Universal Credit (Removal of Two Child Limit) Bill
(1 day, 9 hours ago)
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The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)
My Lords, this Government believe that the UK should be a country where every person has the opportunity to fulfil their potential. That is why we are so committed to removing the barriers that stop people thriving and becoming all that they can be. Doing this will benefit not just the individuals, it will benefit our country. So I am delighted to be here today to move Second Reading of the Universal Credit (Removal of Two Child Limit) Bill. It makes a major contribution to tackling the poverty that limits children’s chances in life, and often for life.
There are now four and a half million children in poverty—900,000 more than there were in 2010. To put that in context, if we picture a classroom of 30 children, at the moment around 10 of them will be living in poverty. Some 2 million of our children are in deep material poverty, lacking the basic essentials such as a warm home or healthy food—things without which no child should be growing up. It is shocking enough that so many of our children have to live through childhood like that, but it is even more shocking when we consider the hugely detrimental consequences that growing up in poverty has on children’s health, education and future employment prospects.
Just one in four children in families with the lowest incomes gets good GCSEs. As adults, those who grew up in poverty are more likely to be unemployed or to find themselves in low-skilled, lower-paid jobs. Those who grow up poor clearly do not lack talent; what they lack is opportunity. As a result, our country is missing out on their gifts and their contributions. We are determined to break this link between children’s backgrounds and their future success. That is why, since coming into office, we have taken significant steps to help families tackle poverty and give every child the best start in life: increasing the minimum wage, expanding free school meals for over half a million children, investing in social and affordable housing, and funding more Best Start Family Hubs. We are now pulling the single most cost-effective lever available: removing the universal credit two-child limit, which will lift 450,000 children out of poverty.
This is the right move to extend opportunity, and it is right because our system should not be penalising so many of our children for the circumstances of their birth—circumstances their parents may not have chosen or expected. Life is unpredictable, and crisis can hit anyone regardless of the choices they have made or the size of their family. Marriages break up; parents lose their jobs or get sick, or injured, or die.
That unpredictability is reflected in the fact that half the families who will benefit from lifting the two-child limit were not on universal credit when they had any of their children. These are people who found themselves in need of help after decisions about family size had been taken. It simply is not right to draw dividing lines in the way the two-child limit sought to do, especially when over half the families affected by the two-child limit are already in work, and, of those who are not working, a significant number are affected by serious health conditions or caring responsibilities.
Illness, disability, bereavement, unemployment, becoming a carer—these things can hit any one of us, and have probably hit many of us in this Chamber already. Our welfare state exists to pool risk, to give all of us some protection from the impact of life’s slings and arrows. Some will look only at the cost, without looking at the cost of failing to offer support. We simply cannot afford to sit on our hands and wait for the costs of poverty to spiral. Without intervention, 150,000 more children will be pulled into poverty by 2030. That is 150,000 stories of missed opportunity, of deeper inequality, of lost productivity. But if tackling poverty is vital not just for the lives and opportunities of children, it is vital for our economy. Every pound we spend lifting children out of poverty saves so much more in future health, education and social security costs.
Few investments will reap rewards as great as investing in the next generation, in our future workforce. Failing to act on child poverty will cost Britain far more than investing now. That is why removing the two-child limit is part of our wider child poverty strategy. We committed in our manifesto to making good work the foundation of our approach to tackling poverty. Parents are doing all they can to support their children. Parental employment rates are already high but, with almost three-quarters of children in poverty being in a working family, too many parents find themselves in jobs where they are still struggling to support their families.
Meanwhile, too many of those who are not in work face barriers to entering the labour market, whether that is down to health, disability, a lack of childcare, poor skills, public transport not working in their area, or all kinds of other barriers. We want every parent who can work to feel the benefits of secure, rewarding jobs that enable them to get on in life, to support their families and to set an example to the next generation. That is why we will deliver a step change in employment and skills support for parents, helping them to balance work and caring responsibilities through high-quality, flexible jobs and improving access to affordable childcare.
The expansion of childcare comes alongside other measures in our child poverty strategy to drive down working poverty, including raising the minimum wage and creating more secure jobs by strengthening rights at work. The measures and the strategy will lift 550,000 children out of poverty. These interventions will lead to the largest expected reduction in child poverty over a Parliament since comparable records began. Together, all this represents a strong start. It kick-starts action and ambition over the next 10 years, responding to the immediate pressures families face now while delivering change to fix the structural drivers of child poverty.
But we do not underestimate the scale of the challenge: to build a society where every child grows up safe, warm and well fed, not held back by poverty but helped forward by government. So we will monitor our progress using two main metrics. First, we will use the internationally recognised and well-established “relative low income after housing costs” measure to monitor overall child poverty. Secondly, there will be a new measure of deep material poverty, which we have developed to assess families’ ability to afford the essentials. This takes account not just of their income but of the cost of essentials, their overall financial situation and the support they receive locally. It is not just the number of children in poverty that matters; it is the depth of that poverty too.
We are committed to ensuring that removing the two-child limit, along with other measures in the child poverty strategy, delivers the results children need and deserve. To support this, we have published a monitoring and evaluation framework alongside the strategy. That sets out how we will track our progress and the success of these policies, as part of an ongoing commitment to transparency, accountability and continued learning. This includes focused analysis to understand what drives child poverty and the impacts of the changes we are making, so that we can build on our successes and continue to make the case for further intervention. We will publish a baseline report in the summer setting out the latest statistics and evidence, with annual reports thereafter to monitor and evaluate progress.
This Government will not stand by while millions of children face the long-term harm that poverty brings. Families in poverty cannot afford to give their children what they need to grow and to achieve their potential. We will boost family incomes through employment and social security, drive down the cost of essentials and strengthen local support services. We are investing in the future of our children and will hold ourselves to account on delivering the impact we promised through this Parliament and beyond. We will remove this cruel policy, which has pushed 300,000 children into poverty.
I look forward very much to this debate and especially to the maiden speeches of my noble friends Lady Antrobus and Lord Walker of Broxton and the noble Baroness, Lady Teather. Between them they bring an amazing wealth and breadth of experience and knowledge to our House. I am delighted that they have chosen this extremely important Bill to make their first contribution to our proceedings. I beg to move.
Baroness Stedman-Scott (Con)
My Lords, I too am pleased to contribute to this important debate and look forward to the maiden speeches of the noble Baronesses, Lady Antrobus and Lady Teather, and the noble Lord Walker of Broxton. We welcome these wonderful people to our House and look forward to their contributions.
I feel I must set the scene and set it out very clearly. I say from the outset that we on the Opposition Benches do not support this Bill; in fact, we oppose it. That does not mean in any way that we do not care about children and families—quite the contrary. We believe there are other ways to support them that mean that money can be used differently to achieve the objective of improving their lives. I state publicly that I respect the consistency and tenacity of the Minister and, indeed, the noble Baroness, Lady Lister, in their campaigning in this area. We respect it. We may not agree with it, but we give credit where it is due.
We are far from alone in opposing the Bill. On this question, we stand with a clear majority of the British public. Polling consistently shows that more than 60% of people in this country support retaining the two-child benefit cap, with that support stretching across voters of all major political parties. What this debate increasingly appears to be about is not responsible public policy but political party management. As events over the past year have made clear, this measure is not being brought forward because the public have demanded it. Indeed, they are clearly opposed to it. We should all pause and consider why hard-working taxpayers are being asked to shoulder the financial consequences of the Government’s inability to manage their parliamentary party. That is not responsible government; it is a deeply troubling response from the Government to unrest.
Many across this Chamber will have their own principles and reasons for opposing this policy, but I begin with a simple illustration of what this policy and this debate mean in practice. Let us take the London Borough of Hackney. There, 29% of children live in households affected by the two-child limit without an exemption—the highest proportion anywhere in the country. As of August last year, there were 92 households in Hackney on universal credit with five or more children where the youngest child was born after the 2017 cut-off date. Unless they qualify for one of the limited exemptions, those households fall within the scope of the two-child limit. In other words, they already receive less than the maximum universal credit they would otherwise be entitled to. Yet even with the cap in place, these households receive on average £5,152 per month in universal credit. That is more than the take-home pay of someone earning around £88,000 a year. Across the country, the welfare bill for five-child households within the scope of the cap is already around £720 million per year. That is with the two-child limit still in place.
Set that against the reality faced by many working families. In Hackney and communities across the country, there are parents in work earning far less than that level of take-home pay who would love nothing more than to have a third child. But they sit down at the kitchen table, look at the household finances and make the heartbreaking decision that they simply cannot afford it. At the very same time, their taxes are funding households down the road who receive an income from universal credit that, in effect, exceeds their own. If this cap is removed, those households will not face the same choices about how many children they can afford.
I ask the Minister a simple question: how can that possibly be fair? How can it be right that working people supporting our economy and paying the taxes that fund the system must carefully limit the size of their own families while being asked to fund a system in which those not in work face no such constraint? That is the fundamental question of fairness at the heart of this debate, and it is why a clear majority of the public vehemently support the cap.
There is a wider point about economic development. More than this, what separates us on these Benches from the Minister and her Back Benches is our view that a handout is not the same as a hand up. The evidence is clear that the most effective way to tackle poverty is to provide people with the means and the incentives to provide for themselves. The single biggest factor in a child’s life chances is whether parents work, and removing the cap reduces the incentives to work altogether. That is clearly not a route out of poverty. Of course support should be targeted at those who need it—we have no argument with that—but it should not create a model where households on benefits are rewarded in a way no working family ever would be. That undermines both fairness and the incentive to work. As I have said, work is the only meaningful way that we will solve the problem of child poverty in the medium and long term.
