Pinch forthe middleclasses as Osbornewields axe

Jonathan Reed Political Editor

More than a million middle-class families will be stripped of their child benefit and the jobless will have handouts capped in a fresh bout of welfare cuts.

Stay-at-home mothers face being hardest hit by Chancellor George Osborne’s decision to cut child benefit from higher-rate taxpayers from 2013 in a move saving 1 billion a year.

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Critics argue it is unfair that families with an income of almost 88,000 will still receive child benefit if neither parent earns more than the 44,000 threshold – but a family with a single earner or single parent who receives more than the threshold will have their benefit removed.

Mr Osborne announced the move in his party conference speech in Birmingham as he promised a “tough but fair” package of measures to bring down the deficit, warning that putting off the pain now would mean even bigger problems in the future.

He sought to sugar the pill for Tory traditionalists by announcing a cap on the amount of benefits that can be claimed by any single family. The plan will mean no family will be able to claim more in handouts than the average household income – expected to be 26,000 a year when the plan is put in force in 2013.

That proposal – which could see benefits cut by 300 a week for some families – immediately sparked controversy, with aides to the Chancellor admitting it would mean some benefit claimants who currently live in expensive areas will be forced to move somewhere cheaper.

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Mr Osborne, who received backing from Marks and Spencer chairman Sir Stuart Rose for the coalition’s deficit reduction plans, also warned the banks they will face tough action if they fail to start lending to businesses again and listed transport infrastructure as one of the priorities for investment to help revive the economy.

The changes to child benefit are likely to be most difficult to swallow for Tory activists. More than 650,000 families in Yorkshire receive the payment. Nationally, 1.2 million households with higher rate taxpayers claim child benefit. Parents with three children would lose 2,448, while those with a single child would be stripped of 1,055.

“It’s very difficult to justify taxing people on low incomes to pay for the child benefit of those earning so much more than them,” said Mr Osborne. “We’ve got to be tough but fair.

“That’s why we will withdraw child benefit from households with a higher rate taxpayer. When the debts left by Labour threaten our economy, when our welfare costs are out of control, this measure makes sense.”

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But Shadow Work and Pensions Secretary Yvette Cooper said: “We support child benefit for all children and all families. Of course there are difficult choices to make and we need more welfare reform, but it’s better to get the economy growing faster and raise more tax from the banks than to cut support for children in middle income families.”

The UK’s largest children’s charity Barnardo’s said the move would protect the poorest while saving the country money and said the move was “hugely preferable” to withdrawing it for older children.

But Alison Garnham, chief executive of Child Poverty Action Group, said: “It’s very unfair that families with children should once again be taking the hit.”

Gingerbread chief executive Fiona Weir said: “This cut will unfairly impact on working single parents and single earner couples – compared to couples where both work.”

Osborne to strip families of up to 300 a week in benefits: Page 4. Comment: Page 10.

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