Child benefit cuts to be re-examined

Published by Ruth Jackson on 13 January 2012.
Last updated on 13 January 2012

child with small plant

The government is looking at ways to make proposed cuts to child benefit allowances "fairer" – a suggestion that could be the saving grace for many families.

In an interview with BBC Radio Surrey's Breakfast programme, culture secretary Jeremy Hunt revealed: "We are looking at ways to make it fairer. Particularly, there's this sort of 'cliff-edge effect', that if someone gets over the top-rate limit they lose child benefit, but there could be two people who are just under the limit in a household and have a combined income of much, much more than that who continue to claim it.

"So we just want to look at the fairness issue and see if there's anything we can do to improve it."

A 'cliff-edge' effect

Hunt's announcement follows hints from David Cameron that the plan to scrap the benefit for families where one parent earns more than £42,375 a year could be amended.

In an interview with Parliament's House Magazine, Cameron acknowledged that the changes could create a 'cliff-edge' effect.

"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," says Cameron.

 

"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."

It's a significant hint given that it comes just three months before the Budget, a time when policies are being finalised. However, at present, Treasury sources say there has been no change in policy.

Critics of the proposed child benefit cut say it is unfair as a household with two parents earning just under the 40% higher-tax threshold – earning a combined income of around £85,000 – would be able to keep their child benefit but families were only one parent works but earns over the 40% threshold – with a household income of £44,000 – would lose the benefit.

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