In my last article, I said I wanted to see measures in the Budget to support working families. Therefore I was delighted by the announcements in last week’s Budget targeted at just this, particularly the massive set of reforms to make child benefit fairer for half a million people.
From April, the Chancellor announced that the Government will be raising the threshold for the High-Income Child Benefit Charge from £50,000 to £60,000 with a continuing taper rate which applies until a person earns more than £80,000. It is estimated this will result in an average gain of £1260 to any family that is brought into scope. A parent of one child earning £60,000 will be entitled to £1,331 a year, rising to £2,212 if they have two children. A family with two children, whose higher earner has an income of £65,000, will gain around £1,664.
By April 2026, the Government pledged to end the unfairness for single earner families by moving to a household system. So that both parents will need to earn more than £160,000 cumulatively before they completely lose child benefit.
It was also announced that there will be a further 2% cut in National Insurance. This means that since last September, National Insurance has been cut by a third, from 12% to 8%. For a person earning £35,000, this is worth around £900 per year. For a person on £50,000, this is worth £1,497.
In addition, next month, the Government launches its new childcare offering. Eligible two-year-olds will be able to access 15 hours a week from April. This will increase incrementally so that by April 2025 eligible households will be entitled to 30 hours per week of free childcare for 38 weeks a year, for children aged between 9 months and the start of school. This is worth approximately £6,500 to the parents of a 2-year old working 30 hours per week.
For the many families in West Berkshire with young children, these combined measures will provide considerable additional help with the cost of living (in many cases providing over £10,000 worth of additional financial support).
Some have asked why the Budget had so much focus on families rather than pensioners. Of course, protecting retirees is important. But over the last 14 years, pensioners have benefitted strongly from the “triple lock” (which has increased the basic state pension by £3,736 since 2010), the Winter Fuel Payment and – for those who own their own homes – the increase in property prices.
I had made strong representations to the Chancellor that there needed to be a focus on working families, who are often trying to juggle kids and work in the face of serious cost of living pressures. I want families in West Berkshire to know that the Government is on their side, giving extra help with child costs through the child benefit system and helping parents to maintain working life with a generous childcare offering.
