Benefitreformwarningfor middleclasses

Mr Cameron’s comment was the strongest indication yet that the middle classes may lose entitlements to child benefit to fund a radical overhaul of the welfare system.

It came as Work and Pensions Secretary Iain Duncan Smith appeared to endorse means-testing, describing the payment of benefits to people earning 50,000 or more as “completely bonkers”.

The row over benefits came at the start of a Conservative Party conference in Birmingham dominated by the swingeing government spending cuts to be imposed in Chancellor George Osborne’s spending review on October 20.

The Prime Minister confirmed that a deal had been struck between Mr Osborne and Mr Duncan Smith on a “refreshingly radical” plan for welfare reform, amalgamating a range of benefits into a single Universal Credit over the course of the next 10 years.

Speaking yesterday on the BBC1’s Andrew Marr Show, Mr Cameron denied there would be “losers” from the reforms, but also stressed it would be impossible to tackle the deficit without “making savings in the welfare budget” – which accounts for one pound of every three it spends.

Although he refused to give details of where cuts would fall, Mr Cameron said: “On the one hand we have got to ask, are there some areas of universal benefits that are no longer affordable?

“But on the other hand let us look at the issue of dependency where we have trapped people in poverty through the extent of welfare that they have.”

Labour’s Shadow Work and Pensions Secretary Yvette Cooper claimed the coalition Government was planning to scrap child benefit for 16-19 year-olds who stay on in education, which could save 2bn a year.

“The Government is clearly planning a massive assault on families,” said Ms Cooper. “This is an attack on aspiration and on overstretched families who want their teenagers to do well.

“The Government is already cutting 3bn from tax credits and support for children. Introducing means-testing for child benefit as well would put many low and middle-income families off claiming the support they badly need.”

But speaking on BBC Radio 5 Live, Mr Duncan Smith defended the principle of means-testing: “Under the last government, the whole benefit net rose up the income scale dramatically, where you had people on over 50,000 who were eligible for some form of benefit. I think that is completely bonkers.”

Thousands of protesters joined a demonstration against public sector cuts outside Birmingham’s International Convention Centre as the conference kicked off.

They heard Mark Serwotka, general secretary of the Public and Commercial Services union, call for a wave of industrial action to “turn the tide” against the Government’s austerity programme.