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4 March 2012

Child benefit u-turn ahoy!

Ed Balls is attacking the Chancellor on child benefit cuts partly because he knows it is a policy th

By Rafael Behr

Ed Balls has written an article for the PoliticsHome website previewing Labour’s lines of attack on the government ahead of the Budget. Alongside the usual complaints that not enough is being done to boost jobs and growth, there is a new specific emphasis on cuts that, according to the Shadow Chancellor, represent a “bombshell” for families.

On Monday Labour will use an Opposition Day debate in the House of Commons to repeat our demand a plan for jobs and growth in next month’s Budget. And we will call on the Chancellor to think again on changes to tax credits and child benefit which will cost families with children up to £4,000 per year.

Labour knows this is a weak spot for the government. The cuts Balls identifies are particularly ill thought through and he knows it. Tax credits were raided in a panic late last year to find extra money to pay for a back-to-work scheme for young people that was hastily cobbled together when it became clear that youth unemployment was becoming a political problem. Child benefit cuts for higher rate tax payers were announced ahead of the 2010 Conservative party conference partly as a tactical gambit by the Chancellor to demonstrate that he had the courage to raid his own party’s supporters’ pockets for the deficit reduction programme – thereby proving to everyone else that “we’re all in it together.”

The problem, as more and more people are noticing, is that the cuts are unworkable. James Forsyth reports in today’s Mail on Sunday how anxious George Osborne and David Cameron are about child benefit in particular. The chief problem is that two-income households in which each earner is just below the higher rate threshold keep their benefit, while a single-income household just above the line gets hit. Yet the former family is much better off. Desperate compromises are being debated in Downing Street.

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A shadow cabinet minister recently complained to me that Labour have not pressed the government enough on this issue, leaving it to Tory backbenchers to demand changes. “There’s clearly going to be a u-turn on child benefit cuts,” I was told. “Why aren’t we lining up to get the credit for it?” Well now they are.