Ruth Talbot
Founder, Single Parents Rights Campaign Group
‘The Spring Budget announcement that Child Benefit eligibility calculations will move from an individual to household threshold shows the Government are finally taking a tentative step towards addressing single-parent discrimination.
‘For almost 40 years, all children were entitled to child benefit regardless of their parents’ income. This ended in 2013 with the introduction of the High Income Benefit Charge paid by those earning over £50,000 per annum. This earnings limit has – since its inception – been based on individual earnings, resulting in a situation where couples can earn up to £99,000 before being liable for the charge, while a single parent loses their full Child Benefit entitlement once they earn £60,000. This results in a single parent with two children earning over £50,300 facing a marginal tax rate of 64 per cent, one of the highest tax rates in the country. This isn’t just bad for families but for the economy as it reduces productivity levels.
‘Ideally Child Benefit would return to a universal benefit, saving the Government significant administrative costs and reinforcing the original third pillar of the Welfare State as outlined in the 1942 Beveridge report. Until this universality is possible though, basing Child Benefit eligibility rules on household, rather than individual, income is a welcome change, not just because of the unfairness it removes in terms of the benefit but also in the acknowledgment it represents from Government that welfare policies can – and do – discriminate against single parents.
‘Prior to the recent Budget – alongside other organisations – we lobbied the Government to not only address this discrimination but also other policies which discriminated against single parents. Two key such policies we urged the Chancellor to address were the recent increased Universal Credit work requirements for lead carers of three- to 12-year-olds that disproportionately impact single parents, and the exclusion of single parent carers and disabled single parents from childcare support that their counterparts with a partner in work are eligible for. Both these policies impact lower-income families.
‘In a Budget which prioritised high earners, it’s not altogether surprising that the Government chose to focus on Child Benefit eligibility rules over these other policies. However, by announcing this change, the Government has shown they understand the bias towards two-parent families.’
Dr Mary-Ann Stephenson
Director, Women’s Budget Group
‘We are very concerned about the move to a household means test for Child benefit. Making one partner’s tax liability dependent on the other’s income undermines the right to independent taxation, which is an important contribution to gender equality. Independent taxation and benefits are a key principle of women’s economic independence, and women make up 87 per cent of all Child Benefit claimants.
‘Child Benefit should return to its universal nature by abolishing the High-Income Child Benefit Charge (HICBC). If we want to tax higher-income families, we should do that through the tax system, making it more progressive and fairer, and maintain universality of a benefit that recognises the contribution of raising a child to society as a whole and the cost this entails.
‘Universal benefits are better at reducing and preventing poverty. Restoring Child Benefit as a universal benefit will also ensure that the right to independent taxation is not compromised by a household means test.
‘The HICBC is a controversial policy that has been widely criticised. Thresholds have not been uprated since the policy was introduced in 2013, meaning over a decade of inflation has dragged more families into the charge. When it was introduced, the HICBC affected one in eight families in the UK; now it is affecting close to one in three families.
‘So, although long overdue, raising the threshold from £50,000 to £60,000 is a welcome first step. In high-cost areas like London, an income of £50,000 after tax is lower than median costs of rent, childcare and energy for a two-child household.
‘But scrapping the HICBC is not enough to fix the issues with the current Child Benefit. The amount of Child Benefit parents can claim has fallen in value in real terms since 2013, and it currently sits at just £24 per week for the first child. Many OECD countries increase the amount paid with every additional child in the acknowledgement that having more children costs more, not less. Yet the UK’s Child Benefit decreases to £15 per week for any additional children after the first.
‘With over half of children living in poverty in some local authorities, we urge the Government to act on more pressing policies needed to help the poorest families. In particular, Child Benefit should be increased to £50 per week and families should receive their full benefit entitlement and not face punitive deductions due to the two-child limit or the benefit cap.’