Proposals to scrap
child benefit for some earners in the UK are
set to changed to protect families with 
stay-at-home mothers, David Cameron has
signalled.
Under the current
proposals, child benefit is to be removed from any household which has someone
earning above the higher-rate tax threshold of £42,745.
However, the scheme
penalises stay-at home mothers. A family with two people earning £40,000 – a
total of £80,000 – will keep the state handout while less-well off families, where the mother is caring
for the children, will lose out.
In an interview with
the House, an in-house parliamentary magazine, Mr Cameron acknowledged that the
proposal as it stood had been criticised for its “unfairness” and that some
families stood to lose benefits.
And he said the
Government was prepared to examine how the child benefit would be cut under the
proposal and suggested that a new system might be proposed in the Chancellor’s
March Budget.
His words are being
seen as significant two months before the publication of Mr Osborne’s
plans.
In his interview, the
Prime Minister was asked about the unfairness of the child benefit proposal on
single-earner households.
“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,” he said. “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 way it’s implemented and that remains the case, but I don’t
want to impinge on the Chancellor’s Budget.”
Mr Cameron’s comments
indicate that the Government may be considering ways to help single-earner
families with salaries just over the threshold.
However, such a
system would be complicated because it would require widespread means testing,
rather than a list of higher-rate taxpayers.
In the interview, Mr
Cameron appears to indicate that the entire proposal to cut child benefit is now
only something the Government is “looking at” rather than a set policy as had
been thought.
Mr Cameron said: “If
we want to make sure that everyone makes a contribution to dealing with the
deficit, that’s why we had to look at measures like taking child benefit away
from higher-rate taxpayers.”
Senior Treasury
sources said child benefit would be removed from some higher-rate
taxpayers.
“We really don’t want
to get expectations up,” said a Treasury aide.
George Osborne, the
Chancellor, announced the decision to cut child benefit during interviews on
breakfast television during the 2010 Conservative Party
conference.
Mr Osborne and Mr
Cameron have insisted that the change is essential despite widespread opposition
from many Conservative MPs.
The Chancellor wrote
to MPs in 2010 saying a more sophisticated removal of child benefit to protect
single-earner households was not feasible.
“The only way to
assess joint income families would be to create a complex, costly and intrusive
means test that would spread right up the income distribution,” he said.
“Effectively that would mean abolishing child benefit, which is one of the
simplest and cheapest benefits to administer.”