German govt approves multibillion-euro child benefit plan

A multibillion-euro social benefit plan for families in Germany, bundling together previously separate child benefits, is one step closer to becoming law after it was signed off by the Cabinet on Wednesday, government sources told dpa.

"There will finally be better, faster and more direct benefits for all families in the future," said Family Minister Lisa Paus following the approval by Chancellor Olaf Scholz's Cabinet.

"This year, families will already have around €750 more per year in their pockets for the first two children, in the biggest increase in child benefits since the mid-1990s."

Germany's lower and upper houses of parliament, the Bundestag and Bundesrat, have yet to vote on the legislation.

The plan was written into the original coalition agreement between Scholz's Social Democrats (SPD), the Greens and the Free Democrats (FDP), but became a major sticking point, mainly around the issue of financing.

The coalition government estimates additional costs of about €2.4 billion in the first year of 2025.

Government sources also said that the costs could rise to up to €6 billion in the following years if more people make use of the benefits.

By providing a better overview and central platform to apply for the benefits, the government aims to reach families who have not yet received the money to which they are entitled, and reduce child poverty.

All in all, the new law would be a "simplification" for all families and the responsible agencies, Paus said on Wednesday morning on Deutschlandfunk radio. "It is not a bureaucratic monster."

The draft law was revised following criticism of the original timetable from the Federal Employment Agency, which is responsible for implementing the legislation.

In the past two weeks, the bill was amended again "to ensure that we can start the basic child allowance on January 1, 2025," Paus told the radio show.

She said she was in talks with the agency about the exact number of staff positions needed to administer the new system, estimated at around 2,000 new posts.

Before the Cabinet decision on Wednesday, the agency said it expects the basic child benefit scheme to start "in the course" of 2025.

"If the planned adoption at the beginning of next year continues, we can start the gradual introduction in the course of 2025," said Vanessa Ahuja, the employment agency's board member responsible for family matters.

The agency needs time to programme the complex IT solutions that are necessary, among other things, she said.