LABOUR IN BRIGHTON: Prescott rebuked on child benefit

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The Independent Online
Gordon Brown yesterday distanced himself from plans to tax child benefit and warned leadership colleagues not to pre-empt a review by Donald Dewar, the party's social security spokesman.

His remarks amounted to a mild rebuke for John Prescott, the deputy leader, for fuelling the speculation that Labour will tax child benefit.

Mr Prescott said it would be one way of targeting the benefit on those who needed it while maintaining Labour's key commitment to child benefit as a universal payment.

The shadow chancellor yesterday said he had not committed Labour to taxing the benefit. Challenged about Mr Prescott's remarks on BBC Radio, he said: "What John Prescott and I have both said is we will look at the report of the Social Justice Commission. It recommended that there is a case for taxing child benefit.

"Donald Dewar is looking at the conclusion of that report at the moment. He will be reporting soon and until he has made the report, I am not going to pre-judge it."

There is no doubt that Labour intends to target the benefit. Tony Blair, the Labour leader, said last week: "I don't think anyone disputes that those earning large sums of money don't really need to have child benefit."

The Child Poverty Action Group has attacked the taxation plan as "unintelligent". The development of separate taxation for husbands and wives could create embarrassing anomalies if child benefit was taxed.

Sources close to Mr Brown cited the example of a woman earning pounds 25,000 who would pay tax on child benefit, but a housewife who was not earning could escape tax, even if her husband earned pounds 200,000.

Taxing it would also prove so expensive and means-testing could undermine Labour's commitment to retain it as a universal benefit. "The difficulties could prove insurmountable," said the Labour source.