Families face losing child benefits under Labour Budget

Up to 700,000 middle-class families could lose child benefits under Labour's budget, it was claimed today.

The previous Conservative government had planned to change the rules to expand the current child benefit allowance, enabling more parents to access the system.

But Chancellor Rachel Reeves' Budget on Wednesday made no mention of child benefit, with documents stating the proposal was too expensive to implement.

Under current legislation, parents receive £25.60 per week for their eldest child, and £16.95 per week for younger children - but once a parent begins earning above a certain level, payments are reduced.

In his March budget, Jeremy Hunt raised the level at which people stopped receiving benefit to £80,000.

He had also pledged to move to a system in which the benefit was calculated on a household and not individual basis, to avoid single parents being unfairly penalised for earning more.

Currently, two high-earning parents who just miss the threshold can receive more child benefit than a single parent who meets it, despite their households earnings being almost double that of the single parent in total.

The benefit tapers off between £60,000 and £80,000, but plans to shift the system to a household cap rather than highest earner cap have been shelved.

This would have meant households with a total income of £120,000 would still receive the full amount of child benefit cap, tapering off up to £160,000.

It was estimated that 700,000 middle-income households would receive an average benefit of an extra £1,480 per year. 

But the Treasury said it couldn't afford the £1.4 billion cost - despite raiding Britain's purses in a £40 billion tax grab.

The Budget document published on Wednesday said: 'The government will not proceed with the reform to base the HICBC on household incomes. This is because it would have come at a significant fiscal cost of £1.4 billion by 2029-30 if setting the threshold to £120,000-£160,000, where no families would lose out.' 

Money saving expert Martin Lewis criticised the move, saying it was 'bad news for single-parent and single-earner families'. He added it would 'leave inequity rife'. 

Charities have also criticised the government's stance on child benefit, and had called for Labour to scrap the two-child cap. 

Reacting to the Budget, Joseph Howes, CEO of Buttle UK and Chair of the End Child Poverty Coalition said it 'will only go so far towards lifting children, and their families, out of poverty in the UK. 

'The government could have chosen to scrap the two-child limit to benefit payments – a policy which drives families into poverty. 

'This opportunity for the government to take quick and decisive action has been missed. More children will be drawn into poverty as a result, on a daily basis.

'Now focus is on the publication of the child poverty strategy in Spring 2025, which must include scrapping this cruel policy. Children affected by this should not have to wait, and need support now.'