When the incentive in place is to get more on benefits than working, why would you go to work? I am concerned by the view expressed by Labour Back-Benchers and the Government that increasing the generosity of the welfare offer in some way solves the issue of poverty. This approach does nothing but provide a sticking plaster to mask the fact that a dramatically increasing number of people rely solely on the state for their subsistence. This comes at a major and increasing cost to those who work and contribute, as the Spring Statement disturbingly underscored when it revealed that welfare spending will rise by 5.8% this year to an absolutely staggering £330 billion—around 11% of GDP.
My party has been clear. We would reinstate the two-child cap. Only last week my right honourable friend, Kemi Badenoch, the leader of our party, set out why. The savings from this policy could be redirected toward one of the more fundamental responsibilities of any Government—the protection and defence of the realm. Again, I stress that it does not mean that we do not care about children and families, but those savings would allow the recruitment of 20,000 additional soldiers and fund the accommodation, equipment and support they need to do their jobs properly at a time when the demands on our Armed Forces are growing and the world is becoming more uncertain. That is a central priority.
After the extraordinary spectacle of recent weeks, when the world has seen the Government unable and unwilling to defend British sovereign territory, the case for properly funding our Armed Forces has become more urgent than ever. Our defence should not be an afterthought. It should be the first duty of the state.
That is why it is so troubling that money that could be strengthening our national defence is instead being spent to manage the Government’s internal policies and politics. The country is being asked to foot the bill not because the policy case has been won but because the Government and the Chancellor have chosen not to pursue the welfare reforms they themselves once supported because they are too weak to get them past their own MPs. Do His Majesty’s Government have any plans to review the welfare state and to change it to a system that incentivises people to work, rather than live permanently on benefits? The defence of the nation should always come before the management of the governing party but, unfortunately, the policy we are discussing today is a manifestation of just that.
Ultimately, this debate comes down to three simple principles: fairness, responsibility and the Government’s priorities. It is about fairness, because it cannot be right that working families who get up every day, pay their taxes and carefully weigh what they can and cannot afford for their own children, are asked to fund a system in which those same choices do not apply. A welfare system that loses sight of that basic sense of fairness will quickly lose the confidence of the people who sustain it. It is about responsibility, because tackling poverty cannot mean simply writing even larger checks from the state. Real and lasting progress comes from helping people into work, strengthening incentives and ensuring that welfare is a safety net, not a substitute for independence. A system that blurs that distinction ultimately fails the very people it claims to help. It is about priorities, because every £1 spent by the state is a £1 taken from taxpayers and other priorities. At a time of enormous pressure on the public finances and growing threats in the world around us, the Government must be honest about where those resources should go.
This Bill fails on all three counts. It weakens fairness, it risks entrenching dependency rather than tackling its causes and it diverts scarce resources away from the fundamental duties of government. For those reasons, and in the interest of fairness and sound policy, these Benches cannot support the Bill. We urge the Government to keep the cap; it is what the country wants and what the country needs. I know the Benches opposite will not agree with me one little bit—I am under no illusions about that. I remind the whole House that you cannot make a poor man rich by making a rich man poor and you cannot help the wage earner by punishing the wage payer.
Baroness Teather (LD) (Maiden Speech)
My Lords, I am grateful for the opportunity to make my maiden speech here during this Second Reading debate. Supporting children and tackling the impact of poverty and disadvantage have been core themes of my work, both in the other place and in my charity and NHS board roles since.
I will turn to the substance of the Bill in a moment and say some personal words about myself at the close. First, I hope noble Lords will indulge me in offering some heartfelt thanks. I am indebted to the many people who have guided me so patiently in my first few weeks. Having done my apprenticeship at the other end, this place is at once both familiar and very different. I am still navigating by reference to glimpses of green carpet that border red, meaning getting anywhere is taking me twice as long as it should.
I am particularly grateful to Black Rod’s team and to the doorkeepers, who made heroic efforts to support my husband, who is a wheelchair user, at my introduction, as they have today. He is here to listen, along with my parents, and I am very grateful to them for being here. I thank the clerks, the Lord Speaker, the attendants and my supporters—my noble friends Lord Dholakia and Lady Kramer—and the youthful staff team in the Lib Dem Whips Office, who are a daily source of facts, sanity and humour.
The Bill is hugely welcome. While some might say that it is not before time, I want instead to recognise the work done by the Minister in this House—the noble Baroness, Lady Sherlock—and the Secretary of State in the other place to bring this Bill forward. I served as Children and Families Minister, and I recall the uphill task of co-ordinating child poverty strategy across departmental silos and coalition “differences of opinion” as somewhere between cat herding and global hostage negotiation—skills that might yet come in handy if we end up in protracted ping-pong here.
I am strongly of the view that the removal of the two-child limit in universal credit is the right thing to do. I have always been a sceptic about arbitrary caps in welfare policy, which seem often to be performative rather than strategic. People are made vulnerable when policy cannot flex for the complexity of real life. More than 1.5 million children are currently affected by the two-child limit, denied what they need to thrive and growing up where hunger, cold and uncertainty are daily realities; missing opportunities to join school trips and activities; and leaving them more likely to be bullied at school—something I know from my most recent role leading a children’s charity dedicated to that cause. Poverty affects children in every community, which was the premise behind targeted support through the pupil premium, but this two-child limit falls on regions unevenly and disproportionately on families from Black and ethnic-minority communities, baking in inequality and damaging life chances for decades.
Removing the two-child limit will make an impact on hundreds of thousands of children. But in the spirit of a maiden speech, I suggest gently that mitigation of its forerunner, the benefit cap, which interacts with the high cost of rented housing, might also be needed. This might be, for example, by reviewing the cap annually in line with the cost of living or disregarding child benefit from the total.
I want to say something about language and narrative. The Joseph Rowntree Foundation’s UK poverty report this year describes the impact of an increasingly toxic public debate on those living in poverty, saying that the
“values of compassion, justice and equity … are too often missing”.
Stigma and scapegoating really matter. Money fills the electric meter, buys the school uniform and pays for breakfast, but it is language that limits expectations, hardens attitudes and severs relationships.
I spent most of my decade-long civilian sabbatical away from politics leading a UK charity in the refugee sector, the Jesuit Refugee Service. I learned much at JRS about the way destitution and homelessness eat away at dignity, but also about the transformative power of relationships and community. Towards the end of my time at the charity, we started a new project to train staff in mediation skills, encouraging them to listen and engage in conversations locally and to learn from people with different, even opposing perspectives about our work. It was experimental in form, but the othering that we had witnessed had been so devastating that we were convinced that we must not contribute to it further.
Our potential to create change and solve problems in this polarised age depends on how well we collaborate with people who do not always share our worldview—resisting the urge to stereotype and being open to the idea that working with people we do not agree with might yield new solutions. One of the great joys of my first few weeks here has been the warm and fascinating conversations with noble Lords from different parties. This cross-party opportunity is a seam that I hope to mine.
I finish my remarks by sharing with noble Lords something very personal. I have spent most of my adult life working with and for people who are sidelined—those who struggle to get their voices heard and their experiences understood. Then, four years ago, I suddenly lost my voice. A random neurological hit knocked out a nerve to my vocal cords, leaving me struggling to speak. It took two years of speech and language therapy at Guy’s Hospital and specialist voice rehab to teach my body to adapt to this state and return a singing and useful voice—help for which I am deeply grateful.
The words of the Letters Patent read by the clerk at our introduction to this House confer on each of us a voice in this place. I understand the privilege of this gift—it is something that my body knows to be true. So I pledge to use my voice here to create space for all those whose voices continue to be silenced and whose experiences are missing from our deliberations. I hope to use my voice to enjoy as many cross-party conversations and collaborations as tea in the Long Room will sustain.
Baroness Janke (LD)
My Lords, it is a great privilege to follow my noble friend Lady Teather’s eloquent maiden speech, and I congratulate her on it and welcome her thoughtful remarks. In her speech, her expertise and experience as a former Minister for Children and Families shone through, and her long-term commitment to work with charities and the NHS show her deep understanding of poverty in all its forms, particularly for refugees. I am sure we in this Chamber will very much welcome her experience and insight to the work we do here, particularly at this challenging time. I also pay tribute to her effective campaigning, having founded the APPG on Guantanamo Bay and chaired the APPG on Refugees when she was an MP. I am sure she is going to make valuable contributions to the work of this House as an enthusiastic and energetic colleague. Her voice will certainly be heard here, I am confident of that. It is a great pleasure to welcome her to these Benches; I wish her further success in the future and in her career in this House.
As we consider the Bill before us today, it is important to recognise the deeply egregious effects it seeks to remedy. The two-child limit is unjust and unfair and is a major driver of child poverty. It is discriminatory and hits hardest those who have the least and suffer the most, punishing children and setting siblings’ interests against one another within families. Some 25% of families affected are single parents with a child under three years old. Children of these families are doubly disadvantaged, having only one parent who is fully employed trying to make ends meet. Some 20% of all households affected by the two-child limit have at least one disabled child and 87,500 families affected lose around £3,500 per year.
