Child Benefit Cuts to Save 1Bn GBP

In an attempt to redress the damage done by the financial meltdown of the banks in recent years there is a concerted effort being made by various governments around the world to implement budget changes.Since 2009 countries such as Greece, Spain, Portugal and Ireland have been forced to cut costs and raise income through measures which include job losses in the public sector, raising the retirement pension age, increase in taxes, both at personal, and on purchases we make.Even France has had to implement austerity measures, much to the anger and consternation of its people. The proposed rise in their retirement age has not gone down well with the French public.In the UK, Value Added Tax is set to rise to 20% from January 2010. Certain benefits are being cut back, and plans to force more unemployed off the register are being put in place.A recent announcement by George Osborne, Chancellor of the Exchequer, will have an impact on those better off individuals earning over 44,000 per year. Most people would agree that a wage of 44,000 a year is perfectly adequate. Yet, everyone with children below a certain age is entitled to Child Benefit. This benefit is not means tested. But, from 2013, if a parent in a household earns over this amount they will no longer be entitled to the benefit. The savings for the British Government will work out at around 1bn a year.What is strange though, is that under the proposals, if a joint income goes over the threshold then where both parents earn less than the 44,000 then they will not lose child benefit. So, say, both parents each earn 40,000 a year, their joint income is 80,000, but no change to their benefits. One parent earns 45,000, the other parent doesn’t work, they will lose the benefit. That does not seem fair.At least the move to save the expected 1bn will hit the middle earners. Until now, it seems the austerity measures have hit the poorest in society harder.

Advertisements