This blog revealed back in March just before the Budget that George Osborne was considering capping child benefit at a certain number of children per family. At the moment, parents receive £20.30 a week for their first child and £13.40 for each additional child after that, but Treasury officials were looking at stopping those payments once a family had reached a certain number of children.
At the time, the measure was supposed to be an alternative to capping child benefit at a certain income level: the family-size measure would have been easier to implement and involve less of a cliff-edge for
people increasing their earnings. In the end, it was ruled out as too controversial, but judging by George Osborne’s speech at the Tory party conference today, the idea is back on the table. The chancellor said:
How can we justify a system where people in work have to consider the full financial costs of having another child, whilst those who are out of work don’t?
The argument leads to only one conclusion: that the chancellor is preparing further child benefit cuts as a way to getting to the £10bn in welfare cuts he has promised. He will have to brace himself for a fight though. Here is what I wrote about it last time:
Treasury officials have been running the numbers on how much the policy could raise and whom would be affected. What they found is that capping child benefit at two children would raise a significant amount of money, but would penalise a lot of low- and middle-earners. Because larger families are rarer, less money would be raised but the outcry would be more muted.
Jim Pickard
Kiran Stacey