PRESS RELEASE - Charity demonstrates that actually, in fact, some families in the bottom half of the income distribution will be impacted by child benefit changes, whilst others in the top 30, 20 and 10 per cent will keep their child benefit.

CARE has today called into question the Prime Minister’s assertion that the Child Benefit Charge applies only to the top 15% of the country, releasing figures that demonstrate that a one-earner family with three children on £50,000 is in the top 51% and that at £60,000 they are only in the top 58%. Indeed a one-earner family with four children on £50,000 is actually in the poorer half of the income distribution.

Yesterday, the Prime Minister told The Andrew Marr Show twice that only the top 15% of the country would be impacted by the new Higher Income Child Benefit Charge, which comes into force this week. He said that in the tough fiscal environment that it was right that those in the top 15% should make their contribution.

The notion that those in the top 15% should have to pay more is logically entirely defensible.

There are, however, CARE contends, two big problems with the Higher Income Child Benefit Charge as a means of realising this objective.

First, the charge is not targeted at the top 15% and will impact many families in the middle of the income distribution. If the Prime Minister genuinely believes that his policy will only impact the top 15%, he has been very badly advised.

Second, the policy takes child benefit away from families in the lower half of the income distribution, whilst not taking it away from other two-earner families that are often in the seventh, eighth or ninth deciles and much better off.

Dan Boucher, CARE’s Director of Parliamentary Affairs, said, ‘This child benefit problem cannot be dismissed on the basis that whenever there are changes there are winners and losers. That would be true if the Government had introduced a policy that resulted in those families in the top 15% of the income distribution losing their child benefit. Those in the top 15% would be the losers. Sadly, the Higher Income Child Benefit Charge does not have this effect. It makes the tough situation that one-earner families already find themselves in this country even tougher, whilst introducing no comparable burden for two-earner families. It consequently punishes those in the middle of the income distribution, whilst letting others on the seventh, eighth and ninth deciles get away with no additional tax burden.’

The charts below show where one and two earner families with children are on the income distribution at different levels of income using figures from 2011.

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For further information, contact James Mildred, Public Affairs Media and Communications Officer on tel: 020 7227 4731 or 07581 153693 or email: james.midred@care.org.uk

Editors Notes:

1. The figures for 2012 show where one and two earner families with children are on the income distribution at different levels of income:
One earner 3 kids 50K wth CB: 51% – 6th decile
One earner 4 kids 50K with CB: 44% – 5th decile
One earner 3 kids 60K without CB: 58% – 6th decile
One earner 4 kids 60K without CB: 49% – 5th decile
Two earner 3 kids 50K with CB: 58% – 6th decile
Two earner 4 kids 50K with CB: 50% – 6th decile
Two earner 3 kids 60K with CB: 69% – 7th decile
Two earner 4 kids 60K with CB: 62% – 7th decile

2. The Prime Minister interviewed by Andrew Marr on The Andrew Marr Show, 6 January 2013:

David Cameron: “You need to make sure that everyone is making their contribution. So taking away child benefit from people earning over £60 thousand pounds – that’s only the top 15% of the country. I’m not saying those people are rich but, you know, I think it’s right they make a contribution.”

Marr [interrupts]: “There’s a lot of traditional families where they are far from rich.”

David Cameron: “Absolutely, I’m not saying they’re rich. I made that point. This will raise 2 billion pounds a year. Now if we don’t raise that 2 billion pounds from that group of people, the better off 15% in the country, we’d have to find somewhere else to take it.”

The Prime Minister interviewed by Andrew Marr on The Andrew Marr Show, 6 January 2013.