HM TREASURY 10
17 March 1998
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BUDGET FOR CHILDREN
A package of measures to tackle child poverty and to improve
support for all children was announced today, by Chancellor
Gordon Brown. As a result, families with children will gain
an average of 300 pounds each year and the poorest 20 per
cent of households with children gain an average of 600 pounds
a year.
The Chancellor said;
"All children deserve the best possible start in life.
This Budget supports families with children and helps
give children the opportunities they and their families
need to improve their prospects. Getting this right is
the best investment we could make."
The eldest child rate of Child Benefit (CB) will be
increased by 2.50 pounds from April 1999 before any
up-rating for prices. The same increase will be passed
on to the poorest families by way of an increase to
Income Support (IS) and related benefits. All families
not already receiving higher, protected rates of benefit
will gain 130 pounds from this change. Total cost will
be 875 million pounds a year.
- Extra help, on top of the CB increase, for poor families
with young children from November 1998 who gain an
additional 2.50 pounds per week for each child through
increases to the personal allowances and child credits
for dependent children under 11 in income-related
benefits (including IS, JSA, FC, and the WFTC). It is
clear that poverty affects larger families the most and
that it is harder for families with young children to
seek work. These measures represent an extra œ425
million per year resources for these families, on top of
the Child Benefit change.
The new Working Families Tax Credit (WFTC) significantly
boosts the income of low-income working families with
children and by encouraging people into work will greatly
improve life-long prospects for children in workless
households. Paid work is the key to tackling poverty
amongst children.
A generous childcare tax credit within WFTC makes quality
childcare affordable for low income working families.
The new credit will meet 70 per cent of eligible
childcare costs up to a maximum cost of 100 pounds a week
for one child families, or 150 pounds a week for families
with more than one child.
An extra 100 million pounds will be spent on schools,
partly to cut class sizes for 5-7 year olds and to
modernise school buildings and equipment. The new
funding will also enable the number of Education Action
Zones established by January 1999 to be increased by
five-fold, helping to tackle disadvantage in particular
localities.
In addition to the measures announced today for children, the
Government is starting to deliver a 300m pounds initiative for
out-of-school clubs as part of the National Childcare
strategy.
Also, as the Chancellor announced today, the Comprehensive
Spending Review will help children, especially those in
poverty. The Government is reviewing provision for young
children as part of the CSR, and in July will launch a package
of measures to help all children off to a "Sure Start" in
life. In particular, it will aim to improve services to
disadvantaged young children and their families, to tackle the
causes of social exclusion which lead to so many children
falling behind before they even reach school.
Overall Effects on Children:
The budget provides a considerable boost in resources directed
towards children, especially towards the 3.8 million children
in the poorest 20 per cent of households. Families with
children will gain an average of 300 pounds each year, and the
poorest 20 per cent of households with children will gain an
average of 600 pounds a year. These effects are illustrated
in the graph (not available in ascii versions) below:
[Figure 1 HMT10.GIF]
NOTES FOR EDITORS
1. The data underlying the graph is contained in the table
below. It is based on Family Expenditure Data uprated to
1998/99 levels of earnings and expenditure.
The table shows the percentage change in net household income
from all the direct tax and benefit measures announced in the
Budget which take effect in both 1998/99 and 1999/00. The
changes are relative to indexation. Households are divided
into income quintiles after ranking them according to
equivalised disposable income. Equivalisation takes into
account the size and composition of households in order to
recognise differing demands on resources. All measures
assumed to have full year effects.
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