Behind these figures, the reality of child poverty is about deprivation and misery. As a former teacher, I have seen it all too often: hungry children finding concentration in school impossible; teachers feeding the most desperate from their own pockets; parents missing meals so their children can eat; children and parents who have never known a holiday; the grinding anxiety and stress of trying to make meagre funds stretch even further and, quite honestly, just never having enough money. The humiliation and stigma of being poor compared to classmates and friends too often ends up in children being bullied in and out of school, for the old, cold and worn-out clothes that single out the poor or for not being able to go on school trips and visits or join sports and leisure clubs because your family simply cannot afford it. All this leads to a lack of confidence, feelings of inferiority and isolation, and subsequent poor attainment. It means that, by the age of 30, those who grew up poor are likely to be earning about 25% less than their peers. They are four times more likely to experience mental health problems, with growing consequences for worklessness and the benefits bill. They are more likely not to be in education, employment or training. I wonder whether the noble Baroness, Lady Stedman-Scott, thinks this is a route out of poverty; I certainly do not.
This pernicious policy was justified by the previous Government on the basis that it would make parents claiming benefits face the same financial choices as those supporting themselves through work. The argument was that the policy would achieve fairness. However, such evidence as there is points entirely to the contrary. No evidence has been produced to show that the policy has achieved its declared objectives. If the previous Government did not produce that evidence, I fail to see how those who were part of it can stand up and defend it.
Half the families who will benefit from the removal of the two-child limit, as the noble Baroness, Lady Sherlock, has said, were not on benefits when they had children, but catastrophes happen to families. People lose their jobs or become ill; families break up; people die or family members need extra care. This is why we have social security, as these misfortunes do not happen just to the poor; they happen to us all. Based on the arguments that the noble Baroness, Lady Stedman-Scott, has put, only a household wealthy enough to withstand all life’s disasters could responsibly decide to have more than two children.
It has been argued that the two-child limit will encourage families to increase their income by finding more work, but, for many, especially lone parents, the difficulty of finding affordable childcare means that they cannot increase working hours but need to make their meagre income go even further. All too often, it is their children who suffer. Expert institutions have attributed the rising tide of child poverty to the two-child limit policy. Some 59% of families affected by the two-child limit are in work, so, again, the false dichotomy between people having children on benefits and people at work does not stand up here.
Abolition of the two-child limit has been a common cause between many Members of this House and campaigners outside Parliament. I pay tribute to those who have worked to get this policy changed, and I very much hope the Bishop of Durham is listening, because he, too, was a key campaigner on this.
It is good to see that action is now being taken to remove this policy through the Bill, but there is still some way to go to eliminate child poverty, including the removal of the punitive benefit cap, which we hope will soon follow. A successful country invests in its children: the people who will deliver our nation’s future. Our country has failed to do this so far, and a record 4.5 million children are in poverty.
The Bill, though long overdue, is a welcome step forward for the nation’s children. We look forward to the full implementation of the Government’s child poverty strategy, and in this spirit, we are pleased to support the Bill.
The Lord Bishop of Leicester
My Lords, I warmly welcome the introduction of the Bill and the opportunity today to comment on it. I congratulate the noble Baroness, Lady Teather, on her truly excellent maiden speech, and I look forward to the maiden contributions of the noble Baroness, Lady Antrobus, and the noble Lord, Lord Walker, as well as of other noble Lords.
I count myself very fortunate to have never experienced true poverty myself, but I have spent much of my working life living in communities where poverty was very real—both the absolute poverty of one of the poorest nations in Africa, where I worked for several years, and the relative poverty of inner-city Sheffield, where I was vicar for a decade before becoming Bishop of Leicester.
I have seen first-hand, therefore, that poverty is not just about material resources but also has a much wider psychosocial impact. Amartya Sen argued that poverty should be understood not as low income but as capability deprivation: the lack of real freedom or opportunities to live a life one has reason to value. Martha Nussbaum expanded Sen’s framework by proposing a list of central human capabilities—such as life, bodily health, imagination, emotion, affiliation, play, and control over one’s environment—which all societies should secure for every citizen as a matter of justice.
Added to this is what some have called the poverty-shame nexus: the mutually reinforcing relationship between material hardship and the emotional experience of shame. People in poverty can experience shame through various mechanisms: social stigma, being judged as lazy, undeserving, or morally inferior; institutional interactions—for example, public services that treat people disrespectfully; or cultural norms that define success and worth in material terms. Research has found that people internalise stigmatising narratives about poverty and, as a result, have lower self-esteem and self-worth, and avoid social interaction with others.
Universal credit and its system of sanctions arguably institutionalise the poverty-shame nexus. Although I accept that its introduction in 2013 brought a necessary simplification to welfare payments, I nevertheless believe that the system of sanctions in particular has an implicit moralising message. Claimants must continually prove that they deserve support because they are both “poor enough” and “trying hard enough”. I have spoken with people who describe the feeling of being “presumed guilty until you are innocent”, on the assumption that every person looking for help might be “cheating the system”.
It is my belief that the two-child limit to universal credit has only added to the poverty-shame nexus. The assumption would appear to be that if you are on universal credit and have more than two children you are somehow not being responsible. Yet I have three wonderful children—I am sure that many other noble Lords also have more than two children—and I confess that I did not make a financial calculation ahead of deciding to have a third child. I wonder how many of us did. Surely, then, we have a duty to lift the sense of shame from others, not reinforce it.
Bishops on this Bench have consistently opposed the two-child limit right from its introduction. Indeed, as has already been mentioned, the former Bishop of Durham introduced a Private Member’s Bill seeking to abolish the limit in 2022. For us, this is part of a much wider calling to combat poverty in all its forms, addressing its causes and wider effects. I know that noble Lords on all sides of this House share that concern. Our differences are more to do with how, rather than whether, it is done. Yet I dare to hope that, once this policy is changed, we can work together to find other areas whereby those who are caught in poverty are enabled to contribute their gifts and skills to wider society.
Baroness Antrobus (Lab) (Maiden Speech)
My Lords, I thank you for the opportunity to make my maiden speech in this important debate on this universal credit Bill and the removal of the two-child benefit limit. This matter is personal to me. When I was 11 years old, state help in the form of child benefit became incredibly important to my single-parent household after my parents separated. My weekly trek to the post office to collect it—in cash, of course, in those days—helped us through a difficult period. Quite simply, it put food on our table. Mine was a middle-class family, and those who rely on support such as universal credit are not a static group, as has been said. Circumstances change: people face bereavement, job loss, or, as in my case, family breakdown. At moments of crisis, that support can be essential.
In fact, both my parents worked in this place as law reporters before the Law Lords moved to the Supreme Court. At no time did anybody imagine I would end up on these Benches. That I have joined the Labour Benches is probably less of a surprise. I have a proud heritage of Labour councillors from my grandparents’ generation, including the chair of Newton-le-Willows District Council, then part of Lancashire: my great uncle, Joe Noon. He taught me to play dominoes and to respect my Labour heritage, and he succeeded in both.
I also give heartfelt thanks to all the staff of the House, the clerks, officials, security and catering staff, and especially the doorkeepers, whose quiet professionalism sustains the dignity and daily functioning of this institution. I also thank Black Rod for his warm welcome and Garter for his guidance. I am deeply grateful to my noble friends Lady Royall of Blaisdon and Lord Coaker for introducing me, and to my noble friends Lady Smith of Basildon and Lord Kennedy of Southwark, not only for their generosity in time of support but for the confidence they placed in me.
I come to this House with a background that spans practice and theory, service and scholarship. For 20 years, I served in the Royal Air Force, including operational tours in the Middle East and Afghanistan, and in the Royal Navy. Those experiences shaped how I understand conflict—not as an abstract concept, but as something that has lifelong and often multigenerational impacts, both on combatants and civilians. Those conflicts still haunt me in many ways, but they also strengthen my determination to engage with politics in relation to defence and security. I wanted to walk towards that fight, not away from it, including standing as a candidate for the Labour Party in the 2015 general election, after I left the Air Force.
After 2015, I turned to academic research. I completed a doctorate examining the politics of air power between the wars in Whitehall. Some of the men who shaped the early Royal Air Force sat on these Benches. I studied their papers in the archives in Victoria Tower. I never imagined that I might one day follow them into the Chamber.
Indeed, 100 years ago, just this Tuesday, Lord Thomson of Cardington, the first Labour Secretary of State for Air and a subject of my research, spoke in an air policy debate in this House. With striking prescience, he warned that, should another European war occur, Britain’s ports and industrial centres would be exposed to devastating attack from the air and that the RAF would be central to national defence. Lord Thomson was tragically killed in the R101 airship disaster on its maiden flight in 1930. I hope that is not an omen for my maiden outing. However, the Oxford Dictionary of National Biography described him as a
“a clear and vigorous speaker, and his cheerfulness and good temper gained him many friends in the house”.
That seems an excellent example for me to at least aspire to follow.
My subsequent academic work has focused on contemporary warfare. I am co-director of the Freeman Air and Space Institute at King’s College London. I have written on many subjects, including organisational culture, air power, missile defence and deterrence in this increasingly dangerous and divided world. I commend my noble friend Lady Carberry on her speech in the International Women’s Day debate, when she highlighted continuing toxic behaviours in the Armed Forces—an issue that I have not and will not shy away from raising.
I began by explaining why the Bill has a personal resonance for me. It matters so much more for the 450,000 children it will lift out of poverty. I saw the impact of financial hardship on children while volunteering in food banks for four years.
To finish, some might wonder why a defence and security academic would choose this debate for her maiden speech. Yet the connection is clear: as we have seen time and again, global conflict and instability directly affect the cost of living. Defence, security and economic well-being are deeply intertwined. Britain’s ability to contribute to a more stable world depends on the credibility of our Armed Forces and the deterrence they provide. We are all affected by defence and security.
