Ministers put child benefit on savings agenda

BY COLIN BROWN

Chief Political Correspondent

Deep cuts in child benefit were discussed at a seminar with Peter Lilley, the Secretary of State for Social Security, ministerial sources confirmed yesterday.

The seminar at Chevening - a government grace and favour residence in Kent - considered a proposal to limit child benefit to the first child of any family but was "not discussed with enthusiasm", the sources said.

The idea, borrowed from the United States, would be to provide a disincentive to poorer families to have more children. But it would be seen as an attack on the worst off in society.

Mr Lilley has substantially increased his standing in the Cabinet by his caution in cutting the social security budget. But he is being pressed to come up with radical proposals for the Tory manifesto to match Labour's new-found zeal for change.

He does not wish to be outdone by Labour's social justice commission, which urged the leadership to consider taxing child benefit and targeting increases in the state pension at the worst-off pensioners.

Mr Lilley has told a policy group preparing proposals on social security for the Tory manifesto to review all parts of the social security budget, including past commitments to maintain child benefit as a universal benefit regardless of income.

Targeting child benefit is one of the most common demands around "middle- class supper parties", said one senior minister. However, Mr Lilley, in spite of his radical Thatcherite reputation, is reluctant to change the policy, which would be highly controversial.

He has already rejected taxing child benefit because it would mean abolishing independent taxation for men and women. But the group will study options including limiting it to children under five.

Mr Lilley is determined not to offer hostages to fortune to Labour in the manifesto by announcing detailed cuts in advance of the election.

The broad policy will be to constrain the growth in social security, as he outlined in a Social Market Foundation lecture, including the introduction of more locally determined payments, particularly those which are housing- related.