Call to prioritise work incentives, not child benefit

Welfare reform could see billions saved in benefits
Welfare reform could see billions saved in benefits

By Alex Stevenson

Removing child benefit from richer families could help make savings of £6.5 billion in Britain's welfare system, Policy Exchange has claimed.

In a new report published today the thinktank recommends other cutbacks in the child tax credit and halting the planned three per cent hike in some benefit payments to make the savings.

Escaping the Poverty Trap argues that the money could be used to increase the amount someone is allowed to earn before they start losing benefits, or 'disregard', to £92.80.

At present, the report argues, people on benefits could be worse off if they work 16 hours or less a week.

"The choice between leaving benefits and going into work should be an easy one," report author Lawrence Kay said.

"If we make these savings, we can significantly increase the amount of money benefit claimants can keep to encourage them to find work, while still reducing the overall welfare bill."

Encouraging part-time work as a 'stepping stone' into the labour market could bring social as well as economic benefits, it is claimed, including improvements in self-esteem, mental illness and general health.

Raising the disregard would cost £5.1 billion, Policy Exchange calculates, leaving an overall saving of £1.4 billion under current welfare costs.


Politics @ Lunch

Friday lunchtime. Your Inbox. It's a date.