Child Benefit (Hansard, 7 November 1978)

§ Mr. Orme

Child benefit is being increased to £4 a week for each child from 2nd April 1979, with an interim increase to £3 from 13th November 1978. The one-parent family premium is being doubled, to £2 a week, in November. The cost of these changes in 1979–80 will be over £500 million.

The arrangements for dealing with these increases will be on broadly similar lines to those made for the first two phases of the introduction of child benefit. The November and April changes are part of a single operation, the third and last in the introduction of the child benefit scheme. The important thing is therefore their overall impact, but I will explain the effects of the changes separately.

The November 1978 increases in child benefit will coincide with the general uprating of awards of supplementary benefit. It is, however, possible that small numbers of families receiving supplementary benefit will be lifted off that benefit as a result of the increases in November 1978 and the same might happen in April 1979. Such families 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.

113W

The November 1978 increases in child benefit have already been taken into account for family income supplement (FIS) in the coincident uprating of the prescribed amounts of gross income below which FIS is payable. There will be no reduction in FIS awards in April 1979 on account of the April 1979 increases in child benefit 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.

Families in receipt of rent rebates, rent allowances or rate rebates—"housing benefits"—for which my right hon. Friends the Secretaries of State for the Environment and 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 two increases in their income from child benefit. But such families will still gain on balance from the combined effect of the increases.

A relatively small number of families at the top end of the qualifying income scale receiving free school meals by direct claim may be at risk. However, the qualifying income scale was substantially increased in 1977 by my right hon. Friends the Secretaries of State for Education and Science and for Scotland and my right hon. and learned Friend the Secretary of State for Wales. 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 gains from the increased child benefit.

I am placing in the Library a note on this final phase in the introduction of the child benefit scheme. This reply is reproduced in the note. There is also a series of tables illustrating the position of families paying no income tax, tax at the 25 per cent. rate, and tax at the 33 per cent. rate, including those families who are receiving 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.