The IFS say that incorporating child benefit into universal credit could cost 4.3 million families £1,000 a year
The Conservatives have promised to cut £30bn of spending if they win a second term, of which £12bn will come from welfare. However they have refused to specify which parts of the welfare bill will be cut, leading to speculation that child and disability benefits could be hit.
At a Westminster briefing today, George Osborne repeatedly refused to rule out cutting child benefit and incorporating it into Universal Credit, despite being asked about it several times.
And it’s little wonder he’s being coy about it: rolling child benefit into Universal Credit would cost families thousands each year due to the difference in the way the payments are means tested.
According to the Institute for Fiscal Studies (IFS), replacing child benefits with Universal Credit would
‘reduce benefit entitlements by around £4.8 billion a year, since there are over 4.3 million families who receive child benefit at the moment but who will not be entitled to universal credit in the future, each of whom would lose over £1,000 a year.’ (p.213)
Universal Credit is Work and Pensions secretary Iain Duncan Smith’s flagship policy. It was aimed at simplifying the welfare system and making it harder for people to commit fraud by merging a host of working age benefits and tax credits into a single payment. However its implementation has been fraught with delays and setbacks.
Currently child benefit is not included, but In its Green Budget the IFS in February highlighted the plans for child benefit as one of several suggestions as to how the Tories might achieve their planned cuts to spending.
They said that child benefit should be made part of a means-tested support system for families and children following Osborne’s decision to turn child benefit into a means-tested benefit in 2013.
Today the chancellor refused to rule this out definitively, saying instead:
“You can judge us on our record in this parliament. If we wanted to put child benefit into Universal Credit we would have done it when we set up Universal Credit.
“We’ve got a track record, we’ve got a plan based on clear principles of making work pay, sharpening work incentives.”
There is still not enough clarity on the Conservatives’ plans for welfare cuts, and today Osborne tried to deflect attention away from the issue by focusing on Labour. He unveiled a PowerPoint presentation called ‘Labour Party Fiscal Plans: An Analysis’, and claimed Labour would hit families with £3,028 more in tax.
Ruby Stockham is a staff writer at Left Foot Forward. Follow her on Twitter
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