Government breaks silence on 'unfair' DWP rule and Martin Lewis says 'fix it'

Mr Hunt, the Chancellor, sat down with ITV The Martin Lewis Money Show, who interviewed him during the first episode of the year after Christmas.

Chancellor Jeremy Hunt has admit Department for Work and Pensions Child Benefit is unfair, as Martin Lewis grills him and asks for it to be fixed. Mr Hunt, the Chancellor, sat down with ITV The Martin Lewis Money Show, who interviewed him during the first episode of the year after Christmas.

Mr Lewis said: “I want to move on to what was by a mile (the most popular question) and it’s important you understand this, you’ve got an election coming. So by a mile, the biggest question that we got, which was about a third of all the questions, is on Child Benefit.

“And I think the best example is Alan’s:’My son’s partner tragically died 34 days after giving birth to twins. He’s taken a new job that now pays him £60,000 and is struggling with the cost of living and mortgage repayments – and the loss of a second income.

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“HMRC has asked him to repay the Child Benefit when he needs every penny. It seems grossly unfair that a couple can bring in nearly £100,000 – because it’s about the individual income – but a single breadwinner loses out once they earn over half of this.’

“So many people, me included, think this is the most unfair structure possible – to hit people who are on a single income, when you have couple who can earn so much more (and aren’t affected). Isn’t it that time you fix that one?”

Chancellor Mr Hunt replied: “Well, let me explain what happens there and I think some of this you’ll understand, but for the benefit of your viewers… Child Benefit is targeted at people who are earning less than £50,000 a year and I think it is right that you target the benefit system to help people on the lowest incomes.

“(This issue) affects about 12% of people…” Martin told him: “Well more, it’s been frozen since 2013, which means hundreds of thousands more people are affected by it.” The Chancellor said: “Well, we look at those thresholds every year in Budgets, and we will continue to do that. But it’s about 12%.

“What we’ve done to try and avoid those charges that you talked about is, we’ve made it possible for people who are earning above £50,000 to pay it through their tax code. So they don’t get a sudden charge. We’ve also made it possible for people to claim the National Insurance credits retrospectively, but let me just, I want to answer your question.

“There is nonetheless a very big distortion in the marginal rate of tax – and I fully accept there is an unfairness in what happens with dual-income families on £50,000 each compared to a single earner on £100,000.” Martin said: “Or a couple where one earns £51,000 and the other person doesn’t – they have the same issue.”

Chancellor: “All I will say is this is one of many distortions in our overcomplicated tax system that I look at when it comes to every Budget. There are lots of things I’d like to change. If it’s affordable to do so then I would do so. But it’s too early for me to know at this stage whether that’s going to be the case this time.”

Martin replied: “Okay. Well, (it was the) biggest single question we got from all of our viewers, so…” Chancellor Mr Hunt said: “Noted.”