Child benefit freeze will cost two-child families over £400

date: Thursday 1 November 2012

embargo: 00:01 hours Friday 2 November

The government's decision to freeze child benefit between 2011 and 2014 will cost families with two children more than £400, TUC analysis revealed today (Friday).

While much of the current focus has been on the loss facing higher-rate taxpayers, the study shows how by preventing child benefit from rising in line with other benefits the Treasury is making all families with two kids £408 worse off.

Child benefit has been frozen for all families since April 2011, despite significant increases in inflation since then. As a result of this policy a family with two children will see the amount they receive in child benefit for their first child frozen at £20.30 per week until 2014 and they amount they receive for their second child frozen at £13.40 per week until 2014.

The TUC says that a result of this freeze, a family with two children suffered a real-terms cut in child benefit of £57.20 in 2011/12, will lose £153.40 over the course of 2012/13 and £197.60 during 2013/14.

From next April over 2.9million UK households with two children under the age of 16 will lose £3.80 a week as a result of the freeze. Families where an individual is earning between £50,000 and £60,000 will also see additional cuts to their child benefit as part of a new tapering system, while families where an individual earns more than £60,000 will lose all their child benefit.

The TUC says the freeze is yet another blow for low-income families, already reeling from huge cuts to their working tax credits, which according to previous TUC analysis could see some families losing thousands a year - http://www.tuc.org.uk/economy/tuc-20859-f0.cfm

The research also highlights how plans to introduce a new sliding-scale for people earning between £50,000 and £60,000 will cost taxpayers more than £100m over the next five years in set-up and administration charges. This will reduce the savings the measure will generated for the government while also discouraging families above and below the means test from claiming, says the TUC.

TUC General Secretary Brendan Barber said: 'Freezing the value of child benefit has already hit millions of families hard, and by 2014 many will be over £400 worse off. By ploughing ahead with the introduction of a costly means test the government is only making the problem worse - introducing confusion and uncertainty into a system that used to work well as a way to provide vital support to millions of families.

'The best way to make the rich pay their share is through the tax system but this government has done the opposite by reducing taxes for the very wealthiest. Cutting the value of benefits for children and introducing complicated new assessments means those in greatest need will get less, with the poorest children suffering the most.'

NOTES TO EDITORS:

Impact of child benefit freeze on two-child families

Operational costs of new scale for higher-rate taxpayers

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