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UK to overhaul welfare, child benefits

By David Stringer
Associated Press / October 5, 2010

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LONDON — Britain will cap payments to jobless families and scrap child benefits for high earners in a sweeping overhaul of the country’s welfare system, George Osborne, the Treasury chief, said yesterday.

Osborne, who is seeking to save about $135 billion in government spending over the next five years, said the cost of welfare payments was out of control — and rewarding some people for staying out of work.

At an annual rally of his Conservative Party, Osborne said Britain’s coalition government would introduce a new welfare cap to make sure families in which both parents are unemployed do not receive more in benefits than an average family earns in wages.

Osborne also announced parents who earn more than $70,000 per year will lose child benefit payments from 2013.

Currently, all families are paid $32 a week for their eldest child and about $20 for other children.

The benefits continue until the children are 19, if they stay in school full time.

There would be welfare payments “to families who need it, but not more money than families who go out to work,’’ Osborne told activists at the rally in Birmingham, central England.

“That is what the British people mean by fair, and we will be the first government in history to bring it about,’’ he said.

Since the coalition took office in May, Osborne has already announced a multibillion-pound package of spending reductions and tax increases, including a two-year pay freeze for most public sector workers, a new levy on banks, and a rise in a tax on goods and services.

He will set out detailed plans for spending cuts over the next five years in an address to Parliament on Oct. 20, aiming to all but clear Britain’s deficit by 2015.

Osborne said the government’s austerity measures would bring prosperity in the future.

He dismissed plans from the main opposition Labor Party to cut the deficit at a slower rate, saying that would only prolong the period of budget restraint.

“The hard economic choices we make are but a means to an end, and that end is prosperity for all,’’ he said.

On Sunday, about 7,000 labor union members — including teachers and health service workers — staged a march outside the Conservative convention, to protest planned spending cuts. “Everyone can agree that we need a fairer economy built on higher, better-balanced growth,’’ said Brendan Barber, general secretary of the Trades Union Congress.

“But the spending and benefit cuts will do the opposite — pushing many people into poverty, hitting middle income Britain hard, and threatening growth.’’

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