§ Mr. Pendry
asked the Secretary of State for Social Services if he will make a further statement on how the new child benefit scheme coming into force on 4th April 1977 will affect war widows with children.
§ Mr. Alfred Morris
The child dependency allowances paid with war widows' pensions are tax free. Child benefit is also to be tax free, but there are to be consequential reductions in the child tax allowances. The overall effect, if the war widow's dependency allowance for her eldest child was reduced by £1 to offset the introduction of child benefit for the first child, with the other child dependency578W allowances left at their present rates, would have been that war widows paying income tax would have suffered a loss of income. To avoid this, the dependency allowance paid for the eldest child is to be reduced by only 30p instead of by £1, from £7.65 to £7.35, and the rate for children other than the eldest is to go up from £6.65 to £7 a week. The effect of these adjustments, together with the child benefit payable, will be that the war widow paying basic rate tax in 1977–78 does not suffer any loss of income. War widows not paying income tax will, of course, be better off by 70p for the first child and an extra 35p for each subsequent child.