Backlash on child benefit for Blair

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The Independent Online

Public Policy Editor

Tony Blair yesterday faced a backlash from his own party and a warning from John Redwood, the former Welsh Secretary, over his clearest hint yet that universal child benefit will go in Labour's planned revamp of the welfare state.

Alice Mahon, MP for Halifax and vice-chair of the party's health and social services committee, warned the Labour leader he would face "a huge fight across the party to keep it" as Peter Hain, the Labour MP for Neath, warned in a book published yesterday that "universal benefits like child benefit are not wasteful".

Mr Blair's signal came in an interview with Today newspaper when he said: "I don't think anyone disputes that those earning large sums of money don't really need to have child benefit."

Means-testing benefit risked taking it away from families who really need it, Mr Blair said. But there was a "problem which needs to be looked at" - a formula which suggests Labour will adopt the recommendation of its Commission on Social Justice that child benefit should be taxed for those paying 40 per cent, top rate, tax.

The idea was, however, attacked by the Child Poverty Action Group, as "unintelligent".

Child benefit is paid for all 12,685,000 children at a rate of pounds 10.40 for the oldest child and pounds 8.45 for other children at a cost of pounds 6.1bn. It is usually paid to the mother. Women, however, are now taxed independently, so taxing it for the tiny number who pay higher rate tax would save only pounds 40m or 0.65 per cent of the pounds 6.1bn bill, according to Department of Social Security figures.

John Redwood told the Independent that Tony Blair needed to remember that child benefit in part began life as a tax allowance. "I am very reluctant to recommend anything that does more damage to decent families who try to bring up their children".

The Conservatives are pledged to retain child benefit in its existing form until the general election.