Labour axe over child benefit

THE SCRAPPING of universal child benefit is being canvassed by Labour's Social Justice Commission.

Child benefit was a centrepiece of the party's last general election campaign. Remodelling it would be one way of paying for an expansion of child care and nursery school education, while directing aid at the most needy, the commission's chairman, Sir Gordon Borrie, believes.

If the idea wins the endorsement of the party and its leader, John Smith, it will mark a fundamental departure for Labour. At the last election the Opposition's two costed pledges to the electorate were to increase child benefit, which costs about pounds 6bn a year, and the old age pension.

Some sections of the party argue that a change of tack on child benefit would detract from attacks on the Conservatives. But others see the proposal as a sensible redistribution of payment that goes to many middle-class people who do not need it.

The commission, which is not a formal Labour policy- making body, was set up by Mr Smith and liaises closely with the party's spokesman on social security, Donald Dewar.

In a paper called 'Making Sense of Benefits' it rejects the term 'universal benefit'. It distinguishes between child benefit, which it terms a 'categorical' benefit because it is neither means-tested nor based on contributions, and retirement pension, which it calls 'contributory'.

The new paper on nursery education and child care plans to canvass the option of scrapping child benefit, which goes to all parents including those who are well-off. Jilly Cooper once famously remarked that child benefit provided a couple of bottles of Sainsbury's champagne a week for her family.

Child benefit, worth pounds 10 a week for the eldest child and pounds 8.10 for each subsequent one, would be replaced with a provision for parents available to those on benefit and to the low- paid through a new allowance in the tax system.

Use of the tax and benefit system would avoid the politically-sensitive prospect of means-testing.

Bryan Gould, a former member of the Shadow Cabinet, gave a cautious welcome to the idea of changing the system. He said: 'I don't think we should dispense with child benefit, but I do think we could offer it in alternative forms.'

Mr Gould suggested three possibilities:

A non-means-tested benefit paid to women who cannot work to help them maintain their children.

A child care allowance for women who want to work.

Clawing back child benefit from those who do not need it through the tax system - by up to 100 per cent for the well-off.

A separate paper to be published tomorrow, 'Jobs and Justice' by Paul Gregg, proposes an overhaul of the benefit system to help ease the trap which prevents many on benefit taking part-time or low-paid work.

The commission paper proposes a more flexible benefit system whereby people could receive partial benefit payments if they undertook part- time or low-paid work.

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