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Cost-cutting UK government curbs child benefits
Source: Agencies |
October 4, 2010, Monday
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BRITAIN will stop paying child benefits to higher earners as part of its plans to slash the budget deficit, which will involve harsh spending cuts across the spectrum, finance minister George Osborne said today.
The move will save one billion pounds (US$1.58 billion) a year from 2013 -- small change compared with a forecast borrowing requirement of around 150 billion pounds this year.
But politically it is a high-stakes move for Britain's coalition government and suggests a determination to do whatever it takes to cut debt despite warnings from the opposition Labour party that acting too fast will choke off a fragile economic recovery.
"We are going to withdraw child benefit from higher rate taxpayers. It's a big decision for us, but we think it's absolutely necessary and fair given the financial situation we face," Osborne told BBC News.
The plan to withdraw the child allowance by 2013 from families earning more than 44,000 pounds a year breaks with a longstanding British principle of "universal benefits" -- allowances such as child benefit and free bus passes for the elderly that are paid to all, regardless of income.
The move will not be popular with middle-class voters, the Conservatives' traditional base of support, and moves onto policy ground on which even former Conservative premier Margaret Thatcher, who relished rolling back the frontiers of the state, feared to tread.
Osborne will give a speech later to the annual conference of his centre-right Conservatives, senior partner in Britain's five-month-old coalition government, in which he will defend his cuts agenda in the face of fears about slowing growth.
The move will save one billion pounds (US$1.58 billion) a year from 2013 -- small change compared with a forecast borrowing requirement of around 150 billion pounds this year.
But politically it is a high-stakes move for Britain's coalition government and suggests a determination to do whatever it takes to cut debt despite warnings from the opposition Labour party that acting too fast will choke off a fragile economic recovery.
"We are going to withdraw child benefit from higher rate taxpayers. It's a big decision for us, but we think it's absolutely necessary and fair given the financial situation we face," Osborne told BBC News.
The plan to withdraw the child allowance by 2013 from families earning more than 44,000 pounds a year breaks with a longstanding British principle of "universal benefits" -- allowances such as child benefit and free bus passes for the elderly that are paid to all, regardless of income.
The move will not be popular with middle-class voters, the Conservatives' traditional base of support, and moves onto policy ground on which even former Conservative premier Margaret Thatcher, who relished rolling back the frontiers of the state, feared to tread.
Osborne will give a speech later to the annual conference of his centre-right Conservatives, senior partner in Britain's five-month-old coalition government, in which he will defend his cuts agenda in the face of fears about slowing growth.
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