Child Benefit (Hansard, 15 March 1978)

§ Mr. Orme

One of the objects of the child benefit scheme is to reduce dependence on means-tested benefits. This aim has to be seen, however, in the context of ensuring, as far as possible, that families receiving means-tested benefits do not lose in the transition to universal benefit. With these considerations in mind, the arrangements for dealing with the increases in child benefit from 3rd April 1978 will be on similar lines to those made last year.

Child benefit and the one-parent family premium child benefit increase will continue to be taken into account in assessing supplementary benefit. A small number of families will be lifted off supplementary benefit in April, but they will normally be able to continue to receive other benefits such as free school meals and free milk and vitamins by direct claim on grounds of low income. Existing discretionary powers will be used to protect from net income loss all families receiving free milk and vitamins by direct claim on grounds of low income.

Child benefit and child benefit increase will continue to be disregarded as income in the calculation of family income supplement. This means that there will be no reduction in FIS awards in April and therefore no loss of the other means-tested benefits, such as, for example, free school meals and free milk and vitamins, which are received automatically under the FIS "passport" arrangements. The result will be some small over-compensation, and this will be one of the factors which will determine our proposals for the uprating of FIS in the autumn.

Families in receipt of rent rebates, rent allowances or rate rebates—"housing benefits"—for which my right hon. Friends the Secretary of State for the Environment and the Secretary of State for Scotland and my right hon. and learned Friend the Secretary of State for Wales are responsible, will have their housing benefits reduced following the increase in their income from child benefit, but will still gain on balance.

These arrangements resolve the core of the problem and virtually eliminate the possibility of net losses in April. The only families at risk are a relatively small number at the top end of the qualifying income scale receiving free school meals by direct claim. However, the qualifying income scale was substantially increased 208W last year by my right hon. Friends the Secretary of State for Education and Science and the Secretary of State for Scotland. Since the general rule is that entitlement to free school meals is granted for 12 months at a time and is not therefore affected if the family income goes up in that period, very few, if any, families would be liable to lose their entitlement to free school meals solely as a result of the net gain from the increased child benefit.

I am placing in the Library a note on the April 1978 changes. This reply is reproduced in the note, which also includes four tables showing the net gains by families paying tax at the current—34 per cent.—basic rate who are receiving (i) no means-tested benefits and (ii) housing benefits. I am also arranging for copies of this note to be sent to a number of organisations with an interest in this subject.