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Britain cutting child subsidy to the affluent

LONDON — The British government said Monday that it would no longer pay a universal child subsidy to wealthier families, opening a campaign that may end up transforming Britain's welfare system by reducing benefits to the middle and upper classes.

The decision, announced by George Osborne, the chancellor of the Exchequer, at the Conservative Party conference in Birmingham, departs from the Tory campaign promise to not place income restrictions on this hugely popular benefit and represents perhaps the most direct attack yet on the rich menu of broad-based entitlements that have underpinned European welfare states.

The government is scheduled to disclose on Oct. 20 how it intends to cut about $130 billion in spending over the next four years, cuts intended to sharply narrow a budget deficit that, at 11 percent of GDP, is one of the biggest in the world.

"This is a big moment for the U.K. welfare state," said Patrick Nolan, an economist at Reform, a free-market-oriented advocacy group in London. "The fact that the government is saying that it can't afford universal benefits is very important. It's where the money is, but it is also where the votes are. That is the conundrum."

Osborne, whose job is the equivalent of a finance minister, said that as of 2013, families making $70,000 a year would not qualify for the benefit, which pays $32 a week for a first child and $21 for each subsequent one. The government estimated that 1.2 million families, about 15 percent of the total, will no longer get the payments.

At roughly $310 billion a year, overall welfare spending, known here as social protection, is the largest component of the British budget.

Britain cutting child subsidy to the affluent

10/04/10 [Last modified: Monday, October 4, 2010 10:48pm]

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