Two-child Benefit Cap and Child Poverty

Tuesday 11th July 2023 Westminster Hall

15:59

[Kim Johnson (Liverpool, Riverside) (Lab)]

I beg to move,

That this House has considered the two-child benefit cap and child poverty.

It is a pleasure to serve under your chairmanship, Mr Pritchard. I am grateful to have the opportunity to lead this debate and raise the issue of the two-child benefit cap and its impact on child poverty. I put on record my thanks to all those who have championed this campaign in the six years since the cruel cap was introduced in April 2017, including the Bishop of Durham and the child of the north all-party parliamentary group on which I sit, who have led and supported the debate in the House of Lords and brought a private Member’s Bill to the other place on this issue. I am also grateful to the End Child Poverty coalition and all the member organisations for their “All Kids Count” campaign and for providing the statistics on the widespread effect of the two-child cap on benefits that I and others will use in this debate.

The explosion of child poverty we witness today has been the No. 1 by-product of the last 13 years of Tory austerity. The current cost of living crisis is adding unbearable pressure to an already critical situation for many families who are struggling to make ends meet.

[Mick Whitley (Birkenhead) (Lab)]

I thank my hon. Friend for the impassioned contribution she is making. Scrapping the cruel and pernicious two-child limit would be the most cost-effective way of reducing child poverty, lifting a quarter of a million children out of poverty in an instant. The Leader of the Opposition has rightly said that the next Labour Government will be laser-focused on eradicating poverty. Does my hon. Friend agree that to that end, our party should make an explicit commitment to scrap the two-child limit in the first days of the next Labour Government and, in doing so, give hope to the 2,700 young people in my constituency who are currently caught in this two-child trap?

[Kim Johnson]

I thank my hon. Friend for his contribution. I believe that the incoming Labour Government should make every effort to look at eradicating poverty in any way, shape or form. We are seeing a resurgence of Victorian diseases such as malnutrition, rickets and scarlet fever. Children are going to bed with empty bellies and going to school unable to concentrate or learn to their full potential. In recent years, we have heard many heartbreaking stories of children mimicking eating from empty lunch boxes or even attempting to erase their hunger by eating paper and erasers. Children are incredibly aware of the stigma of poverty, and the pressure can have lifelong psychological effects on top of the material impact on educational attainment, life chances and associated health problems.

[Ian Lavery (Wansbeck) (Lab)]

It is great to see my hon. Friend bringing this extremely important debate to the Chamber. In the north-east, 12,000 children and families are unable to claim the universal credit benefit because of the two-child cap. Some 5,400 are also not considered eligible because of their child tax credits and their situation with universal credit. Will my hon. Friend say what sort of impact that has on ordinary families not just in the north-east, but up and down the country?

[Kim Johnson]

I thank my hon. Friend for his intervention. The cap has done immeasurable damage to so many families in this country, impacting poverty and driving more families into poverty and not, as this Government anticipated, into work.

[Margaret Greenwood (Wirral West) (Lab)]

I congratulate my hon. Friend on securing this really important debate. According to the End Child Poverty coalition, more than 2,700 children were living in poverty in my constituency of Wirral West in 2021-22—that is more than 18% of the children. As my hon. Friend has touched on, we know that poverty has an impact on children’s educational attainment, happiness and life chances. Does my hon. Friend agree that this is a scandalous state of affairs, it makes absolutely no sense for us to leave this problem unattended and we must end the two-child limit as a matter of urgency?

[Kim Johnson]

I totally agree with my hon. Friend. We need to end this horrendous two-child policy and ensure all children have the opportunity to thrive and grow and not live in poverty.

Last September, when I hosted an event in Parliament in partnership with the End Child Poverty coalition and the National Education Union calling for universal free school meals to help alleviate child poverty and close inequalities in education and health, we heard from some incredible youth ambassadors. They told us of the stigma of being singled out for free school meals. One said the impact was like sitting in a classroom wearing a badge on their back saying they were poor. Another told us she remembered her mother skipping meals to make sure she and her siblings had something to eat and that now, years later, her own relationship with food and the guilt she associated with eating is still having an impact on her. Members in all parts of the House will be painfully aware of so many similar personal stories from the constituents they work with every day.

Last year the Joseph Rowntree Foundation annual report on UK poverty showed that child poverty in families with more than two children increased from 33% to 47% between 2012-13 and 2019-20, reaching levels not seen since before 1997. In my constituency, 11 children in a class of 30 are living in poverty, and of the 1,400 children in households in receipt of universal credit, 444 are not eligible for extra support due to having two or more siblings born after 6 April 2017.

