Britain scraps universal child benefit in cuts package

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Britain is to scrap the long-held principle of child benefits for all families, its finance minister said Monday, as the government imposes the deepest cuts in decades.

Chancellor of the Exchequer George Osborne said that the move -- which ends a universal system introduced in 1946 -- would affect higher-earning households, around 15 percent overall.

Speaking before his speech to the Conservative party conference in Birmingham, central England, Osborne said the move was necessary to reduce a record deficit which his coalition government inherited from the Labour party.

The Conservative-Liberal Democrat coalition took power in May after former prime minister Gordon Brown's Labour lost a general election.

"It is a big decision for us but we think it is absolutely necessary and fair given the financial situation we face," he told the BBC.

"It is not a decision we have taken lightly but given the scale of the debts that Labour's left us with... we think this is fair and it means we are all in this together."

Child benefit is a tax-free payment which is paid by the state to all families with children under 16.

It currently stands at 20.30 pounds (23.40 euros, 32.00 dollars) a week for the eldest child and 13.40 a week for each subsequent child.

Osborne's move will see the benefit withdrawn from families where either parent earns around 44,000 pounds.

The proceeds will be used to pay for a new universal credit which is set to replace other welfare payments in the coming decade.

It is part of a stinging package of cuts which the government is due to unveil in a comprehensive spending review on October 20.

The coalition government is bidding to tackle Britain's record deficit of 154.7 billion pounds (188 billion euros, 242 billion dollars).

Government departments have been warned of possible cuts of up to 25 percent.

© 2010 AFP

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