George Osborne has come under attack over plans to cut child benefit for the better off, as critics warned the reforms could trigger a collapse in middle-class support for the welfare state.

The chancellor said the cut, which will apply from 2013 to people on the 40% and 50% income tax rates, was “difficult but fair” and would raise about £1bn a year. People earning more than about £44,000 would be affected if the measure was implemented now, although this limit comes down to £42,375 from April.

Internet talkboards went into overdrive after it emerged that the decision to withdraw the benefit could hit single mothers harder than two-parent homes, with some pointing out that the measure would encourage unmarried fathers not to put their names on birth certificates to exclude their earnings from the calculation.

Liam Byrne, the shadow chief secretary to the Treasury, said Osborne had chosen “to single out middle Britain for extra cuts” today.

“It’s clear from today’s speech that George Osborne’s deficit reduction strategy is simply to make middle Britain pick up the bill for a crisis it did not cause.”

His colleague Yvette Cooper, the shadow work and pensions secretary, said: “This morning, you did not hear a measure announced that penalises every high earner, but a measure that penalises high earners with families.

“This is not ‘we’re all in this together’ stuff.”

Unveiling the plans earlier today, the chancellor said the cut – which will apply to people on the 40% and 50% income tax rates from 2013 – was “difficult but fair” as the government seeks to reduce the welfare bill and drive down the deficit. “I understand these people are not the super-rich but we have to make sure that we’re all in this together,” he said.

As well as helping reduce the deficit, the child benefit cut will help pay for Tory plans for a universal single payment of welfare that will cover tax credits, as well other benefits including housing benefit, jobseeker’s allowance, and council and tax benefit, which will be capped to ensure benefit levels are higher than the amount households would receive if they go to work.

But Osborne sparked fury after admitting that a household with two people earning £43,000 each, totalling £86,000, could still receive the benefit, whereas a household where just one person was earning £45,000, would have it withdrawn.

Osborne said this was because the government was trying to keep the system “as simple as possible”.

He said he hoped higher-rate taxpayers would stop claiming child benefit but, if they did not, the same amount would be deducted from them through the tax system.

Osborne’s colleague, Iain Duncan Smith, the work and pensions secretary, admitted when pressed that it was unfair for a single parent to earn just over the threshold and receive no child benefit, while two parents each earning just below the threshold would keep it.

“I know, and there is no way of doing it in a more spread way than this. Of course, when universal credit comes in we will be able to taper this in a much, much more progressive way,” the former Tory leader said.

Left-of-centre thinktank the Institute for Public Policy Research attacked the “crude” cut and warned that the decision withdraw the universal benefit could lead to a collapse in middle-class support for the welfare state.

Deputy director Kate Stanley called for child benefit to be taxed instead as a fairer way to save the taxpayer the same amount. “George Osborne’s proposals go further than even [Margaret] Thatcher dared to go.

“The welfare state will only survive if it has the support of the middle classes and child benefit is their key payback. If you take away £1,000 from families with one child, the moment one of the parents earns around £44,000 a year is a very big step and could seriously undermine the welfare system.”

A source with knowledge of the benefits system said: “Services for poor people soon become poor services.”

Dr Katherine Rake, chief executive of the Family and Parenting Institute, said today’s announcement on ending child benefit as a universal entitlement would be a “shock” for families.

“Universal child benefit sends out an unequivocal message that children are our society’s future. It recognises the importance of family life by supporting every single family with a child. For many women, even in higher income brackets, this is the only source of income they receive directly, giving them independence and control over family spending. There have now been a suite of measures which have hit those with children, particularly at a time when many are struggling to make ends meet.”

Mike Brewer and James Browne of the Institute of Fiscal Studies thinktank warned that the reform risked seriously distorting incentives for some families because adults with children whose income placed them below the higher-rate income tax threshold might find themselves considerably worse off from a small rise in income.

This is because such a family would in effect lose all their child benefit as soon as the adult’s income rose just above the higher-rate income tax threshold.

He added: “The government might argue that using the income tax system to means test child benefit is cheaper for it to administer than devising a brand-new means-test, and can be done more quickly.

“But there is already a system of means-testing support for families with children through the tax credit system. The government could have straightforwardly reduced spending on child benefit by combining it with the child tax credit in some way.” George Osborne Welfare Conservative conference Conservatives Tax and spending Child benefit Paul Owen Hélène Mulholland guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds

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