[Rachael Maskell (York Central) (Lab/Co-op)]

My hon. Friend mentioned the Joseph Rowntree Foundation, which is based in my constituency. It has done work not only to demonstrate that the two-child limit is having an impact on children but also that the benefits base is not focusing on the essentials and the essential costs. On top of that, the broader rental market area is not paying the way on private rent either. Families in my constituency are struggling with the accumulation of cuts and the drawback that the Government have put in place. Does my hon. Friend understand why this Government are punishing children and families in such a way?

[Kim Johnson]

I do not know why the Government are punishing children and forcing them into poverty. It is a crying shame.

These families are disproportionately affected by increases in the cost of living and, as has just been mentioned, are treated punitively by the benefits system. Some 1.3 million children across the country are currently losing out under the cap, with their families losing on average £3,235 directly out of their pockets. With new stats due on Thursday 13 July, the Child Poverty Action Group and Save the Children predict the number will rise to 1.5 million.

[Beth Winter (Cynon Valley) (Lab)]

CPAG has estimated that over 4 million children live in poverty, and that figure is due to rise. More than 5,000 children in my constituency—a third of the children living there—live in poverty. The Welsh Government are currently consulting on their draft child poverty strategy 2023 and there is a big debate in Wales about how we tackle not only child poverty but poverty more widely. Wales is very clear, as Minister for Social Justice Jane Hutt has said, that the two-child limit must be scrapped. Is it not right, and time, that the UK Government listened to the devolved nations and did just that?

[Kim Johnson]

I thank my hon. Friend for the intervention and the Welsh Government for rolling out universal free school meals, and I support her and the Welsh Government in saying we need to end the two-child cap.

Does the Minister really believe it is acceptable for children to suffer more just because of the number of siblings they have? The two-child cap on benefit payments is cruel and ineffective. Larger families are punished, leaving them struggling. A majority—some 55%—of the families affected by the policy are already in work. Black and ethnic minority families and single-parent families are disproportionately impacted, as well as families who rent. The two-child limit creates a huge hole in budgets that simply cannot be plugged by working additional hours. The Government claim that the policy helps to push parents back into work, but after six years, they still cannot provide a single shred of evidence that that is actually the case. The truth is that the policy does nothing to remove barriers, and research from the University of York shows that in some cases, the cap is counterproductive in helping parents back to work.

[Mary Kelly Foy (City of Durham) (Lab)]

I thank my hon. Friend for securing this important debate and for all her campaigning on the issue. I completely with her points about poverty and children suffering, but I have a slightly different concern about this punitive policy. Does my hon. Friend agree that it is an absolute disgrace that the rape clause is still in effect? I ask the Minister not to ignore that point. Why is the clause still on the statute book, and why will the Government not repeal it?

[Kim Johnson]

I thank my hon. friend for raising that important point, and I will come to it later.

Last year, 1,830 mums were forced to declare that they were raped in order to be eligible for extra support for their children—compelled to disclose horrific and personal details. The anguish that this demand creates for women has been found to have an impact on their decisions to terminate pregnancies. Just take a second to consider that. Imagine a woman having survived such a deeply traumatic ordeal, to then be faced with a Government policy that makes her feel she can no longer carry on with her pregnancy. It is so deeply cruel and damaging that we have to ask whether the Ministers who devised that heartless policy had an ounce of compassion between them.

We know that lifting the cap would immediately raise 250,000 children out of poverty, and a further 850,000 out of deep poverty. Campaigners call it the single most effective intervention that would tackle child poverty immediately. It would cost this Government just £1.3 billion. Consider that against the £37 billion that they wasted on a failed test and trace system, the £5 billion that they found for the defence budget in March, or the £9 billion tax cut to corporations and the pensions giveaway for the 1% that they so generously granted in the last Budget.

We know that the money is there to help struggling families, if we can only find the will. Poverty is a political choice, and time and time again this Government have chosen giveaways for the rich and scraps for the rest of us. Inflation is being driven by corporate greed creating record profits for the super-rich. The Government would like us to believe that there is no money to meet basic needs and support struggling families, but the reality is that it is just being hoarded by the 1%.

We are seeing the biggest drop in spending power in 70 years. Total spending on public services is set to be 12% lower in 2027-28 than in 2010, yet the wealth of UK billionaires has more than trebled since the Tories have been in government. With skyrocketing rent and energy bills eating into people’s pay packets, disposable income is being squeezed more and more. The record rise in food prices is pushing millions more into food insecurity.

