Labour conference: The child benefit cap is a blow to struggling families

Labour's record on child poverty is an admirable one. So it's even more of a shame that Ed Balls has allowed the axe to fall on child benefit.

Labour’s record on child poverty is an admirable one. So it’s even more of a shame that Ed Balls has allowed the axe to fall on child benefit

In an impressive speech by Ed Balls today, the shadow chancellor sought to balance social justice with ‘toughness’ on the key issue of spending and ‘balancing the books’ should Labour win power in 2015.

To strong applause, Balls told conference that ‘you can never trust the Tories with the NHS’. He also drummed on a familiar theme of ‘the slowest recovery for 100 years’, saying that ‘working people cannot afford five more years of this Tory government’.

Alongside the crowd-pleasers, however, was a harsher message on spending: ‘Labour will make no spending commitments without saying where the money is coming from,’ Balls told conference. As part of this steely message Balls said that a 1 per cent cap on increases in child benefit would be extended to 2017.

Balls made clear that the cap would apply only for first few years of next parliament, but it will have consequences nonetheless. As Alison Garnham of the Child Poverty Action group has warned:

“Child benefit will have lost 14 per cent of its value over the course of this parliament. Another two years of lost value will mean families will be £190 a year worse off for their first child and £125 for any subsequent children by 2016/17.”

Until recently all households with children were entitled to receive child benefit at a rate of £20.30 per week for the oldest child, and £13.40 per week for each additional child. But from 2013 families with a higher rate taxpayer were no longer entitled to child benefit.

Labour claims that pegging child benefit increases to 1 per cent will save around £400 million which will be used to reduce the deficit.

In choosing to cap child benefit below the rate of inflation, Balls is making the political calculation that it will be seen as unfair for adults who are out of work to be receiving more in benefit support than families in work receive in pay. Balls has been accused by some on the right of making a u-turn after Labour voted last year against Conservative proposals to cap a number of benefits (including child benefit) at 1 per cent.

And yet this will seem incredibly unfair to many in the Labour party. After all, children do not make the employment choices of their parents and therefore should not be held responsible for those choices. Average wages may also be losing value due to inflation, but that seems a poor reason for making those claiming child benefit poorer too.

Labour’s record on child poverty is an admirable one. Between 1997-98 and 2010-11 there was an £18 billion annual increase in spending on benefits for families with children and an £11 billion annual increase on benefits for pensioners by 2010-11. As the IFS points out, ‘…child and pensioner poverty would either have stayed the same or risen…had there not been these big spending increases’.

The shadow chancellor has said that Labour is the only party that is truly committed to reducing child poverty. So it’s even more of a shame that Ed Balls has allowed the axe to fall on child benefit, something which helps many people to keep their heads above water.

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