The UK government’s Chancellor George Osborne has announced that higher-rate taxpayers will no longer be eligible for child benefit as from 2013. The move is part of the UK government’s efforts to cut spending as, in recent years, the country’s public deficit has grown markedly. Around 7.7 million families with children currently get child benefit, at a cost of about £12 billion a year, according to the BBC, which adds that ministers estimate the change will affect about 1.2 million families. Savings are estimated at £1 billion a year.
Speaking at a Conservative party conference in Birmingham on 3 October 2010, George Osborne said that, in the current financial climate, the UK could no longer continue to spend £1bn a year in child support to those who were better off. "Believe me, I understand that most higher-rate taxpayers are not the super-rich. It is very difficult to justify taxing people on low incomes to pay for the child benefit of those earning so much more than them" he said.
Currently, parents receive £20.30 a week for their eldest child and £13.40 for subsequent children, with payments continuing from birth until the child is 16 years old. In addition, child benefit is paid if the child is over 16 and under 20 and is in full-time non-advanced education or approved training. An example of non-advanced training is a school where a child is being given classes so that he/she can pass his/her General Certificate of Secondary Education (GCSE) exams. Scotland’s equivalent is called the Standard Grade.
Child benefit is also paid if the child is 16 or 17 years old and has left full-time non-advanced education or approved training but has registered for work, further education or training with the Careers Service or Connexions Service (a careers guidance service for 13 to 19 year-olds) in Great Britain (England, Scotland and Wales) or with the Department of Education & Learning or an Education or Library Board in Northern Ireland.
As from 2013, families with two parents on incomes up to £44,000 each will keep the benefit. Those families with combined incomes of over £88,000 will therefore lose it. Single parents who earn over £44,000 will also lose the benefit. George Osborne also announced that the UK government will introduce a limit on the total amount of benefits 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” he said.