Your Lordships will have different perspectives and backgrounds from me. I am looking forward to working with and learning from you.
Baroness Lister of Burtersett (Lab)
My Lords, it is an honour to follow the wonderful maiden speech of my noble friend Lady Antrobus, which came from both the heart and the head—there is no better combination. As she said, she comes to your Lordships’ House with a background that spans practice and theory, service and scholarship. She is too modest to say just how eminent her record has been in all those spheres. Her speech demonstrates how valuable her contribution will be to the work of this House, at a time when conflict is engulfing so much of the world. I very much look forward to the wisdom that she will bring to debates on these matters.
My noble friend was also able to bring her personal experience of growing up in a single-parent family to bear on the subject of today’s debate. In doing so, she demonstrated the value of the knowledge that comes from lived experience—something that has helped to shape the Government’s child poverty strategy. She brought home very powerfully why it is wrong to suggest that the money spent on the abolition of the two-child limit would be better spent on defence, as the leader of the Opposition said recently. My noble friend’s speech made it clear how the security of the realm and the security of individuals in poverty are intertwined.
This brings me to the Bill. Let us rejoice as we read the death rites on what one eminent social policy professor described as the “worst social policy ever”. As we have heard, what UNICEF UK describes as a “transformative” measure will reduce both the numbers of children in poverty and the depths of poverty. As one mother responded, “Finally all my children will be seen as equals”. I pay tribute to those in government and in civil society who made sure it happened.
The Council of Europe Human Rights Commissioner recently observed that,
“without this step, it would be difficult to imagine an effective overall approach to combating child poverty. It is an important investment in the rights and wellbeing of children”.
He criticised the stigmatising preconceptions about people receiving social security that have marked some political and media reactions to the Bill. These reactions have suggested that somehow spending money on lifting children out of poverty is illegitimate—part of what is dismissed by the Opposition as the “ballooning benefits bill”. This ignores an estimated £50 billion a year hacked off that bill as a result of Tory cuts and restrictions, while official figures show that spending on working-age benefits as a percentage of GDP has not increased and is not projected to increase.
Arguments about the costs of the Bill also ignore, as we have heard, the cost of not acting, in terms of the impact of poverty on public services—notably, health, education and children’s care—and on future employment prospects. We are talking about preventive spending and investment in our children.
It is all too easy for the Opposition to hide their contribution to the worsening of child poverty behind the argument that the answer lies in paid work, full stop. This is despite the fact that, as we have heard, three-fifths of those hurt by the two-child limit have a parent in work and that an estimated 70% of the additional funding will go to that group. More fundamentally, there is a widespread consensus built on academic analysis that removal of the two-child limit is the one most effective measure open to the Government to reduce child poverty at a stroke. To quote CASE at the LSE,
“changes in parental employment, whilst important, will never deliver change to child poverty rates on the scale we need to see. We can only get significant and lasting reductions in child poverty by investing in our social security system. There really is no other way”.
Research by Public First suggests that, when provided with information about the cost-effectiveness of abolition of the limit in reducing child poverty, voters’ support for the measure increases significantly. The same is true of the overall benefit cap.
I am afraid that, here, I have to introduce a note of dissent, which I am sure will not surprise the Minister. It echoes the powerful maiden speech from the noble Baroness, Lady Teather. The Bill’s impact assessment estimates that in 2029-30 around 50,000 households will not gain and 10,000 will only partially gain because of the cap. I find it depressing that the same arguments are used about needing the cap to ensure work incentives as under the previous Government. Yes, the cap may push some parents into paid work, but by driving parents into deep poverty it creates stress and anxiety about making ends meet that makes them less effective jobseekers. This is not, as Ministers assert, in the best interests of children. Indeed, I remind my noble friend that, when the cap was introduced, the official Opposition supported the removal of child benefit from the cap on the grounds that it is received by equivalent working families and that, therefore, in order to create a more level playing field, it should not be included in the cap. Could this be looked at again, please, from the perspective of the best interests of children?
I also urge that, when the threshold limits are reviewed next year, a decision is made to uprate them annually in line with the UC standard allowance, so that we do not see more families pushed into deep poverty by the cap each year. As it is, they have been uprated only once since 2016, when they were cut. They are now worth £5,409 less in London and £4,702 elsewhere as a result.
Two other concerns have been raised about some families who will not benefit or fully benefit from the Bill. The first, raised by CPAG, of which I am honorary president, and Advice NI, relates to some families who, having migrated to UC through the managed migration process, may lose some of their transitional protection. The other, raised by Resolve Poverty, concerns families who may lose as a result of the knock-on effect on their council tax reduction. I do not think that either is mentioned in the impact assessment and I wonder whether my noble friend can throw any light on the numbers likely to be involved.
To return to the good news, the Bill will, in the words of a mother of four quoted by CPAG,
“make a world of difference”.
As the cornerstone of the first UK-wide child poverty strategy since 2010, it symbolises what a Labour Government can do to build a good society.
Baroness Bennett of Manor Castle (GP)
My Lords, I thank the noble Baroness, Lady Sherlock, for introducing this Bill. Her passion for this policy is evident and I am sure that she is very glad finally to bring it to us 615 days after the current Government took power. The Green Party called for the end of the two-child benefit cap during the 2024 election and has continued to do so subsequently.
As the noble Baroness said, this policy was introduced by the Cameron-Osborne Conservative Government in 2017, deliberately choosing to put children into poverty—children who had done nothing to deserve that situation. It was a cruel policy and it is very good news that it is finally going. I offer congratulations to the many campaigners who have worked for this day, including Labour Back-Benchers in the other place. It is a great pleasure to follow the noble Baroness, Lady Lister, who, I have no doubt, has been working very hard on this and rightly identified where the Government urgently need to go further, which is where I will particularly focus.
This is a missed opportunity, as it fails to act on the household benefit cap. According to Z2K, the charity that aims to fight poverty, at least 150,000 children in larger families will see no benefit at all because they are subject to that separate benefit cap. The household benefit cap means that many larger families will be trapped in deep poverty. In a case study cited by Z2K, Maryam is a lone parent of three who fled domestic abuse and now relies on universal credit. She has been affected by the two-child benefit limit and the benefit cap and is left with just £25 a week for the family to live on after rent. Even with today’s Bill, her income will not increase at all. If the benefit cap was lifted alongside it, it would allow her to meet her basic living costs and escape severe destitution.
There are also the families affected by disability. The Government’s child poverty strategy highlights that children living in families where a household member is disabled are at particularly high risk of both poverty and deep material poverty. Yet, under the changes in the universal credit legislation, financial support for seriously ill and disabled people under universal credit will be reduced by £215 a month. For a disabled family with three children affected by this, that universal credit change will wipe out 62% of the benefits from the two-child limit abolition. Policy in Practice, which did some very valuable work, found that one in 10 households currently held back by the two-child limit will not gain at all when the policy is reversed and one in 10 families will see only part of their potential gain as they become benefit-capped through the policy.
I am citing those figures, and I am sure others will come up with other figures, because there are no official figures on this. In fact, I asked the Minister in a Written Question in December for the Government’s figures on how many families who would have had money from the end of the two-child benefit cap would be hit by the household benefit cap. The Answer that I got on 5 January was:
“The requested information is internal analysis that is being quality assured to official statistics level. Plans to publish this in due course are ongoing”.
I wonder whether the noble Baroness can tell me how that is going.
Looking at the overall situation, the Institute for Fiscal Studies estimates that, without further policy action, child poverty rates will have crept back close to the 2024-25 level by the end of the forecast period in 2029-30, leaving a change of just 0.4% in those poverty levels. Another thing aside from the overall benefit cap is the local housing allowance, which is currently wildly inadequate.
I have two final brief points. I welcome the three maiden speakers today and look forward to those from whom we have not yet heard. They are obviously interested in child poverty but I urge them to think about branching out, as they find their feet in this House, into other areas that impact it. I spoke yesterday in the Moses Room about financial regulation. That is crucial to child poverty and a threat to the security of us all. Please think about engaging; do not just leave it to the banking insiders but pick up issues such as that as well.
Finally, to respond directly to the noble Baroness, Lady Stedman-Scott, I am slightly surprised that, as the Conservatives are very into history, their leader has not really looked into the history books on the Boer War. British society and this place became very concerned that poverty, poor diet and poor housing meant that young men were not fit to fight for Britain, because of child poverty. If you are going to recruit 20,000 more soldiers, how will you do it from a society blighted by child poverty?
Lord Babudu (Lab)
My Lords, I look forward to hearing the remaining maiden speech, from my fellow newcomer and noble friend Lord Walker of Broxton. I congratulate the noble Baronesses who have delivered excellent maiden speeches already. Before I get to the substance of my contribution, I declare an interest as the executive director of Impact on Urban Health, part of an endowed foundation that funds organisations that have contributed to the Government’s child poverty strategy, including Child Poverty Action Group and Changing Realities.
In preparing for this debate, I was heartened to read of the extent of cross-party consensus on the need to address child poverty. Given how it has risen over the past 14 years, we must be clear that the current approach is not working. Building on contributions from other noble Lords, I will speak briefly about how people come to be on universal credit and run up against the two-child limit, who ends up in that situation and what it costs.
