Coalition Government announce new welfare reforms

The Chancellor today outlined proposals to reform the welfare budget. He indicated that child benefit will be cut for those paying the top rate of tax as part of "tough but fair" welfare reforms.

A treasury spokesperson said: "It's a big decision, but we think it's absolutely necessary and fair given the financial situation we face.

"We could not justify taxing someone on £20,000 a year to give the benefit to someone on £50,000 a year. The alternative is a very complicated means test assessing every house in the country."

Background: Parents earning over about £44,000 who pay 40% tax and above will be affected. Families with two parents on modest incomes - which might add up to £44,000 - will keep the benefit. It is estimated that the change will affect about 15% - 1.2m - families.

• At the moment we tax people on low incomes to pay for the Child Benefit of those earning much more. This is very difficult to justify.
• We will make the benefit system fairer and more sensible by withdrawing child benefit from households with one or more higher-rate taxpayers. This measure is tough but it is also fair.
• The system will be operated by HMRC through the existing PAYE and Self-Assessment structure, and avoids the need for a new and expensive means-testing system.