Pre-Budget Statement: Child Poverty: Means-tested bonus for poorest families

CHILD BENEFIT will be topped up by a new means-tested benefit after the next general election under the Government's plans to cut child poverty by half within the next decade.

The Chancellor plans to introduce a new integrated child credit (ICC), worth pounds 40 a week for the first child. It would be means-tested, so that it would not go to the well-off.

The ICC would bring together the different strands of existing support for children: the working families' tax credit, income support and the children's tax credit.

The Treasury made clear that the long-term plans would not mean the abolition of child benefit as a universal payment. A senior Treasury source said: "The new benefit would absorb three existing means-tested benefits, not child benefit, which will be kept. The Chancellor is quite clear that ending or replacing child benefit is not a good idea."

But the new credit could still achieve Mr Brown's long-term goal of giving more money to the poor, if child benefit was not increased in line with inflation after the election and the new, means-tested ICC was raised instead.

The integrated benefit would be paid directly to the main carer of families in and out of work; it would be complemented by an employment tax credit paid through the wage packet to working households with and without children.

Mr Brown announced in his spring Budget this year that he would not tax child benefit. Tony Blair feared that taxing the universal benefit would reduce support for Labour among the middle classes, who would lose out, and the party wanted to commit itself to supporting families. But the Government believes persuading mothers into paid work is the best way to tackle child poverty.

Colin Brown