The number of families hit by child benefit cuts has soared by 370,000 thanks to Tory ‘stealth’ tax changes, a leading think tank has revealed.
The Institute for Fiscal Studies found that George Osborne’s decision to freeze income eligibility thresholds will leave one in five families facing the loss of all or some of the payments.
Six years to the day since the former Chancellor introduced his austerity crackdown, the number of those affected has surged by a third, the IFS analysis discovered.
Labour’s John McDonnell pounced on the figures as proof of the continuing impact of Osborne’s cuts programme, telling HuffPost UK that it was further evidence for the need to back Labour’s Budget amendment on Tuesday to review child poverty and equality levels.
Child benefit was a ‘universal’ benefit until the Tories decided in 2012 to severely restrict eligibility to exclude any household with someone earning above £50,000 a year.
But the IFS study found that failing to increase the threshold in line with inflation - while increasing higher rate tax thresholds - has dragged many more middle income families into the cuts.
“For the first time, significant numbers of families without a higher-rate taxpayer will lose some Child Benefit,” it said.
Based on current earnings growth, it estimates that 60,000 families without anyone earning £50,000 will lose out in 2021–22, doubling to 120,000 such families in 2022–23.
Child benefit is currently worth £1,079 per year for the first child and £714 for each subsequent one.
The IFS said that in its first full financial year of operation (2013-14), the new policy meant that 13% of families with children, or around a million, lost at least some of the benefit as a result of the policy, with around 700,000 losing all of it.
In 2019-20, it estimates that the share of families with children who are affected will be 18%, or 1.4 million, of whom a million will have lost all of their entitlement.
“In other words, the number of families with children who are affected will have risen by about 36%, or 370,000, in just six years.
“What cannot be justified is to have an ever-increasing proportion of families exposed to the policy over time, with the increase determined by the rise in prices since 2013.
“The cumulative impact it has in raising taxes or reducing benefits by stealth can do nothing for trust in government.”
McDonnell, a long-standing defender of universal benefits, told HuffPost UK: “This research highlights the impact of the Tories’ social security freeze which is the single biggest reason for rising child poverty levels.
“The Tories are cutting social security by stealth with its child benefit cuts now expected to hit one in five families with children compared to one in eight when the policy was introduced.
“That’s why Labour is pushing for a vote in Parliament tomorrow (Tuesday) regarding the Government’s record on child poverty and equality.”
A Treasury spokesman said: “We are spending more than £90 billion a year on working-age benefits and this will continue to rise.
“And we are helping families to earn more and keep more of what they earn by raising the personal allowance, increasing the National Living Wage and doubling free childcare.”
The Treasury claims that wider childcare measures will mean unprecedented investment of around £6 billion every year by 2020.