There is a simple fix for this: enhanced workers’ rights to ensure that work pays enough to live and raise a family. That way, we can ensure that not a single child in this country goes hungry, and no child gets left behind. The evidence is there for all to see. Punishing families for having more than two children does not push parents back into work; it only drives more children into poverty. Tory austerity cuts were nothing less than an ideological drive to rig the economy in favour of the few at the expense of the many, and children in my constituency and across the country are now paying the price. The impact of growing up in poverty can be lifelong. We cannot wait for a new Labour Government to provide these children with a future; this Government must listen now and lift the two-child cap.

This debate is not the first time that I and many of my colleagues here in Westminster Hall today have raised these issues in this House over the years. We know the tired and misleading lines parroted by the Government, pointing to a rise in employment and a drop in absolute poverty over the course of their leadership of the country, so before the Minister gives his reply, I want him to consider the bleak reality of this situation. Work is no longer a route out of poverty. The Tories have undermined workers’ rights and trashed the very concept of work, to the extent that seven out of 10 children living in poverty in this country are in working families. Just let that statistic sink in for a minute: over two thirds of the children who live in poverty in the fifth richest country in the world are struggling because their parents’ wages are not enough to live on and raise a family.

In response to my question to the Prime Minister last month about the two-child benefit cap, the Prime Minister responded in his usual manner, by claiming that his Government had lifted 400,000 children out of absolute poverty since 2010. I am sure that Members in this Chamber would all agree that, on the face of it, that sounds like a really great achievement and one worth celebrating. However, as the Prime Minister and his Government well know, that statistic is misleading and does not take into account the impact of inflation, which is an approach that can only be described as being grotesquely out of touch during a cost of living crisis, when we see security tags put on basic necessities such as nappies and baby milk.

Economists and organisations such as the Institute for Fiscal Studies use “relative poverty” as a much more accurate measure of the reality of the trajectory in poverty, and this measure clearly shows the deepening trend in child poverty that we see every day in our constituencies. I ask the Minister not to take us for fools today. We are here because we know the desperate reality facing so many of our constituents. We are here to demand better for them. We will not continue to go round in circles debating meaningless numbers while the Government continue to bury their head in the sand and ignore the struggles of the people they were elected to represent.

I thank the Minister again for responding to this debate and the arguments that we have made, and I hope that he can feel the strength of feeling in this Chamber today about the facts of poverty.

16:14

[The Minister for Employment (Guy Opperman)]

It is a pleasure to serve under your chairmanship, Mr Pritchard, and I congratulate the hon. Member for Liverpool, Riverside (Kim Johnson) on securing the debate and on the passionate way that she put her argument today. That passion cannot be doubted in any way whatsoever and due respect is due to her for that.

The Government believe that the best way to support people’s living standards is through work, better skills and higher wages. I regret to say that I will rely on an answer similar to the one that the Prime Minister gave to the hon. Lady at Prime Minister’s questions. Whether she agrees or disagrees with that answer, I hope that she will bear with me as I give it.

In 2021-22, children living in a household in which all the adults were in work were five times less likely to be in absolute poverty after housing costs than children living in workless households. We believe that we have made progress. In 2021-22, there were 1.7 million fewer people in absolute poverty after housing costs than there were in 2009-10, including, as has been made clear, 400,000 fewer children. There are also nearly 1 million fewer workless households now than there were in 2010.

Following the review of the benefit cap levels by the Secretary of State for Work and Pensions in November 2022, those levels were increased by 10.1% from April 2023. Let us not forget that households can still receive benefits from the taxpayer up to the equivalent of a salary of £26,500 nationally or £31,300 in London, allowing for London weighting. Also, we uprated the national living wage by 9.7%, increasing our support for both those who are in work and those who are out of work, as well as uprating all benefits by 10.1% in April. That is the largest cash increase ever to the national living wage, which is now up to £10.42 an hour, providing extra support for workers.

Clearly, there are over 1 million vacancies across the UK and our focus is firmly on supporting people into work and helping them to progress in work. That approach is based on clear evidence about the importance of parental employment, particularly where it is full time, in substantially reducing the risks of child poverty.

[Nadia Whittome (Nottingham East) (Lab)]

Is the Minister aware of the recent study by the London School of Economics, published last month, that found that the two-child benefit cap policy has not increased employment levels? We can only conclude from that that even on its own terms, the policy is failing while hundreds of thousands of families have been pushed into poverty.

