Chancellor Announces Bold Changes to Child Benefit

© The Conservative Party

The Chancellor of the Exchequer, George Osborne MP, has unveiled a bold plan to get Britain's ballooning benefits bill back under control, while introducing fair play into the financing of the welfare state.
Today in his keynote speech at the Conservative Party Conference in Birmingham, the Chancellor announced that the Coalition Government will introduce a new £500 a week cap on welfare benefits, designed to ensure that workless households no longer receive thousands of pounds in benefits more than the average working family receives in pay.

At the same time, child benefit will be withdrawn from households paying tax at the higher rate, to ensure that people on low incomes are no longer taxed to provide child benefit for those with bigger salaries.

The changes mean that household benefit payments will be capped near the median earned income after tax and National Insurance for working families - around £500 per week by the time of implementation in 2013.

The cap will apply to combined income derived from benefits including Jobseekers Allowance, Income Support, Employment Support Allowance, housing and council tax benefits, Child Benefit, and Carers Allowance. Benefits like Social Fund loans and free school meals are not affected, and people with Disability Living Allowance and war widows will also be excluded.

The withdrawal of Child Benefit from higher rate taxpayers - saving an estimated £1 billion a year -will also apply from 2013, administered through the tax system. There are currently 1.2 million households where higher rate tax is applied which qualify for child benefit. The 6.6 million families with no higher rate taxpayers who receive the benefit will remain unaffected by the change. The Chancellor said:

"If the welfare state is going to gain the trust of the British people, it needs to reflect the British sense of fair play. So for the first time, we will introduce a limit on the total amounts of benefit any one family can receive; and the limit will be set according to this very simple principle: unless they have disabilities to cope with, no family should get more from living on benefits than the average family gets from going out to work."

As for child benefits, which cost taxpayers about £12 billion a year, the Chancellor declared:

"I understand that most higher rate taxpayers are not the super-rich. But a system that taxe working people at higher rates only to give it back in child benefit is very difficult to justify at a time like this.

"And it's very difficult to justify taxing people on low incomes to pay for the child benefit of those earning so much more than them.

"We have got to be tough but fair, and that's why we will withdraw child benefit from households with a higher rate taxpayer. When the debts left by Labour threaten our economy, when our welfare costs are out of control, this measure makes sense."

Welfare reform needed to tackle family breakdown and long-term poverty

Giles McNeill backs plans to help people get back to work in West Lindsey and achieve success

Giles McNeill, Nettleham Parish Councillor, today added his support to calls to reduce long-term welfare dependency, tackle long-term poverty and re-create stable families.

The policy ideas entitled “Work for Welfare” were launched by Conservative leader, David Cameron. They aim to help people find fulfilling jobs, while continuing to support those who genuinely cannot work. Currently across Gainsborough Constituency, there are 3,450 people on Incapacity Benefit and 1,110 on Jobseeker’s Allowance. Under the new Conservative proposals:

Respect for those who cannot work:
Recipients of Incapacity Benefit who really cannot work will receive continued support and will remain outside the return-to-work process.

Employment for those who can:
Every out-of-work benefit claimant will be expected to work or prepare for work. There will be a comprehensive programme of support for job seekers including training, development and work experience. Welfare-to-work services will be provided by the private and voluntary sectors on a payment by results basis.

Assessments for those claiming benefits:
There will be rapid assessments of all new and existing claimants for out-of-work benefits.

Limits to claiming out of work benefits:
People who refuse to join a return-to-work programme will lose the right to claim out-of-work benefits until they do. People who refuse to accept reasonable job offers could lose the right to claim out-of-work benefits.

Community work:
Those who claim for more than two years out of three will be required to help out on community work programmes.

End Tax Credit discrimination:
The savings from these reforms will be used to end the discrimination against couples in the Tax Credits system.

Giles McNeill said:

"Real welfare reform will help reverse the disastrous rise in family breakdown under Labour and tackle the persistent and often hidden poverty that shames our nation."

"Labour’s old politics on welfare reform simply are not working. Higher numbers of Incapacity Benefit claimants and high youth unemployment show that the policies of the last ten years have failed. It’s time for change."

"Rather than Whitehall taking responsibility away from people and making them dependent, we need to help people across West Lindsey to take responsibility for themselves and achieve success and independence."

The full ‘Green Paper’ entitled ‘Work for Welfare’was launched on 8th January 2008and can be downloaded here.