First, on how it happens, as we have heard, around half of those affected by the two-child limit were not on universal credit when they had their children. This is a circumstance that can befall so many of us—a break-up with a spouse, the loss of a job or a worsening of health. These are routes to universal credit for so many. Who ends up running against the two-child limit? It is women, in large part. Of the 450,000 households affected, more than half are headed by single mothers and only around 6,000 by single fathers. Black and ethnic-minority households are up to three times more likely to be affected than white households and 40% of affected households have a parent with a disability. The approach we are taking disproportionately affects women, ethnic minorities and people with disabilities.
What does it cost? We have heard from other contributions that the proposed changes will have a cost of around £3 billion a year, in the end. That is a lot of money by any means, but, stepping back, what is the broader cost of letting this limit stand? Extensive research by Child Poverty Action Group, the Joseph Rowntree Foundation and the Department for Work and Pensions has shown that those affected are more likely to experience poor physical and mental health and less likely to be in employment, education or training or to earn a decent wage in the long run. In several ways, this limit costs people the opportunity to live in good health, to earn well and to contribute to society. We are losing tax contributions and well-being.
I am incredibly sympathetic to the need to control our welfare bill. I sat on the Commission for Healthier Working Lives because I believe that work plays a hugely important part in enabling people to live well. But we must not forget that the majority of those affected by the two-child limit are already in working households. In due course, I will speak to the changes I believe we need in welfare more broadly, but today I want to be clear about one thing: this is not the way to build a healthier society or to save money. It ultimately costs us money. We know that we do not want children to live in poverty and that it is scarring their lives.
We have this opportunity. Removing the two-child limit is simply the most effective way to achieve meaningful progress on reducing child poverty. Other approaches have not been working since the limit was introduced and with the opportunity to achieve the biggest reduction in child poverty within any single Parliament, I urge noble Lords to signal their support for His Majesty’s Government and grasp this opportunity with both hands.
Lord Walker of Broxton (Lab) (Maiden Speech)
My Lords, it was once pointed out to me that this place was designed to intimidate and I am indeed terrified right now, especially given the fabulous maiden speeches before me. That could not be more at odds with the kind and helpful welcome that I have received from every corner of this House—Black Rod, the clerks and officials, the doorkeepers, the catering staff, the police, and my gracious supporters and noble friends Lady Smith and Lord Blunkett. In fact, the cordiality of noble Lords who I have met on all sides of this Chamber has been lovely. I hear the vibe in the other place is somewhat different, so thank goodness I failed to obtain a seat there. In fact, it has been quite an unexpected and circuitous route for me to be standing here today, but here I am and I intend to contribute to the very best of my abilities.
I never met either of my granddads. They both worked hard down coal mines and died too young. My mum and dad met at school in West Yorkshire. Given their backgrounds, they knew all about graft. They tried no end of things to better themselves, from peddling strawberries on a Welsh roadside to running a late-night fish and chip shop and sending out chain letters, all before landing on the idea in November 1970 of selling loose frozen food from a tiny shop in Oswestry. Dad worked the stock and Mum the checkout. He wanted to call the business Penguin; fortunately, Mum won that debate and Iceland was born. As a kid, I had the privilege of being able to sit around the dinner table and listen to their conversations about what it takes to build something brick by brick—the highs and the lows, and the need for persistence and resilience. I promised myself that I would make the very most of what good fortune I had been dealt.
That resolve has carried me to the summit of Everest. It has helped raise large amounts for charity and driven me to campaign on many environmental and social issues from palm oil to plastics, from infant formula to ethical credit. When making my own way in the world, I was adamant about one thing: I did not want to sell frozen peas for a living. Instead, I qualified as a chartered surveyor before moving to Poland, starting a property company and becoming the entrepreneur I had always dreamed of. We made many mistakes, somehow survived the great financial crash, and today my firm Bywater is the leading low-carbon mass timber developer in the UK.
Joining the family firm was never really on the cards, but when my dear mum was diagnosed with early onset Alzheimer’s, I realised that my own time might be limited and I wanted to protect the amazing legacy she had created with Dad. I can tell you that high-volume, low-priced food retailing is a bit different to collecting rents. It is cutthroat and all about value. I hope the value that I can bring to this place is some high-street realism, shining a light on what I have learnt as a retailer and an entrepreneur, amplifying the voices not just of business but also of the millions of weekly customers that we serve across 1,000 communities around the UK.
In many ways, Iceland is a barometer of Britain and, right now, those communities are struggling. The cost of living crisis means the basic affordability of everyday items is out of reach for many. That is why in my new role as Cost of Living Champion to the Prime Minister I will be relentless in pursuing outside ideas and fresh thinking, and asking uncomfortable questions.
Recent events in the Middle East have made this both more important and more challenging than ever. But I like a challenge, so I am pushing No. 10 to use its emergency powers to protect consumers from opportunistic rip-offs by convening a weekly COBRA-style committee of regulators to act in real time to protect consumers. I want to bring in the energy companies and petrol retailers to hold them to account.
As well as affordability, poverty comes from a feeling that you cannot access basic services—a sense of an unequal system creating financial injustice and of Westminster politicians not listening. To cite the economist Amartya Sen for the second time in this debate, it is about a lack of the agency to develop all of one’s potentialities. The only way we can tackle this is through collaboration between business and government. Business needs to act with the utmost kindness, respect and obligation to all its stakeholders, not just its shareholders. On the flip side, government needs to remember well that it is only private enterprise that generates the wealth our nation so desperately needs to fund public services, and to spend that money wisely.
Speaking of which, that little shop I mentioned in Oswestry was started with a £30 loan from my grandma. It grew into what is today the biggest business in Wales, which, in the last 20 years alone, has proudly contributed more than £1.3 billion to the UK Treasury. I directly thank our team of 30,000 amazing Icelanders for making that possible. Shopkeeping is tough, but it is noble.
I turn to the topic of the debate. We see the impact of poverty in our stores every day as customers struggle to put food on the table to feed their families. We have taken up many initiatives of our own to try to help, from boosting Healthy Start vouchers to creating interest-free microcredit schemes which prevent the most vulnerable from falling into the hands of predatory loan sharks. We have also led many successful campaigns, such as making infant formula more affordable or becoming the biggest recruiter of ex-offenders in the UK, which is good for society, business and the economy.
Ultimately, there is a limit to what any business can do, so I am delighted to support this Government’s actions to lift hundreds of thousands of children out of poverty by removing the two-child cap. Socially, morally and fiscally, it is undoubtedly the right thing to do. Alongside this targeted intervention, remembering that a Government’s responsibility is to spend wisely, we must also reattain our fiscal prudence with our country’s welfare spending. I support the Labour Party, not the benefits party. It should strive to provide a safety net for those in real need, not those making a lifestyle choice. In particular, we must prioritise getting many more of our young people out of the NEET cul-de-sac and back to participating in society; otherwise, we are complicit in destroying their life chances. Acting on this is also a moral obligation.
I conclude by paying special thanks to my own family: my irrepressible dad, who has supported me at every turn, and my mum, who I know is looking down from the gallery in the sky today. Finally, I thank my two daughters, and my wife, Rebecca. She is the kindest, strongest, most beautiful person I know. I thank her for putting up with me. I hope that noble Lords will enjoy putting up with me too.
Lord Bird (CB)
I say “well done” to the noble Lord, Lord Walker. I was confused when I was asked to follow the noble Lord and, in the tradition of the House, to praise him. I thought to myself, “I don’t know anything about Walkers crisps”. That was the only Walker I knew. Then I thought, “Ah no, it is Johnnie Walker”. For a while I was confused, but I got there in the end.
What really excites me about what the noble Lord is doing, as well as putting a lot of people into work, is the idea that he extended the hand to people who had been banged up. He has given jobs to people who were in prison. I am glad that the noble Lord is in competition with Timpson. I think, in a way, he is a bit ahead of it and maybe it is going to have to catch up. It is a good bit of competition. The only problem I have with the noble Lord—and I really do have a problem—is: where was he when I needed him? I remind noble Lords that I am an ex-offender.
I turn to the Bill. What a wonderful Bill, to get rid of something like this. We may like it or not; we may or may not be with the noble Baroness, Lady Stedman-Scott, wanting to give hand ups rather than handouts. I have to say that the noble Baroness stole that from me; she knows that. I was the first person in the United Kingdom to use those terms, and I stole them from Bill Clinton, who stole them from Jesse Jackson. Is that not interesting? Is it not wonderful that we can talk about a hand up, not a handout? The whole of my working life, since starting the Big Issue 34 years ago, has been about giving people a hand up, not a handout.
My mother had six children. Every year that she had a baby, she got poorer—and poorer and poorer. Big families are not good for the bottom line. They are not good for you. But the problem with this Bill, and where I fall out with our Conservative friends, is that while it may punish mum and dad, it really punishes the children. To me, if we need anything in life today, it is to be behind our children. Our children are being undone before us: mobile phones and social media are undermining them. Our children are really at the sharp end of things.
I come from the pre-social security period. We were brought up with very little help from the state—in the 1950s and 1960s, there was none of that. We got five shillings per child: that was about one pound and 10 shillings for a family of six boys. Because Britain is a low-wage and low-investment economy, British capitalism is really good at making slithers of money out of jobs that are low-paid. It is very difficult now for a lot of people to nobly go out to work and earn enough money to feed themselves and their children, even though they are doing a 40-hour week. We are a low-wage economy because we are a low-investment economy.
