single earner families. |
Labour said the policy was "unravelling already" and was an "utter shambles". | Labour said the policy was "unravelling already" and was an "utter shambles". |
'Unfairness' criticism | 'Unfairness' criticism |
Child benefit is available for every child in the UK below the age of 16 and is one of the few remaining non-means tested benefits. | Child benefit is available for every child in the UK below the age of 16 and is one of the few remaining non-means tested benefits. |
Taking child benefit away from higher rate tax payers was a key part of the government's so-called "fairness agenda". | |
But worries about anomalies in the policy have been growing. So what could ministers do to address the claims that the policy is unfair? | |
Straightforward means-testing has already been ruled out by the chancellor. | |
He says it ends up costing more money to administer - wiping out any potential savings. | |
Some kind of taper might address the "cliff-edge" where some families would suddenly find their benefits removed because they just breached the 40% tax threshold. | |
We will only really know what the government has in mind in March when the chancellor delivers the Budget. | |
Officials insist this isn't a U-turn but there may be a fine tuning of the proposals. | |
The problem for government is that if ministers give ground on this policy, other interest groups might try to win concessions in new areas. | |
It is worth £20.30 every week for a first-born child and £13.40 for each subsequent child. It is paid to the parent directly responsible for care of the youngster - in practice, it is most often claimed by the mother. | It is worth £20.30 every week for a first-born child and £13.40 for each subsequent child. It is paid to the parent directly responsible for care of the youngster - in practice, it is most often claimed by the mother. |
In October 2010, Mr Osborne announced plans to scrap child benefit for any household with a parent above the 40% tax threshold - currently about just over £42,400. | In October 2010, Mr Osborne announced plans to scrap child benefit for any household with a parent above the 40% tax threshold - currently about just over £42,400. |
Critics say it would unfairly hit a single earner family which is just over the threshold - while a couple both earning just under £44,000 a year each would keep the benefit. | Critics say it would unfairly hit a single earner family which is just over the threshold - while a couple both earning just under £44,000 a year each would keep the benefit. |
In an interview with Parliament's House Magazine, Mr Cameron said: "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. | In an interview with Parliament's House Magazine, Mr Cameron said: "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. |
"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." | "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." |
Asked about the issue in an interview with BBC Radio Surrey's Breakfast programme, Culture Secretary Mr Hunt said: "We are looking at ways to make it fairer." | Asked about the issue in an interview with BBC Radio Surrey's Breakfast programme, Culture Secretary Mr Hunt said: "We are looking at ways to make it fairer." |
But, asked if any further changes to the policy were sought, the chancellor said: "We're 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... so we will be removing child benefit from higher rate taxpayers. | But, asked if any further changes to the policy were sought, the chancellor said: "We're 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... so we will be removing child benefit from higher rate taxpayers. |
"We haven't set out how we're going to implement that and we're going to do that in the next few months. | "We haven't set out how we're going to implement that and we're going to do that in the next few months. |
"But the principle that it's not fair to ask someone who's earning say £20- or 25,000 to pay for someone who's on £80- or £100,000 to get child benefit is one that I think is very important." | "But the principle that it's not fair to ask someone who's earning say £20- or 25,000 to pay for someone who's on £80- or £100,000 to get child benefit is one that I think is very important." |
Mr Osborne has said the proposed cuts could save up to £1bn a year. | Mr Osborne has said the proposed cuts could save up to £1bn a year. |
But Labour says they have caused "huge anxiety" and that all families need support in tough times. | But Labour says they have caused "huge anxiety" and that all families need support in tough times. |
Shadow Treasury minister Chris Leslie said his party had "repeatedly warned that the government's current plans to cut child benefit are unfair and highly bureaucratic". | Shadow Treasury minister Chris Leslie said his party had "repeatedly warned that the government's current plans to cut child benefit are unfair and highly bureaucratic". |
He said it appeared the policy was unravelling - potentially leaving a "black hole" in the public finances and threatening more bureaucracy if people were to be means-tested for the benefit. | He said it appeared the policy was unravelling - potentially leaving a "black hole" in the public finances and threatening more bureaucracy if people were to be means-tested for the benefit. |
"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," he said. | "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," he said. |
Child benefit is taken up by 96-97% of the eligible population. | Child benefit is taken up by 96-97% of the eligible population. |
It is not yet clear how the government intends to implement the planned cuts, but it could involve HM Revenue & Customs, which administers the child benefit system, cross-referencing all claimants against their tax records. | It is not yet clear how the government intends to implement the planned cuts, but it could involve HM Revenue & Customs, which administers the child benefit system, cross-referencing all claimants against their tax records. |