Cameron hints at tax break amid child benefit row

The government has indicated it plans a tax break for married couples by 2015, amid anger over plans to cut child benefit for top rate taxpayers.

The Tory manifesto pledged an annual £150 tax break for basic-rate taxpayers but David Cameron has now hinted it could be extended to higher earners.

Treasury sources denied any change on tax breaks was in response to the reaction to the child benefit cuts.

The PM later told ITV News he was sorry the plan was not in the Tory manifesto.

The chancellor said on Monday the child benefit cuts would happen from 2013.

George Osborne's announcement meant families with at least one parent earning more than about £44,000 a year would lose the benefit.

But critics said it would be unfair, because families with two earners, each paid just under the threshold, would still be eligible while those where only one parent works would be hit. Some Conservative MPs were among those raising concerns.

'Supporting marriage'

Prime Minister David Cameron tried to defuse the row on Tuesday, saying people had to consider other policies the coalition government was doing.

BBC political editor Nick Robinson said government sources had told him there would be a tax break for married couples introduced in this parliament.

He pressed Mr Cameron on whether this could be used to compensate some of those who had lost out from the child benefit change.

The prime minister said: "I have always supported the idea of supporting marriage through the tax system, specifically supporting the idea of a transferable tax allowance. The idea of a transferable tax allowance is in the coalition agreement.

"It's something we would like to do this parliament but I hope you will bear with me as I try to announce one policy at a time."

Asked whether only basic rate taxpayers - who will not be affected by the child benefit change - would be eligible, Mr Cameron repeated that he wanted to take "one step at a time".

'Frank and open'

Pressed on whether the policy might be changed to compensate some of those who lose out on child benefit, he said: "The policy in the coalition agreement is not specific; it just says we support the transferable tax allowance."

Mr Cameron also defended the child benefit change, telling the BBC: "The truth of the matter is, this deficit is so bad we can't deal with it just by going after the super rich, or by dealing with welfare dependency - we do have to ask relatively better off families to make a contribution."

"It's hard but I think it's right," he said.

Speaking to ITV News political editor Tom Bradby, Mr Cameron acknowledged it was a new proposal but one which he was being "very frank and open" about.

He said: "In the election campaign both the Conservatives and the Liberal Democrats actually said there are going to be cuts, there are going to be difficult cuts, we outlined some of those cuts.

"We did not outline all of those cuts, we did not know exactly the situation we were going to inherit. But, yes, I acknowledge, this was not in our manifesto."

When questioned, he said: "Of course I'm sorry about that but I think we need to be clear about why we're doing what we're doing."

Treasury sources denied there had been any change in the tax breaks policy for married couples in reaction to the backlash against the child benefit proposal.

'Social policy'

In April the Conservatives outlined their plans to give four million married couples and civil partners an annual £150 tax break for basic-rate taxpayers, where one partner did not use their full personal tax-free income allowance. They would have been allowed to transfer £750 of their tax-free personal allowance to their working partner.

But the idea was opposed by the Liberal Democrats.

The coalition agreement drawn up between the two parties said: "We will... ensure that provision is made for Liberal Democrat MPs to abstain on budget resolutions to introduce transferable tax allowances for married couples without prejudice to the coalition agreement."

Critics of the married tax allowance say it discriminates against the nearly two million single parents in the UK, most of whom were once married.

"These are ordinary mums or dads who provide stable home environments for their families," said Fiona Weir, chief executive of the Gingerbread organisation which support single parents.

"They deserve equal treatment, not measures that treat them as second class."

Among Conservative MPs to raise concerns about the child benefit policy was the former shadow home secretary David Davis, who said it was "an accidental piece of social policy" as it would "encourage wives or mothers to go out to work".

Backbencher Penny Mordaunt said it had been "poorly presented" and, while she supported the principles, she was concerned about the impact on married couples.

Former Lib Dem leader Sir Menzies Campbell said some the anomalies in the child benefit proposals, which created a "sense of unfairness", should be looked at.

But he said the coalition was entitled to reconsider the principle of universal benefits given the "unique financial circumstances" the country was in.