HC Deb 03 March 1976 vol 906 cc659-60W
Mr. Kenneth Clarke

asked the Secretary of State for Social Services what would be the level of child benefit for each child if it were introduced in April 1977 at no additional Exchequer cost; and what would the value of such a level of benefit be as compared with present family allowance and child tax allowances for standard rate taxpayers with one, two, three and four children, respectively.

Mr. O'Malley

On the illustrative basis that the first £240 of each child tax allowance rates would be subsumed, the estimate of £1.94 given during proceedings on the Child Benefit Bill last summer still broadly stands. At this level, a family's child benefit is respectively 32p more, 2p more, 28p less and 58p less than the combined value of the present family allowance and the first £240 of existing child tax allowances for the basic rate taxpayer mentioned.

Mr. Kenneth Clarke

asked the Secretary of State for Social Services what level of child benefit would be necessary in April 1977 to equal the value of present family allowances and child tax allowances for standard rate taxpayers with three and four children, respectively; and what would be the estimated additional Exchequer cost of introducing child benefit at such levels.

Mr. O'Malley

The rate would vary according to the ages of the children. If they were all under 11 it would be about £2.03 or £2.08 respectively. The cost would depend on the extent to which child tax allowances for older children were subsumed, but as a broad guide one can assume that the cost increases by between £6 million and £61/4 million for every extra penny on the child benefit rate.

Mr. Kenneth Clarke

asked the Secretary of State for Social Services whether the statement in the Government's Estimates of Public Expenditure to 1979–80 that the costs shown for the new child benefit scheme to be introduced in April 1977 do not include any extra cost of child benefit over the projected cost of family allowance and child interim benefit takes any account of estimated savings on the ending of child tax allowances or not.

Mr. O'Malley

The Government's plans for the child benefit scheme will naturally take account of the financial effects of the withdrawal of child tax allowances.

Sir B. Rhys Williams

asked the Secretary of State for Social Services what is the rate at which tax-free child benefit could be introduced for all children in 1977–78 if no family paying tax at standard rate on marginal earnings were to lose by the simultaneous withdrawal of child tax allowances.

Mr. Meacher

On the costing assumptions used in the debate on the Second Reading of the Child Benefit Bill last Session, including the assumption that only the first £240 of each child tax allowance would be withdrawn, a rate of £2.20 a week would in general leave no two parent family worse off.—[Vol. 892, c. 330–406.] The corresponding rate for one-parent families would be £2.24 a week.

Sir B. Rhys Williams

asked the Secretary of State for Social Services what would be the net cost of introducing child benefit for all children in 1977–78 at £4 per week free of tax, assuming that child tax allowances are withdrawn simultaneously; and at what rate child endowment could be introduced if the net additional cost were nil, assuming the simultaneous withdrawal of child tax allowances and that all children receive the same tax-free benefit.

Mr. Meacher

If the value to basic rate taxpayers of all child tax allowances for children under 19 were withdrawn, about £1,200 million a year. For the second part of the Question I would refer the hon. Gentleman to the reply my right hon. Friend gave to the hon. Member for Rushcliffe (Mr. Clarke) today.