[Guy Opperman]

As I think I have made clear, I do not accept the arguments about poverty. I am not aware of the specific LSE paper that the hon. Lady mentions, but I would make the simple point that in this country we have never given more welfare support or paid higher figures for pensioner support or disability support. Without a shadow of a doubt, there has been massive cost of living support, as I will outline, to the most vulnerable.

[Ian Lavery]

The Minister makes the case for how good this Government have been on benefits, support and work funds. Minister, that is 4.2 million children living in poverty. He cannot be happy with that; he has to admit it is far too high. Secondly, does the Minister think kids sitting round the tea table at night are worried about whether they are in abject poverty, absolute poverty or relative poverty? If you have an empty belly, you have an empty belly, and this Government should be totally ashamed of themselves because of the high statistics and figures that are rising week in, week out.

[Guy Opperman]

With respect, I do not accept that the figures are rising week in, week out. The simple point is surely this: over the past two years, the taxpayer has contributed £94 billion of support to vulnerable households, and that support is ongoing. For example, the energy price guarantee will remain in place as a safety net and a support for households until March 2024. The cost of living payment, which I can go into more detail on, features a further £150 payment to 6 million people, over and above existing benefits, which have gone up by 10%. Over £900 will go to 8 million households on means-tested benefits over the course of the year. The first £301 payment to those on means-tested benefits was made in April.

For pensioners, an additional £300 on top of the winter fuel payment is being paid to over 8 million pensioner households. Such a degree of support has never been provided before, and whatever people’s views are of this Government—positive or otherwise—they have stepped in to the tune of £94 billion with cost of living support over the past two years. As I say, the first £301 payment was recently issued to local people up and down the country.

[Kim Johnson]

Will the Minister give way?

[Guy Opperman]

I will for the last time—I am attempting to answer some of the points.

[Kim Johnson]

Although I appreciate that £94 billion has been issued to the most vulnerable, we are in a crisis. Energy, rent and food are spiralling, so the money people have in their pockets is not going far enough. Does the Minister agree?

[Guy Opperman]

The Government have stepped forward and provided £94 billion of support, worth on average approximately £3,300 per household, because they wish to address those particular problems. We are trying to help individuals on an ongoing basis for that reason.

I will try to make some progress. The hon. Member for Liverpool, Riverside made much of the question of tax. She will know that the richest 1% pay a massive proportion of UK tax and effectively have never paid as much as they presently do. Changes to taxable thresholds were a coalition policy, to be fair to the Liberal Democrats. When we started in government in 2010, low earners paid tax on low earnings as well as trying to take their money home. The taxable thresholds have risen repeatedly so that low earners no longer pay tax in that way; in other words, we have a very progressive policy that assists people who are struggling. Between 2016 and 2023, the number of couples in employment with children increased by 713,000, which is a 3.4% increase in the employment rate for that groups. In the circumstances outlined, child benefit continues to be paid for all children in eligible families, with an additional amount for any qualifying disabled child or qualifying disabled young person also payable regardless of the number of children in the household.

Universal credit offers additional help with eligible childcare costs and is also available regardless of the total number of children in the household. We believe we have a balanced system that provides strong work incentives and support for those who need it—all benefits have been uprated by more than 10%—while ensuring fairness to the taxpayer and the many working families who not only pay the bills we are talking about but do not see their incomes rise when they have more children.

The Government believe the policy to support a maximum of two children is a proportionate way to achieve these objectives. Similarly, the benefit cap provides both a strong work incentive and fairness for hard-working tax-paying households. It encourages people to move into work wherever possible. The work incentive introduced by the Government will also support people to move into work and increase their earnings, which will significantly increase the likelihood of a household not being affected by the cap. Universal credit households with earnings of £722 a month are also exempt from the cap.

I finish on a couple of key points. Clearly, there is a massive amount of cost of living support. However, I respectfully say that universal credit should be lauded and supported. I do not believe it is Labour party policy to scrap the two-child policy, but whatever happens there is no question that the legacy system that could not in any way cope with variable earnings and allow people to progress in work has been rightly replaced by universal credit, which allows people to work while also being constantly supported and in a position wherein they are never worse off under universal credit.

In conclusion, I welcome the contribution of the hon. Member for Liverpool, Riverside to the debate and I share her concern that children should be supported by the social security system. I respectfully suggest that there is ample evidence showing that that is the case. We are very much of the view that—whether it is through the 10% benefits increase, the £94 billion of support to vulnerable households, the uprating of the national living wage or the work of jobcentres up and down the country to support in-work progression—there is support out there.

Question put and agreed to.