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Budget
17 March 1998
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 helpsgive 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 425 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:
NOTES FOR EDITORS
1. The data underlying the graph is contained in the table below. It is based on Family Expenditure Data uprated to1998/99 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.
