Tory cash pledge for families

The Conservatives will spend pounds 200m on raising Family Credit in line with inflation if they are elected for a fifth term.

Ministers claimed last night that the move could split the Labour Party, saying that some opposition back-benchers have criticised its plans to scrap Child Benefits for 16- to 18-year-olds in education. Labour wants to replace the benefit with a means-tested benefit for students in further education.

Peter Lilley, the Social Security Secretary, has won Cabinet approval for a manifesto pledge to increase benefits for 700,000 low-income families.

The promise will be accompanied by a renewal of the Conservatives' existing policy of raising Child Benefit in line with inflation each year.

The two policies would cost pounds 1bn over five years, with the increase in Family Credit making up about one-fifth of the bill.

The decision, made at yesterday's final Cabinet meeting before the general election, is aimed directly at Labour's policy of cutting Child Benefit. Labour has said it will scrap the benefit paid to the parents of 16-18 year-olds who stay in education in order to pay for means-tested educational allowances for poorer students.

Family Credit, which costs pounds 2bn per year at the moment but which is not inflation-linked, is paid at the rate of pounds 11.05 per week for an oldest child and pounds 9 per week for a younger child.

The Conservatives' manifesto is expected to promise a "Family Benefits Guarantee" to help families.

However, the promise is not intended to increase the Department of Social Security's pounds 90bn annual budget. Instead, it is meant to ring-fence the money so that it cannot be spent on other things.

Mr Lilley said: "Our Family Benefits Guarantee shows we are committed to supporting families, helping children stay at school and making it more worthwhile for parents who want to work.