Inside Politics: A back-bench revolt is persuading the Chancellor to rethink his plans for child benefit reform, writes David Maddox

WHEN George Osborne faced his first Conservative Party conference as Chancellor in 2010 he made what was a bold move at the time by announcing his intention to cancel child benefit for households with at least one earner paying the higher income tax rate.

The policy – which would cut £2,500 from the income of a family with three children – was a cheap way of cutting the welfare bill that avoided a complex form of means testing.But more importantly, by hitting the Conservatives’ core middle class vote, it served to symbolise the coalition’s motto of “We’re all in this together”.

Yet with the budget just a fortnight away it seems clear this move is to be ditched in what could be one of the coalition’s more embarrassing U-turns. The reason for this is that the policy had done something that all the contraptions of the government whips’ office had failed to do, which was to unite angry rightwing Tory back-benchers with their near mortal enemies, the Lib Dems.

Many Lib Dems thought the crude means testing measure was unfair and had also come under pressure from their constituencies, particularly in the south of England, to have it looked at again. So it was no surprise that yesterday the retreat on the policy was heralded by Lib Dem Deputy Prime Minister Nick Clegg.

But the real pressure came from the Tory back-

benchers who saw the plan as an unacceptable attack on the family and the middle classes and who last night threatened to join Labour in the lobbies to vote against the measure which was supposed to be implemented in April. They are a restless bunch, as Mark Pritchard’s resignation as party deputy chairman over European policy and immigration, yesterday underlined.

The Tory back-benchers’ main objection to the child benefit change was that it attacked “stay at home mothers”. While a family with two earners below the higher rate tax band – beyond £42,745 – would keep their child benefit, a family with one parent staying at home to look after the children but with one earner in the higher rate would be hit twice – first by having to pay a 40p tax rate and then by losing their child benefit with what amounted to a salary cut of £3,500 a year. So it would have led to the ludicrous situation that a family with an income of more than £80,000 could keep child benefit and pay less tax than one pulling in £42,745.

It has been suggested the government might look at a different cut-off point of £50,000, but this could be aimed at joint household incomes as well. It is obvious Mr Osborne has suffered a major defeat on an important welfare measure aimed at bringing down the deficit. But with Tory back-benchers getting restless over the coalition, human rights, Europe, defence, green policies and other complaints, the Chancellor has little choice but to give them a concession.