Removing child benefit from higher rate taxpayers was a coalition policy which drew criticism from across the board — and now David Cameron has hinted that it could be watered down.
After the plan to cut child benefit for higher earners was announced in 2010, inconsistencies quickly emerged: stay-at-home mothers would be penalised, as a household in which one parent earns just over the threshold of £42,000 would lose all their child benefits, while another with two earners of £41,000 each would not be affected.
Cameron told the House magazine:
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. 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 steepness of the curve, we always said we would look at the way it’s implemented and that remains the case, but again I don’t want to impinge on the Chancellor’s Budget.
This reflects growing concern about falling support for the Conservatives amongst female voters. (New Statesman blogger Gavin Kelly has written extensively on this). The cut to child benefit is just one on a long list of policies which hit women harder than men: cuts to Sure Start, the abolition of baby bond and the health in maternity grant, and the three-year child benefit freeze. Indeed, a recent study by the House of Commons Library found that of the £2.37 billion to be raised through tax credit cuts and caps on public sector pay, 73 per cent (£1.73 billion) will come from women, and just 27 per cent (£638 million) from men.
It is no surprise, then, that the government is thinking of somehow sweetening the pill (this has been on the cards since September at least). But how much change are we talking? The Welfare Minister Chris Grayling said last night that he had “heard nothing to suggest we are about to change direction massively”, while George Osborne has previously said that a more sophisticated way of implementing the cut would be too expensive.
So we are unlikely to see the cut — due in 2013 — scrapped all together. It is a big part of the coalition’s deficit reduction programme, and could save. £2.5 billion a year. What is more likely is that it will be examined to see if a taper can be applied to the system to ease its implementation. It is speculated that Osborne could make a move as soon as the next Budget. Exactly what that move is — and whether it successfully halts falling support amongst female voters — remains to be seen.