Cuts to child benefits for better-off parents that come in to force today are “fundamentally fair”, David Cameron claimed yesterday.
The Prime Minister insisted his government was taking the “right approach” to reduce or remove the benefit from families in which one earner’s salary tops £50,000 a year.
Critics point to the fact that in households where both parents earn just below the threshold, child benefit is unaffected.
The benefits cuts are expected to affect up to 1.2 million parents in some way. The policy means families with a wage earner receiving more than £60,000 a year will lose all their child benefit, which is worth up to nearly £1,056 per child annually.
Families with someone earning above £50,000 will lose part of the benefit, on a sliding scale.
Mr Cameron said yesterday: “I’m not saying those people are rich, but I think it is right that they make a contribution.
“This will raise £2 billion a year. If we don’t raise that £2bn from that group of people, the better off 15 per cent in the country, we would have to find someone else to take it from.
“I think people see it as fundamentally fair that if there is someone in the household earning over £60,000 you don’t get child benefit.”
Conservative Party chairman Grant Shapps admitted the cuts were unpopular in his own home.
He said: “I speak as one of the 15 per cent of parents who is losing child benefit. I have three children, I have just filled in the form. I totally understand how frustrating these things are.
“Nobody wants to lose the income. The reality is if you are losing child benefit, you are by de facto in a somewhat better position than other people, which is why this policy commands overall support from the public.”
Child benefit is paid to parents at the rate of £20.30 a week for the first child – or £1,055.60 a year – and £13.40 for additional children. A guardian’s allowance is £15.55.
At least 200,000 parents have opted out of child benefit ahead of last night’s deadline, twice as many as government officials had expected.
However, the benefit cuts are expected to affect 800,000 families, who have been sent letter by HM Revenue and Customs (HMRC). A further 400,000 will potentially be hit through income changes from April.
Labour claimed the changes would cause domestic friction and a bureaucratic headache for parents. Shadow Treasury minister Chris Leslie said: “This is a costly administrative nightmare that could also lead to family rows as couples decide who takes the financial hit.
“And it’s unfair too, because single earner families on £50,000 will have their child benefit cut, while some couples earning as much as £100,000 keep all of theirs and millionaires actually get a tax cut.”
The Centre for Social Justice also criticised the cuts, saying it imposed a “marriage penalty” for couples who wed compared with those who cohabit.
Managing director Christian Guy said: “UK family breakdown is spiralling out of control – the chaotic child benefit reforms risk pouring fuel on the fire.”
HMRC chief executive Lin Homer said the higher than expected number of people opting out of child benefit meant the cost of the change might be half that predicted.
She said: “We think it will cost us £11 million to raise the £2bn this change will raise.”