The means testing of child benefit is to begin from 7th April next year if Tynwald approves Orders made by the Minister of Social Care at this month’s sitting of Tynwald.
The move is expected to save £2.5m a year, £500,000 of which is earmarked to provide extra help for families to pay nursery fees.
The change will see child benefit stopped completely for the 10% of families with an annual income above £90,000. Those with an annual income below £60,000 – 70% of the total – will continue to receive benefit at the maximum rate.
Families with an annual income between £60,000 and £90,000 will have their child benefit reduced by 25% for every £10,000 band of income above £60,000.
Current spending on child benefit is £16.5m a year, paid to about 9,500 families in respect of around 16,500 children and qualifying young persons. £20.40 per week is paid for the eldest or only child, with £13.50 paid for second or subsequent children.
Minister for Social Care, Chris Robertshaw MHK, commented:
'We cannot carry on as we are, paying Child Benefit to people who simply don’t need it. This Government has a clear mandate to balance the budget by 2016. My Ministerial colleagues and I are committed to looking at all benefits and services currently delivered on a universal basis and to instead target them to those in need, introducing means-testing processes where it is appropriate to do so. We have to make savings where we can.'
'I think the system we have come up with is fair and equitable and will require only a minimal amount of resources to operate.'
Subject to Tynwald approval, the Department will be writing to all existing child benefit recipients over the next few months to explain the changes being made. There is no need for customers to get in touch with the Department beforehand, but if they have any concerns they should either e-mail the Child Benefit Unit at email@example.com or telephone them on +44 1624 685107.
A presentation on the issue was made to Members of Tynwald on 5 November.