Downing Street has rejected a renewed move by Iain Duncan Smith to cut child benefit from parents with more than two children as a way of helping to achieve the £12bn in welfare cuts proposed by George Osborne.

No 10 made a point on Monday of distributing remarks made by David Cameron on the eve of the general election in which the prime minister confirmed that child benefit would be retained in its current form for the next five years.



The intervention by Downing Street suggests that Duncan Smith, the work and pensions secretary, is heading for a showdown with George Osborne over his planned welfare cuts before next month’s budget.

Duncan Smith believes it is possible to achieve £12bn in welfare cuts, which amounts to 10% of the non-pensioner elements of welfare spending, but believes it will have to involve behavioural change by claimants rather than “cheese paring”.

The PM’s view is that, as he said during the election campaign, we keep child benefit. We don’t cut child benefit. No 10 spokeswoman

One idea promoted by Duncan Smith in recent years is to limit child benefit to the first two children. The Sunday Times reported at the weekend that he had ordered his civil servants to model the effects of imposing such a limit, which showed that it would save £1bn a year. A further £2.5bn a year could be saved, according to figures compiled by the Institute for Fiscal Studies, by cutting the amount of child benefit for a first child from £20.70 a week to £13.70, the same as the amount paid for subsequent children.

A source told the Sunday Times: “Iain is not going to do this in a cheese-paring kind of way. This will be about achieving behaviour change. With two children, you send a message where people have to think: can I afford another child? If you are on benefits and know the state will support you for the next child and the next, you are not facing the same decisions.”

Downing Street made clear that Duncan Smith’s proposals would be given short shrift. The prime minister’s spokeswoman said: “The PM’s view on this is that, as he said during the election campaign, we keep child benefit. We don’t cut child benefit.”

But No 10 confirmed that child benefit would be frozen for the next two years in line with a freeze on working age benefits. “As part of the plans [of freezing working age benefits], we will go on freezing child benefit for the first two years of this parliament.”

Downing Street reinforced the message by distributing remarks made by the prime minister in an ITV News interview in the closing stages of the general election campaign. Asked by the ITV News deputy political editor, Chris Ship, whether he would “keep child benefit in the current form for the next five years”, the prime minister said: “Correct, correct. I said that last night and happy to say it again today.”

Child benefit is a sensitive issue for the government after the chancellor scrapped it in the last parliament for higher rate taxpayers. It is paid to families in which neither parents earns above £50,000 and is denied to families where one or more parent earns above £60,000.