Cut in child benefit would be ‘cruel’

A FEARED slashing of child benefit rates in the budget would amount to “cruelty” and increase poverty, Brian Cowen was last night warned.

The Taoiseach refused opposition demands to declare the payment was safe from cuts as it dominated heated Dáil exchanges.

Fine Gael leader Enda Kenny insisted he would ring-fence the benefit and find the necessary €4bn worth of savings needed in public spending somewhere else.

Mr Kenny said that families were being “cruelly exploited” by the Government over the issue.

He stressed that with 1.1m children in 600,000 families receiving the payments, many depended on the money for essential items.

“It seems to be acceptable to pump billions into banks and to allow people who borrowed enormous amounts of money to swan around as if they are untouchable by any law. Yet people who find themselves in negative equity or who have lost a second or sole income are faced with a senior minister implying that it is the Government’s intention to cut child benefit,” Mr Kenny said.

The issue hit the top of the political agenda after Social and Family Affairs Minister Mary Hanafin indicated that three different rates of child benefit payments may be introduced in next month’s budget.

Ms Hanafin said the Revenue Commissioners could be used to band families on higher and lower incomes, so that cuts could be targeted more fairly.

The minister said she did not believe a woman should lose child benefit completely but warned that would not mean that every mother would get the same amount of money, though she did not believe a woman should be penalised because of her partner’s income.

Mr Cowen would not be drawn on the matter but pointed out the cost of child benefit had risen from €960m in 2001 to €2.5bn now. The Taoiseach insisted that no area of spending could be immune to cuts in the budget as the state had limited resources.

Labour leader Eamon Gilmore also warned against cutting the levels of child allowance as he said this would have a regressive impact on reducing poverty levels. Mr Gilmore also expressed outrage that the “golden circle” of 10 investors at Anglo Irish Bank who borrowed from the institution to buy shares to prop it up can now use a tax “loophole” to write off the losses on the entire amount against their future capital gains tax liabilities.

Mr Gilmore said the taxpayer has already lost €300m on the Anglo deal and would now lose more.

The Taoiseach said that depended on whether they made profits and that was the nature of the tax system.