Fears are growing the Child Benefit could be eventually abolished and become part of the troubled Universal Credit system, as new analysis reveals that its real-terms value has fallen back to its 1999 level.
Child Benefit, which celebrates its 40th birthday this week, was introduced on 2 April 1979 and was originally a universal benefit paid to all families, regardless of family size or income, until recent changes saw it removed from some wealthier families.
The value of Child Benefit was increased in 1991, 1999 and 2009, but successive government’s have since failed to increase its monetary value.
In real-terms, the value of Child Benefit has plummeted by around £210 a year since 2011-12, or £350 for two children, prompting concerns that it could soon be scrapped entirely and subsumed into Universal Credit.
Analysis by the Resolution Foundation, a left-leaning think tank, shows that as well as no longer being a universal benefit, recent benefit cuts such as the freeze to working age benefits essentially means that Child Benefit is now worth less than the family allowance in replaced, which dates back to 1946.
The think tank warns that if cuts continue Child Benefit could soon be limited to only the very poorest families, at which point the Government may decide to merge it into Universal Credit and there could be no guarantee that its value would be increased or protected.
Instead of scrapping Child Benefit, the Resolution Foundation says the Government should instead consider increasing it by £5 a week at a cost of around £2.7bn.
This, they say, would help to reduce levels of child poverty in the UK which have been rapidly increasing since 2012.
The latest annual poverty statistics show that the number of UK children in absolute poverty has risen by 200,000 in the last year alone, and now stands at 3.1 million.
Overall, there are 4.1 million UK children trapped below the poverty line whose families earn less than 60% of the media average income – equal to 30% of all children in the UK.
Adam Corlett, Senior Economic Analyst at the Resolution Foundation, said “Today Child Benefit – Britain’s most widespread benefit for families – turns 40. But its anniversary feels more like a wake than a celebration.
“A decade of caps, freezes and restrictions have meant that the value of Child Benefit has, for some families, fallen to a 40 year low. A fifth of families are no longer entitled to it in full.
“If these trends continue, Child Benefit could be abolished in the coming years and subsumed into Universal Credit.”