Child benefits in the United Kingdom

Child benefits in the United Kingdom are a series of welfare payments and tax credits made to parents with children in the UK, a major part of the welfare state.

The first modern child tax credit was introduced in the 1909 'People's Budget' of Lloyd-George. This introduced a £10 income tax allowance per child, for tax payers earning under £500 per annum. Following extensive Parliamentary debate, the Budget became law as the Finance Act (1909–1910) 1910 on 29 April 1910. Since the income tax rate was then 1 shilling, two pence in the pound (5.83%), the value of the tax credit was therefore 11 shillings and eight pence per child. Since most people did not earn enough to pay tax, this was a subsidy for middle class parents. The nominal value of these tax credits were generally, though not always, increased in line with income tax rates. For instance, by 1916, income tax had increased to five shillings in the pound (25%), and the tax credit to £25, giving a value of the tax credit of £6 5 shillings..

Calls began for a specific family payment in the early part of the 20th century. These were successfully opposed by those who saw men, earning higher wages than women, as bread-winners, supporting the family through their wages - family allowance payments were seen as socialist and/or feminist in nature. In addition, eugenicist arguments perceived the poor as unworthy of support.

Over the 1930s, growing evidence showed that large numbers of children were born into poverty, with 47% suffering five years or more of malnutrition. Higher wages would not effectively target these children, as the majority of male workers had no dependent children. A White Paper of Family Allowances was published in May 1942, giving costings for various levels of family allowance. These were not immediately adopted, and following the publication of the Beveridge Report, which called for subsistence levels of payments, uprated with the cost of living, the Family Allowances Act 1945 was passed. This provide for a five shilling per week payment for each child, after the first. This was designed to support large families, and was set well below the nine shilling a week subsistence level (further devalued by inflation) recommended by Beveridge. In 1952 the rate was increased to eight shillings per week. In 1956 the rate for the third and subsequent children was increased to ten shillings per week, and the maximum age for payments for dependent children was increased from 15 to 18.

In 1968 the rates were increased from 8 to 15 and then 18 shillings and from 10 to 17 shillings and then £1 respectively, but this was paid for in part by a reduction in the value of child tax allowance, so that the poor would benefit, but the middle classes did not.

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