In a strategic move to close the polling gap with Labour, the Conservative Party has pledged to extend child benefit to 700,000 higher-earning households by raising the threshold to a combined income of £120,000 per household.
Currently, child benefit, worth over £2,000 annually for two children, is withdrawn when one household member earns over £60,000, with complete withdrawal at £80,000. Critics have pointed out the arbitrary nature of these thresholds, as households with dual earners each making £60,000 still receive full benefits, while a single earner at £80,000 does not receive any.
The proposed overhaul would allow households with a single earner making up to £120,000 to receive full child benefit, with gradual withdrawal commencing only when household earnings exceed £160,000. This reform is projected to cost £1.3 billion, funded through measures against tax avoidance and evasion.
Chancellor Jeremy Hunt announced, “Today we have unveiled a £1,500 tax cut for parents to enhance financial security and provide more spending power for families. Raising the next generation is paramount, and as part of our plan to reduce taxes, we are alleviating the burden on working families.”
In the upcoming manifesto, the Conservatives plan to announce another significant tax cut, with potential reductions in stamp duty and inheritance tax.
Prime Minister Rishi Sunak used a recent debate to claim that Labour would impose a £2,000 tax hike on households, a statement dismissed by Labour leader Sir Keir Starmer as false. Hunt emphasised, “Voters face a clear choice: bold Conservative tax cuts for working families or a £2,094 tax increase under Labour to cover their £38.5 billion spending gap.”
The £60,000 threshold, introduced by the Conservatives in 2013, ended universal child benefit, initially affecting one in eight families. Frozen since its introduction, it now impacts nearly one in three families, or up to 2.5 million households. Hunt had previously raised the threshold from £50,000 to £60,000, citing unfairness to single-earner households and calling for further reforms.
A Labour spokesperson criticised the announcement, saying, “This is another chaotic, unfunded policy from Rishi Sunak, reversing his party’s own decisions. The choice is between continued Conservative chaos or stability with Labour.”
The Conservative Party’s claim about Labour’s £2,000 tax rise has faced scrutiny, with the Office for Statistics Regulation noting the figure covers a four-year period, potentially misleading without full context.
Starmer reiterated, “Our plans are fully costed and funded, with no tax rises for working people. The prime minister’s desperate claims are false, and he knew it.”
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Rishi Sunak to Extend Child Benefit to Higher Earners