Axe child benefit, think-tank urges

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Published: Wednesday 17th June 2015 by The News Editor

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Child benefit should be scrapped and some welfare payments to disabled people should be taxed as part of efforts to cut the amount of the social security budget going to middle-class claimants, a think-tank has recommended.

Abolishing child benefit would save almost £5 billion, with poorer families compensated through an increased universal credit (UC) payment, the report by Reform said.

The document, drawn up by a former adviser to Work and Pensions Secretary Iain Duncan Smith, comes as the Government attempts to find £12 billion in welfare savings.

The report said the coalition government sought to tackle “middle-class welfare” but suggested David Cameron’s Tory majority administration should go further to ensure that “social security expenditure is spent on those in need”.

It said: “To this end, child benefit should be targeted at those on the lowest incomes by moving it into UC.”

The respected economic think-tank the Institute for Fiscal Studies calculated that rolling child benefit into UC would save £4.8 billion.

Reform also suggested the Disability Living Allowance (DLA) and its replacement the Personal Independence Payment (PIP) should be taxed, with consideration given to means-testing claimants.

“At a minimum, the Government should tax DLA and its replacement PIP,” the report said.

“This would save £0.9 billion.”

The report was co-written by Charlotte Pickles, who was an expert adviser on welfare to Mr Duncan Smith between 2010 and 2012.

She said: “The Government has to achieve cuts in the welfare budget without going too far, too fast. Cutting child benefit would be fair but freezing or cutting tax credit rates would not.”

The study also recommended reducing sickness benefits should be reviewed, with the employment and support allowance (ESA) for people in the work-related activity group reduced to the level of jobseekers’ allowance.

Reform recommended a substantial increase in social housing stock in an effort to reduce the housing benefit bill, which increased from the equivalent of £16.6 billion in 2004/5 to £24.4 billion in 2014/15.

” The Government should reverse the shift towards private rental accommodation by investing in new social housing,” the report said.

“This would require substantial capital investment, but over time would reduce the housing benefit bill and ensure that taxpayer money is being spent more efficiently.”

The report also criticised the flagship Conservative policy of extending the right-to-buy scheme to housing association tenants.

“This policy risks depleting the stock of social housing further and therefore increasing the housing benefit bill in the longer term,” the report warned.

“The Government has pledged a one-for-one replacement of the houses sold through the extension of the programme, but if taxpayers are to get better value for money for the billions they spend on housing benefit, significantly more social housing is needed. Careful consideration needs to be given to the longer-term implications of this policy.”

Published: Wednesday 17th June 2015 by The News Editor

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