Labour: child benefit plan unravelling

Chancellor George Osborne unveiled his plan, to scrap child benefits for those paying the top rate of tax from 2013, at the Conservative party conference yesterday.

But just hours later Children’s Minister Tim Loughton indicated the policy could be revised.

He told Channel 4 News: “If there are ways we can look at compensating measures for those genuinely in need that will be looked at in future budgets.

“If the thresholds need to be adjusted there’s plenty of time to look at that.”

The policy will affect only those who earn more than around £44,000, paying the top 40 and 50 per cent tax rates – around 1.2 million families.

Shadow Work and Pensions Secretary Yvette Cooper said: “The Government’s unfair attack on child benefit is now unravelling.

“The Chancellor only announced means testing this morning, and already the Children’s Minister has admitted that the thresholds need to be looked at again.

“They have clearly been taken aback by the reaction of parents across the country. George Osborne and David Cameron obviously don’t understand what it means for families on middle incomes to lose thousands of pounds a year.”

Warnings

Mr Loughton’s comments came after poverty and equality campaigners warned the child benefit policy, which applies only to an individual’s salary rather than family income, could hit single mothers unduly hard.

The Institute for Fiscal Studies also said some could regard the policy “unfair” because it favours families with two incomes, rather than those where one parent stays at home to look after the children.

The former Conservative leadership contender, David Davis, said he approved of what the Government was trying to do.

“But I think they’re going to have to rethink how they do it. Child benefit ought to relate to both parents’ incomes and not just one,” he said.

“They’ve got until 2013 to sort it out and I’m comfortable that they will.”

Mr Osborne had earlier said the measure was “tough but fair” and it is understood that the Treasury expects it could save hundreds of millions of pounds.

He also announced a cap on the amount of benefits any one family could claim, as part of a wider shake-up of benefits planned by Iain Duncan Smith.

Mr Duncan Smith wants to introduce a “universal credit” payment to simplify the system, and will give more details in his own speech to the Conservative party conference today.

Child benefit totals £20.30 a week for the first child, and £13.40 a week for other children.

Channel 4 News CutsCheck has also got wind of a ministerial rebellion over the plans, with one minister saying it was a “complete bombshell.”

In a message on Twitter today, Mr Loughton tried to play down his comments.

“People over-excited over my child benefit comments,” he wrote. “Calm down. Of course I’m not calling for a review. Yes it’s tough but fair.”

Party conference

Prime Minister David Cameron is likely to face questions on the new policy today, as he prepares for his own keynote speech.

Also today Justice Secretary Ken Clarke is set to call for prisoners to “get out of bed” and work full time to compensate crime victims and pay for their own accommodation.

His department is looking for around £2 billion of savings in the public spending cuts.

He is set to pledge he will end the “life of enforced, bored idleness, where getting out of bed is optional” for most prisoners.

Watch below: Political Editor Gary Gibbon, Economics Editor Faisal Islam and Jon Snow discuss the political impact, as well as the hit to families, of the change.