From the TUC

Child benefit under attack

29 Jun 2015, by in Society & Welfare

In the past five years Child Benefit has been frozen, capped and taken away from better off families. Eroding Child Benefit, a new TUC report out today reveals that a couple with two children are already £5.95 a week worse off as a result and by the time of the next election that loss is likely to be £9.05 a week.

The last 2010-15 government made a number of significant changes that impacted on Child Benefit (CB). From April 2011 the index used for annual ‘uprating’ in line with inflation in the previous September was changed from the Retail Price Index (RPI) to the Consumer Price Index CPI); the latter is usually lower, hence families receive less. CB was also frozen for three years from 2011/12 to 2013/14. Plus it was capped for a further two years at one per cent in 2014/15 and 2015/16 even though CPI was higher than one per cent. 

And in this parliament the new government have said there will be a further freeze on Child Benefit in 2016/17 and 2017/18.

If we compare what families will be receiving by the end of this parliament with what they would they would have received had the previous system of RPI uprating continued unchanged, families would be receiving significantly less. The table shows us how Child Benefit is now uprated and what it would be worth under RPI. 

Child Benefit received each week under different policies 

 

£ amount received for first child per week

 

£ amount received for subsequent child per week

 

CB uprated by RPI

CB uprated by CPI plus freezing & capping for two years[i]

 

CB uprated by RPI

CB uprated by CPI plus freezing & capping for two years

2010-15 government’s policy announced

2010/11

20.30

20.30

 

13.40

13.40

Policy takes effect

2011/12

21.25

20.30

 

14.00

13.40

2012/13

22.40

20.30

 

14.80

13.40

2013/14

23.00

20.30

 

15.20

13.40

2014/15

23.75

20.50

 

15.65

13.55

2015/16

24.30

20.70

 

16.05

13.70

Projected figures using OBR data

2016/17

24.55

20.75

 

16.20

13.70

2017/18

25.05

21.00

 

16.55

13.90

2018/19

25.75

21.35

 

17.00

14.10

2019/20

26.55

21.75

 

17.50

14.40

2020/21

27.35

22.20

 

18.05

14.65

In total a family with two children has lost out on £1084.20 between 2011/12 and 2015/16. The cumulative impact of the government’s planned changes would be £2017.60 for a family with two children between 2016/17 to 2020/21 based on the 2015 OBR projections for CPI and RPI[ii]. A total loss of £3,101.80 is clearly a huge loss.

However, should the government further change its plan this would amount to further losses for families as clearly social policy doesn’t reside in a vacuum. If the government goes ahead with cuts to Child Tax Credit low-paid families with children will lose a second time.

[i] i.e. the last government’s policy of a one per cent cap in 2014/15 and 2015/16

[ii] OBR, Economic and fiscal outlook March 2015 http://cdn.budgetresponsibility.independent.gov.uk/March2015EFO_18-03-webv1.pdf The calculations use the annual projections in lieu of the September CPI and RPI projections.