Capitalism is quite happy with that. It does not matter if you make millions of pounds out of slithers of profit, or whether you buy and sell things that are worth £50,000 each. This is the thing that I came into the House of Lords to try to sort out: I came in to dismantle poverty, not to make the poor more comfortable, nor to keep them outside as though they were a different species. I have listened to the debate so far. I am not sentimentally attached to the poor; I do not cry over them. I think there are too many people who cry over the poor and who do not do anything. I want to get the poor out of poverty. I want to get the poor into a situation where they can make decisions about their own lives, where they can have the kind of life that they want, where they can get rich and socially mobile and get out of poverty. There is only one cure for poverty and it is not the state. The only cure is social mobility. If you get social mobility, you are out of it.
The funny thing is that most people in Britain, even Conservatives, will be a few generations away from the coalface. They will have morphed their way to better times. The problem is the inheritance of poverty—for example, 90% of the people I have worked with in prisons and on the streets come from poverty inherited from their parents. Until we work on that, we will not get anywhere.
Lord Watson of Invergowrie (Lab)
My Lords, it is common for noble Lords to start their speeches by saying that it is a pleasure to follow either a noble Lord or a noble Baroness, and that is generally true. There are certain circumstances when it is not true. A number of speakers in this House are just so impressive, often speaking without any notes, that it is a very daunting prospect to follow them—and the noble Lord, Lord Bird, is undoubtedly one of them.
I pay tribute to my new noble friends Lady Antrobus and Lord Walker and the noble Baroness, Lady Teather, all of whom made speeches of quality, with a passion and fluidity that show that they will make major contributions to your Lordships’ House in the months and years to come.
Turning to the Bill, I am very pleased that we have got to where we are today on the removal of the two-child limit, but I cannot disguise my regret that it took so long. Be that as it may, as of next month, the two-child limit will no longer apply. In a typically powerful opening speech, my noble friend the Minister highlighted how many children will be taken out of poverty by the final year of this parliamentary term. Add in the introduction of breakfast clubs and the extension of free school meals, and that figure will rise beyond half a million. Even more impressive is that all that is before the Government’s child poverty strategy properly gets under way—a 10-year plan aimed at delivering a lasting reduction in child poverty by tackling its structural causes.
The noble Baroness, Lady Stedman-Scott, spoke about the value of work, but during her party’s time in government, it completely failed to ensure that parents in work could keep up with the cost of living. In the Tories’ last year in office, 3.2 million children in working families were in poverty—up from 2.1 million when they came to power in 2010. More than any other policy, the two-child limit introduced in 2016 was responsible for driving child poverty to its current record high. To be honest, we should not be too surprised, because one of the last acts of the Labour Government who demitted office in 2010 was the Child Poverty Act, part of which was to establish a child poverty commission to tackle structural issues around child poverty. It took the incoming Tory and Lib Dem Government two years to introduce it, but they called it the Social Mobility and Child Poverty Commission. As the noble Lord, Lord Bird said, social mobility is of course very important, but the focus was meant to be on child poverty, and it had that name. Four years later, “Child Poverty” was dropped and it became the Social Mobility Commission. I think that reflected the fact that child poverty simply was not a priority for that Government and subsequent Tory Governments.
More than 60 children’s charities and other campaigning groups have welcomed the Bill. Tellingly, only right-wing organisations such as the Institute for Public Policy Research, the Centre for Social Justice and the self-styled TaxPayers’ Alliance—I am a taxpayer, but it certainly does not speak for me—have questioned the repeal of the two-child limit. Often, arguments in favour of retaining the two-child limit are couched in language such as a “benefits bonanza” or “welfare junkies”, appallingly pejorative terms that demean many people who are in receipt of state support while in employment, doing jobs where their pay is so low or unpredictable that they need extra help just to survive.
I say to my noble friend the Minister, with whom I worked on the shadow education team and for whom I have huge respect, how much I welcomed her use of the term “social security” in her speech. Can we please ditch the terms “welfare” and “benefits” and put “social security”, the description that we used to use, in their place? That is exactly what state support for families living with poverty is. Why should we not use the proper term? We can find a term that is not demeaning or in any way pejorative to people in need of help.
At Second Reading in another place, the shadow Secretary of State for Work and Pensions questioned the affordability of the repeal of this legislation, something that has been repeated today. I would flip that coin and ask: what about the affordability of not ending the limit, which my noble friend Lady Lister called preventive spending? Can the cost of lower educational attainment, poorer mental health and a much higher likelihood of being NEET ever be tolerated? Shamefully, I have to say that during the 14 years of Tory and the Tory-Lib Dem Governments, it too often was. We can say that it will not be tolerated any longer, because this Government are developing the child poverty strategy to which I referred earlier. That will result in children receiving the social security and social solidarity that they deserve and having better health and education outcomes, enabling more of them to build careers that will provide stable lives for families of their own. That will be the hugely beneficial outcome of this Bill, which is in itself hugely welcome.
Baroness Dacres of Lewisham (Lab)
My Lords, before I begin my substantive contribution to this debate, I want to pay tribute to those who have made their maiden speeches this afternoon. It has been wonderful to learn so much more about each of them and inspiring to hear them.
This Bill represents one of the clearest and most immediate steps we can take to reduce child poverty in this Parliament. Few policies in recent years have had such a direct and concentrated impact on larger families as the two-child limit. Its removal is therefore not just symbolic; it is practical, targeted and necessary. Around 470,000 households are affected by the two-child limit, impacting between 1.6 million and 1.7 million children. Six in 10 of those households include at least one adult in work. These are working families, as many have mentioned this afternoon. The parents rise early, commute long distances, juggle childcare and shifts, and contribute daily to our economy and our communities. Yet despite those efforts, many remain in poverty. That is a reality of in-work poverty today.
Families lose around £3,400 for each third or subsequent child not covered by the child element. For households already balancing tight budgets, that loss is not abstract; it means difficult trade-offs between heating and eating, falling behind on rent or relying on food banks. Behind every statistic is a family trying to provide stability and reassurance to children while quietly carrying the financial strain. The Joseph Rowntree Foundation has consistently identified the two-child limit as a key structural driver of rising poverty among larger families. Its research shows that children in families with three or more children now face poverty rates exceeding 40% after household costs. Poverty among larger families has risen markedly since the introduction of this policy, widening inequality between children based purely on their family size.
Joseph Rowntree Foundation modelling demonstrates that removing the two-child limit would significantly improve living standards for the lowest-income households. Scrapping the limit would more than halve the projected real-terms decline in income for the poorest third of households compared with retaining it. Government analysis similarly indicates that hundreds of thousands of children would be lifted out of relative poverty.
The Bill also sits within a broader effort to support families and strengthen living standards. It complements the expansion of free breakfast clubs, saving parents up to £450 a year, and the extension of free school meals to all children of households on universal credit, benefiting half a million more pupils. That broader approach matters because poverty is rarely the result of one single factor; it is shaped by wages, housing costs, food prices, childcare pressures and access to opportunity. Addressing it therefore requires income support and practical support, nutritious food at the start of the school day, predictable childcare that enables parents to work, and a social security system that reflects the real cost of living.
The heart of this legislation affirms a simple but vital principle that no child’s opportunity should be limited by the number of siblings they have, and that working families deserve stability, dignity and fairness. The measures before us today will not solve every challenge faced by families, but they will make a real difference to the lives of many children across this country—a responsibility worthy of this House. For those reasons, I support the Bill.
Baroness Shah (Lab)
My Lords, I start by congratulating my noble friends Lady Antrobus and Lord Walker of Broxton, and the noble Baroness, Lady Teather—it is always great to see a member of the Brent family on the Benches—on their brilliant maiden speeches. I am grateful for the opportunity to speak at Second Reading. The two-child limit was introduced by the Conservative Government in 2017 and its consequences for child poverty were felt immediately. On taking office, the Labour Government inherited an economy in a fragile state and have worked deliberately and responsibly to create the conditions in which bold action on child poverty could be taken. The Bill is the result of a Government who have prioritised why they came into power.
Let us be clear about what this policy has done to families across our country. The Child Poverty Action Group has described it plainly. This is a “tax on siblings”. It severs the fundamental
“link between what children need and the support they receive”.
Government data in July 2025 shows that more than 1.6 million children live in households affected by the limit—that is one in nine children in England, Scotland and Wales. That number grows every year. The Joseph Rowntree Foundation’s UK Poverty 2026 report is sobering. For 2023-24, it showed 4.5 million children living in poverty in the United Kingdom. That is a scandal. The Bill is a vital first step, not the last.
The case for this Bill is not just economic; it is educational. Children growing up in poverty already start behind their peers, and the gap widens every year. The Education Endowment Foundation has found that pupils eligible for free school meals are, on average, 18 months behind their classmates by the time they sit their GCSEs. The Social Mobility Commission has shown that children from the poorest households are significantly less likely to achieve the grades needed to access higher education or skilled employment. Poverty does not merely limit what children can afford; it limits what they could become. When we remove the two-child limit, we are not simply putting money into households; we are unlocking potential that this country cannot afford to waste.
For children growing up in households affected by the two-child limit, the barriers begin long before the school gates. Families are unable to afford school uniforms, school trips and even basic stationery—the small things that determine whether a child feels that they belong. Teachers report children arriving hungry and unable to concentrate. The Institute for Fiscal Studies has found that a 10% rise in family income during childhood leads to measurable improvements in educational attainment and earnings in later life. In other words, poverty is not a temporary inconvenience; it is a force that shapes a child’s trajectory for decades. The Bill is an investment in the education of future generations. The IFS, the Resolution Foundation, the Joseph Rowntree Foundation and CPAG alike all say that lifting the limit is the single most cost-effective lever the Government can pull to reduce child poverty.
