Benefit will help fight child poverty

The new child tax credit, payable to nearly six million families from April 2003 and the government's main weapon in its fight to abolish child poverty, received a warm welcome last night.

The credit, which will combine all income-related support for children into a single payment made direct to the main carer, usually the mother, will be payable to all families with incomes of up to £58,000 (£66,000 in the first year of a child's life) - a much higher than expected threshold.

It will be paid at a maximum weekly rate of £27.75 per child on top of universal child benefit, which goes to all parents regardless of their income. Where possible, it will be paid directly into the carer's bank account.

The 25% of families with an annual income of less than £13,000 will get the maximum CTC. Combined with child benefit, this will give them £54.25 a week for the first child and £38.50 for each subsequent child. So, for example, the poorest families with two children will get £92.75.

The National Council for One Parent Families calculates that the poorest lone parents with two children will be £11 a week better off under CTC than on current income support levels.

For families on incomes of more than £13,000, the level of CTC payment will taper away gradually until disappearing completely for those on £58,000 or more, who will receive only child benefit at £16.05 per week for the first child and £10.75 for subsequent children.

For households with two children, for example, this means £37.25 a week for the 50% of families who are on incomes of between £13,000 and £50,000, while those on £58,000 or more will get £26.80 a week.

CTC brings together into one payment all means-tested, income-related support for children. It will integrate and replace the child elements of the working families' tax credit, the disabled person's tax credit and income support or jobseeker's allowance, as well as the existing children's tax credit introduced in April 2001.

There will be no work conditions attached to the CTC. The amount paid will be assessed purely on the basis of the family income for the previous tax year. Family can mean an individual, or a married or cohabiting couple.

This means CTC will be extended to some groups who are currently excluded from all but child benefit, such as students.

Kate Green, director of NCOPF, says: "We welcome this as a forward-looking Budget. Child tax credit at this level will make a real difference to the poorest families and the commitment to increase CTC levels at least in line with earnings each year will help ensure that the poorest children do not fall further behind.

"But further significant increases in CTC will be needed if the government is to meet its pledge of eradicating child poverty by the year 2020."

Ms Green also applauded the chancellor's decision to extend help with childcare costs to low-income families, especially parents working shifts or with disabled children, who need childcare provided in their own home.

From April 2003 they will be able to claim tax credits if they use a home childcarer, a domiciliary care worker or a nurse employed through a registered care agency.

Martin Barnes, director of the Child Poverty Action Group also welcomed the Budget as "brave, positive and showing a clear commitment to tackling child poverty".

Also from April 2003, flat-rate statutory maternity pay, which is paid after the first six weeks' leave, will go up from £75 to £100 a week. Maternity allowance, paid to self-employed women and others not eligible for the statutory pay, will also go up to the same rate.

Working fathers, for the first time, will get the right to two weeks' paternity leave at the same £100 rate.