Anger from child poverty groups over Budget

The Budget included National Insurance cuts and the raising of child benefit thresholds for higher earners, but critics say there was little for poorer families.

Couple look at bills with frowns on their faces

 

The Chancellor has announced the lifting of the threshold on child benefit as part of a Budget statement which critics say had very little for the poorest families.

In his Budget statement, Jeremy Hunt announced a 2p in the pound cut to National Insurance contributions for employees and the self-employed, although tax thresholds have been frozen, meaning more middle earners are drawn into higher tax brackets. He also said that full child benefits would be paid to households where the highest-earning parent earns up to £60,000 [up from the current £50,000]. Partial child benefit will be paid where the highest earner earns up to £80,000. He said the government would review child benefit limits on a household rather than an individual basis, but not until 2026.

Hunt also said that he guaranteed “the rates that will be paid to childcare providers” in order to deliver the Government’s expanded free childcare pledge, although he didn’t say what those rates would be.  Childcare groups welcomed the commitment to ensure early years funding rises in line with provider delivery costs, but said it is only a start and doesn’t cover the existing funding gap arising from underpayment of subsidised care for three and four year olds.

Neil Leitch, CEO of the Early Years Alliance, said: “We at the Alliance have long called for a mechanism to ensure that early years funding rises in line with provider delivery costs, and so welcome the fact that today’s announcement should help prevent the current funding gap from widening even further over the coming years.”

The Chancellor also announced that the Household Support Fund, which helps households most in need to pay for essentials such as food and utilities, will be extended, although charities say this is just a temporary fix.

Reaction

Ben Chaplin, Managing Director at Croner-i, said: “Overall many will feel that today’s budget is a bit of an anti-climax with no real changes to the status quo.”

The Women’s Budget Group said it was a Budget that favoured men over women, estimating that single men will gain on average close to £500 more a year than lone mothers from the combined cuts to National Insurance Contributions (NICs) in the Autumn Statement and Spring Budget and couples without children will on average gain over £1,200 more a year. Dr Mary-Ann Stephenson, Director of the Women’s Budget Group, said women suffered more from lack of investment in public services, adding: “Stepping back from the details of tax rates and fiscal rules, what was entirely lacking from the Chancellor’s budget was any long term vision for the country and the economy.”

Save the Children was more outspoken, with a spokesperson saying: “The Chancellor is leaving the poorest families out in the cold with his Spring Statement. The 4.2 million children living in poverty, one million of whom are destitute, continues to be a black mark for this Government. Benefit payments are at the lowest level in years and we fear threats of increased sanctions. While we warmly welcome the significant changes to child benefit and the extension of the Household Support Fund, more investment is needed in social security and the early years sector to support the country’s most vulnerable children.” 

The Child Poverty Action Group said: “The change to child benefit for higher income families is welcome but it turns the spotlight on families getting very much less. Child benefit has lost 20% of its value since 2010 – an unforgiveable real-terms cut that hits kids in the lowest income families hard.  Any government concerned with the country’s economic prospects must restore investment in children, starting with a £20 per week increase to child benefit and abolition of the two-child limit in universal credit allowances.”

The Women and Equalities Committee heard from ministers earlier in the day justifying the two-child policy and the benefit cap. Jo Churchill, Minister for employment, said the two-child policy was accepted by both the major parties. 78% of families on Universal Credit have less than three children, she stated, adding that the policy was about “fairness” for those who go out to work, although many people who claim UC are in work. On the benefit cap, Churchill said only 1.3% of working age households receiving UC were affected, adding that “it should always pay to be in work”.



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