Then, there is the so-called rape clause, which requires women to prove non-consensual conception in order to secure exemption for a third or subsequent child. It is degrading, traumatising and utterly incompatible with a just society, and I am proud that this Bill will consign it to history.
The Bill before us is not a merely a policy change; it is a moral statement. It says that we will not hold children responsible for the circumstances of their birth. The Resolution Foundation puts the figure as high as 500,000 children lifted out of poverty when the two-child limit’s removal is combined with expansion of free school meals. CPAG has estimated that the long-term cost to society of entrenched child poverty stands at £39 billion a year in lost tax revenue and increased demand on public services. We spend more managing the consequences of child poverty than it would cost to prevent it.
The Bill does not stand alone; it is the centrepiece of the most ambitious child poverty strategy in a generation. Taken together with measures in the Government’s child poverty strategy, these are not tinkering at the edges. This is structural change, addressing the root causes of poverty that has been allowed to deepen over the last 14 years of austerity. This is a rare moment of consensus across major research and advocacy organisations throughout this country. Ending the two-child limit is the single most cost-effective action this Government can take. The moral case is unanswerable, and the time has come. I end by quoting Cicero:
“What society does to its children, so will its children do to society”.
Lord Redwood (Con)
My Lords, I congratulate our maiden speech-makers today and join in the general welcome to them. I draw from the noble Lord, Lord Walker, a very wise remark when he reminded our governing party that it is indeed the Labour Party, not the “Benefits Party”. While I think that all of us here share the passion and the ambition to lift families out of poverty and to make sure that children can have fulfilling lives, in the strong words of the Minister, I think it is more difficult than just making a modest extension in benefit provision for certain families in our society. If only it were that easy, I am sure parties would have done it a long time ago. What we are embarking on, surely, is a very ambitious programme which is trying to help, without interfering unnecessarily, all those families in which the children do not get that right opportunity.
Some children in poor families are let down because there is simply a lack of money. They have loving parents, and if there were a bit more money, they would not have to make such invidious choices about meals and support for the children at school, and trips and outings. Others are let down by adults in their lives who control them, abusing them or spending the money on too much alcohol and drugs, and not concentrating on providing them with the stable financial background they need. Some children are born into families in which there may be plenty of money or too little money, but they lack those other important things. They lack love. They lack support. They lack ambition for the children. They do not provide the guidance that good parents and good grandparents try to provide.
The state cannot be everybody’s parent, nor do we want it to be. The state wisely says that the Government, or a local authority, will intervene and pre-empt the parents only in extreme cases. We are talking about influencing, encouraging and supporting the parents. That can be done by many of us. Everyone here has been on a remarkable journey in their lives to date. Many have overcome considerable difficulties, from background, resistance or opposition, and have achieved great things already, so the more we can get out and talk and engage and encourage, the more it is possible that we can turn on a light in young minds and that they can see that something is possible that the adults around them have not told them about. Or maybe we can enthuse their teachers, who need to put ambition into their lives. There is nothing wrong with ambition; it can be a force for good, and it is releasing children from poor backgrounds if we can communicate to them that maybe they can achieve great things too.
The noble Lord, Lord Bird, said it very well in his remarks on social mobility. But of course, we are interested only in one-way mobility: we want people to be able to move up. We are not so keen on people moving down, and we try to cushion or help if they move down too quickly. The more people we promote, the more people fall below the average; that is the way arithmetic works, but we want to live in a more prosperous society. There will always be people who are relatively worse off, but if it is around a much higher average living standard, then there will be so much more happiness in the world around us.
I say to the Government, given our shared ambitions to get more people out of poverty and give more encouragement to young people, that there are many other things than this Bill that they could or should be doing. The first thing is that it has to be much easier to get a job. Unfortunately, over the last 18 months, there has been a big rise in unemployment, and the combination of high taxes on jobs and on those businesses that need premises in our high streets—the shops and the entertainment and leisure businesses—has contracted the number of job opportunities. This will make it much more difficult for the Government to fulfil their ambitions, because this cannot be done without the good will and success of the entrepreneurs, as represented so ably here today by the noble Lord, Lord Walker.
The strand in Labour which is about the promotion of work and better working conditions is wholly admirable. Whenever I have been fortunate enough to run larger enterprises or be involved in their management, I have always been very encouraging of that strand in Labour. I have wanted people to be better paid, but it must be through bonuses or working smarter, so that the company can serve the public well without going bust. I have always wanted people to see that there is the chance of promotion. Most of us started with jobs we did not really want to do and had to work our way up. That is what ambition is all about.
The Government must think of a much bigger, bolder strategy. Paying extra benefits is not going to do it.
Lord Davies of Brixton (Lab)
I welcome strongly the Government’s decision to abolish the two-child limit. Scrapping it remains the single most effective step that we are taking to reduce child poverty in this country.
As we have heard, abolishing the policy will lift about 450,000 children out of poverty by 2030. When combined with the other measures in the Government’s child poverty strategy, this could lift more than half a million children out of poverty by the end of the decade. This is something that we should be celebrating and shouting from the rooftops. It is an incredible achievement and one of which the Government can be proud.
This is not an abstract statistic. It represents hundreds of thousands of individual children who will grow up with better security, better health and improved opportunities. One noble Lord has asked how the Government can justify the expense and mentioned the £3 billion figure. Quoting the £3 billion figure ignores the costs of child poverty—the poorer health outcomes, the lower educational attainment, the greater pressure on public services and the lost economic potential. Put together, that is an estimated £39 billion. The £3 billion saves the country as a whole £39 billion. How can we not wish to pursue that policy? It is not reckless spending. It is highly targeted and cost-effective, with serious and substantial long-term benefits.
Others have argued that taxpayers should not be expected to support larger families. Many of the comments of the noble Baroness, Lady Stedman-Scott, were about large families. The reality is that, now, only a limited proportion of families have four or more children. Of those families, the great majority are working hard to provide for them. Those who are unable to get jobs are still not to be dismissed as the feckless poor—that is the narrative which is always produced to try to prevent decent human services. The two-child limit has no measurable impact on family planning or the fertility rate.
Every child is to be celebrated and cherished, regardless of their birth order. They deserve enough food, a safe home and a fair start in life. When children are supported to thrive, they do better in school, remain healthier and contribute more fully as adults. That benefits not only those families but all of us—society as a whole. It is important—I think the point needs to be made to the noble Baroness, Lady Stedman-Scott—to note that this is not only about families out of work. As other speakers have explained, the majority of those who are caught by the current policy and will benefit in future are families who are in work.
Unfortunately, I am going to join my noble friend Lady Lister of Burtersett and raise the issue of the benefit cap. I do not think this policy will achieve all its objectives unless and until we remove the benefit cap. It was introduced by the coalition Government and it continues to place immense pressure on many families. I should have started by paying testimony to and welcoming the excellent maiden speeches that we have heard today, but it is worth mentioning that the noble Baroness, Lady Teather, can claim credit for opposing the introduction of the benefit cap when she was in government. I am sorry she is not here, but I acknowledge her important contribution to this debate.
To conclude, if we are serious about tackling structural poverty, we cannot remove one barrier, that of the two-child cap, while leaving another firmly in place. Lifting the benefit cap would complement the abolition of the two-child limit and ensure that the gains we make today are not undermined by other restrictions that fail to reflect the rise in the cost of living.
Lord Sikka (Lab)
My Lords, I support this Bill, though I am disappointed that some oppose lifting people out of poverty while constantly supporting greater spending on the welfare of corporations and the super-rich.
Eradication of child poverty could boost the UK economy by around £40 billion a year. Children in poverty struggle to realise their full education and employment potential, which leads to lower earnings and contributions to the public purse. They are more likely to have healthcare problems, make greater demands on public services throughout their lives and have shorter life expectancy. Lifting children out of poverty makes perfect economic and moral sense.
The £3 billion expenditure will boost the spending power of the poorest families and stimulate local economies. The real cost to the public purse would be much less, because it would, in large part, return to the Government in the form of VAT, other indirect taxes and lower demand on public services. The Opposition can support redistribution of income and wealth by, for example, calling for alignment of the taxation of capital gains with wages, which would raise £14 billion. There would be plenty there to cover the costs of this measure, but they do not actually call for redistribution.
I am concerned that thousands of children will not receive any improvement from this Bill because of the overall benefit limit, which is set at around £22,020 a year for most families and £14,753 for single adult households. Some 119,000 households have their universal credit capped and 82% of benefit-capped households include children. Can the Minister explain the impact of the overall benefit cap on child poverty and its relationship with the Government’s strategy for reducing or eradicating child poverty?
Child poverty is linked with parental poverty, so we need a strategy for that. The median gross wage of a UK employee is £31,056, or £25,880 after income tax and national insurance. Graduates take home even less. Inevitably, 14.2 million people live in poverty, and 25.3 million people live below minimum income standards. In other words, they lack the income to meet material needs and to enable participation in society. This comprises 48.6% of children and 35% of working-age adults. Some 81.6% of children in lone-parent families are growing up in households with inadequate incomes.
Those who oppose the Bill should be reminded of the horrific consequences. For example, the UK has a higher rate of infant mortality compared with peer countries, because many women cannot afford good nourishment, not only before but also during pregnancy. Due to poor food and living conditions, British five year-olds are up to seven centimetres shorter than children of the same age in Europe. One in four young people in England has a mental health condition, and illnesses such as rickets and scurvy have returned. Altogether, some 7 million children are growing up in households which lack the income needed for a dignified standard of living. So, there is a clear need for an effective strategy for parental poverty eradication.
