The scrapping of universal child benefit in the Isle of Man is the third hit on middle-income families.
That was the warning to the government from Michael MHK Alfred Cannan, as Tynwald approved means testing the benefit from April 7 next year.
It follows the privatisation of pre-schools in 2012 and the introduction of university tuition fees.
Mr Cannan described the proposal as ‘balanced, reasonable, fair and expected’, but added that it may result in a drain of talent from the island, as ‘working professionals may feel they and their families are more welcome elsewhere’.
Social Care Minister Chris Robertshaw MHK disputed that the move would have this effect, saying: ‘We are making a better job of it here than in the UK.’
Howard Quayle (Middle MHK) said he was supportive of the motion.
But he added: ‘We need to be careful moving forward with cuts based on income that we don’t create a cliff edge where it may be more beneficial for one person to stay at home and save on nursery fees rather than work.’
Douglas West MHK Chris Thomas was one of a number of members who pointed out that families with a household income of £60,000 – above which there will be a phased reduction of child benefit payments – were not necessarily ‘rich’.
He said it depended on their circumstances.
Zac Hall (Onchan MHK) questioned whether the age of the child had been taken into consideration as a means of phasing child benefit payments.
He said that payments could reduce as the child got older, which would be fair as it would coincide with many mothers returning to work.
Mr Robertshaw said that means-testing ‘was enough of an issue to face without unnecessarily complicating it’.
From April, families with a household income of £90,000 and above will lose their child benefit.
This accounts for 10 per cent of families.
Families with an annual income between £60,000 and £90,000 will have their child benefit reduced by 25 per cent for every £10,000 band of income above £60,000.
Those with an annual income below £60,000 – 70 per cent of the total – will continue to receive benefit at the maximum rate.
Total income will be based on tax records.
The move is expected to save £2.5 million a year. Some £500,000 of this is earmarked to provide extra help for families to pay for their nursery fees.
Pre-school voucher payments may possibly double from the current £350 per child to about £700.
Current spending on child benefit is £16.5m a year, paid to about 9,500 families in respect of around 16,500 children and qualifying young persons.
£20.40 per week is paid for the eldest or only child, with £13.50 paid for second or subsequent children.
Mr Robertshaw has said that as the Manx government works to balance the budget by 2016, it can’t continue to pay child benefit to people who don’t need it.
He believes the system being proposed is ‘fair and equitable and will require only a minimal amount of resources to operate’.
The Minister told members that regulations detailing how the scheme will operate will be brought before Tynwald ‘at the next or subsequent sitting’.