Trickle-down economics has long failed. Average real wage has hardly moved since 2008; workers have no say in how wealth generated by their brain and brawn is to be shared; there are no curbs on profiteering; some 3 million people are malnourished or are at risk of malnutrition; and the poorest 20% pay a higher proportion of their income in taxes than the richest 20%. Due to the visible hand of successive Governments, the bottom 50% of the population has less than 5% of the wealth, and the bottom 20% has only 0.5%. Such an environment cannot banish child poverty. So can the Minister say something about how the Government are going to develop a comprehensive strategy for the eradication of parental poverty?
Lord John of Southwark (Lab)
My Lords, as an old-timer in this place, I congratulate my noble friends Lady Antrobus and Lord Walker, and the noble Baroness, Lady Teather, on their brilliant, inspiring and moving maiden speeches.
A Labour Government are about nothing if they are not about reducing poverty and inequality in our society: breaking down the barriers that separate rich and poor and opening opportunities to all, whatever our background. That is why I am so pleased to be speaking in this debate and in support of the Bill, which sees the Labour Government removing the two-child limit on universal credit. I am pleased that it is just one part of the Government’s comprehensive child poverty strategy, which aims to lift 550,000 children out of poverty by the end of this Parliament.
The noble Baroness, Lady Stedman-Scott, said there was a fundamental question in this debate. I say the fundamental question is why we have so many children living in poverty in this country. It is shocking that in 2026, in the world’s sixth-largest economy, around 4.5 million children live in relative poverty. It is even more shocking to consider than in 2010, at the time of the last Labour Government, that number was 2.3 million, having fallen from 4 million in 1997—figures I took from a paper prepared by the noble Baroness, Lady Teather. Our own national history shows us that child poverty can be tackled in a meaningful way if the Government of the day are willing to act. Those who oppose the Bill today are on the wrong side of history.
However, even if the Government’s objectives in this Bill and other measures are achieved, we must acknowledge that we will still have a long way to go. The scale of the challenge now makes the task of acting all the more urgent and necessary. A family of four, two adults and two children, living in relative poverty, is, according to statistics I have read, getting by on no more than about £400 a week. That is £400 to pay for heating, electricity, travel, food, clothing and all the costs that any family incurs before you consider anything that might be considered a treat. I need hardly remind noble Lords that that is a figure which is little more than the daily allowance which each one of us is entitled to receive for one day in this House. As others have said, we know that the costs of child poverty do not end when a child reaches the age of 18. They can blight an entire life, with a child growing up likely to earn less, work less and suffer greater ill-health if their life started in poverty.
When I was a local authority leader, I introduced two measures in particular aimed at tackling child poverty and the barriers to health for young people: free healthy school meals for all primary school children and free swim-and-gym use for all residents. As well as giving that hand-up to young people in my borough, we sought to grow our economy to lift even more people out of poverty. That is also the mission of this Labour Government. Today, though, we are talking about that all-important task that government at all levels faces of putting a supportive arm around those most in need. The people this Bill will help are those who need that supportive arm. They are not the feckless or work-shy, as some might claim. As we have heard, 60% of those families who will be supported are already in work, but just struggling to get by.
As the third child in my family, I am not sure how I would have felt if I had known that the state and the Government did not value me in the same way as my siblings; but this is the position we have put too many children in over the last decade. We live in challenging and uncertain times, particularly for children and young people who see a future marked by increased costs for educational opportunities and a significantly changing work environment with the revolution of AI—before we even get to thinking about their security at home and in this country. The mark of any society must be the way in which it looks after its most vulnerable. We rightly protect our older residents. At the moment, we protect some children, but now is the time for us to show that we care about every child who lives in poverty.
Baroness Jenkin of Kennington (Con)
My Lords, I am grateful for the opportunity to speak in the gap, which also gives me the opportunity to congratulate the maiden speakers and say that I look forward to their participation in our work here.
I would like to associate myself with my noble friend Lady Stedman-Scott’s remarks. As the Minister will be aware—but possibly not all noble Lords—my noble friend’s life before she came here, working for three decades for the charity Tomorrow’s People, was dedicated to helping people furthest from the labour market to get and keep a job in order to live an independent life. She knows better than many, and from long experience, that this approach is the best route out of poverty.
At the heart of this debate lies the principle of fairness. Across the country, millions of working families make difficult financial decisions every day about the size of their family and what they can afford to provide for their children. It is reasonable that the welfare system reflects the same considerations. A two-child limit ensures that the system remains sustainable and focused on supporting those who need it most, while also maintaining fairness between households who rely on benefits and those who support themselves entirely through work.
We must also consider the broader responsibility of government to manage public finances carefully. Welfare spending is the largest category of UK public spending, and policies such as the two-child cap help ensure that support remains available for the most vulnerable, both now and in the future. In difficult economic times, choices about public spending are never easy, but responsible government requires that we strike a balance. The Government’s first duty is the security of this country and the British people. We know that defence spending has to increase to fulfil that duty.
The OBR calculates that lifting the cap will cost the taxpayer £2.3 billion this year, rising to about £3 billion by 2029-30, which is unsustainable in the current economic climate. With an estimated 29 million households affected, the cost per household per year is projected to be £80 to £100, which would be an additional challenge at a time when so many are struggling with costs. Our duty is not only to provide support but to ensure that the system remains fair, sustainable and credible for the taxpayers who fund it.
Lord Palmer of Childs Hill (LD)
My Lords, I compliment the maiden speeches of my noble friend Lady Teather, the noble Lord, Lord Walker, and the noble Baroness, Lady Antrobus. They were a credit to this House and we look forward to further contributions, which I am sure will come from all three noble Peers. I thank the Minister for her excellent summing up of what is happening and what we hope to happen.
These Benches support the Bill and I am very much disappointed with the Conservative Benches for opposing it. It is an improvement on an overdue measure that I have long spoken in favour of. It removes one of the ugliest features of the social security system—the two-child limit in universal credit. My noble friend Lady Teather spoke eloquently on this when she said that more than 1.5 million children are affected and denied the essentials they need to thrive. For my party, this change goes very much to the heart of who we are. We exist to build and safeguard a society that is free, open and fair. We want a society in which no one is enslaved by poverty, ignorance or conformity. That is why opposition to the two-child limit is not a new or convenient position for us. I say this as a chartered accountant who would love to balance all the books, but a fair society does not balance the books on the backs of the children.
There is a moral case for this change. The two-child limit has always rested on a deeply flawed premise. It effectively says that a third or fourth child is somehow less deserving of support than older siblings. But children do not choose the circumstances of their birth. We should know that. They do not choose whether their parents face illness, bereavement, separation, disability, insecure work or rising living costs. They do not have much say in being born, either. Yet this policy has punished children for circumstances entirely beyond their control.
On the scale of the problem and why it matters, we are debating this against the background of child poverty. About 4.5 million children in the UK are living in poverty—nearly one in three. Child poverty is not an abstract statistic; it is hunger, cold homes, anxiety, missed opportunities and diminished life chances. It is also increasingly deep poverty. Millions of children are now living well below the poverty line. The burden falls disproportionately on larger families, lone parent households, households with disabled people and many ethnic minority families. The Bill matters because it begins—only begins—to unwind a policy that is one of the major drivers of rising deep child poverty.
On what the Bill does and why the Liberal Democrats support it, the Bill removes the two-child limit in universal credit so that support is available for all eligible children in a household, not only the first two. It applies across Great Britain and Northern Ireland, with commencement from assessment periods starting in a few weeks’ time on 6 April 2026. We on these Benches support the Bill because it is the right thing to do for children and families. It is targeted and effective. It is good value in public policy terms. The Government’s own assessment and the evidence cited in various briefings make it clear that removing the limit is among the quickest and most cost-effective ways in which to reduce child poverty.
There is a practical case. This is not only social policy but economic policy. Children who grow up in poverty are more likely to experience worse educational outcomes, poorer physical and mental health, and fewer opportunities in adulthood. That means that child poverty stores up pressure for the NHS, schools, local services and the welfare system itself. It also means lost productivity, lost skills and lost tax revenues. In other words, child poverty is not only a moral failure but an act of economic self-harm. If the policy is removed, there will be gains in household income and significant reductions in relative poverty and deep material poverty. The Bill is a down payment on healthier families, better outcomes and a stronger country.
I state, because of some of the comments from the Conservative Benches, that between 2010 and 2015, the proportion of children in absolute poverty before housing costs dropped from 18% to 17%. Under the Conservative Governments between 2015 to 2023, this proportionately increased back to 18%. That is their policy, and the Conservatives are putting that forward again.
The Bill asks a basic question: do we value each child equally? The Liberal Democrats believe that the answer must be yes. Children are not an afterthought to public policy. They are not a line in a spreadsheet—and I am all for spreadsheets. They are, as has been said, 20% of our population but 100% of our future. By removing the two-child limit, we will take a meaningful step towards a country that is fairer, healthier and more hopeful. We on these Benches support the Bill and will work constructively to build on it. For those reasons, these Benches support the Bill’s Second Reading and are disappointed with the Conservatives’ refusal to support it.
Viscount Younger of Leckie (Con)
My Lords, in winding up for the Opposition, I say that we have had three remarkable maiden speeches this afternoon. I will make a few comments about each.
I am so pleased that the noble Baroness, Lady Teather, has recovered and regained her voice. I have no doubt that we will be hearing much of it. I hope that she will rejoin the Parliament Choir; I declare my interest as a tenor in the choir.
I applaud the clear energy, entrepreneurship and communication skills of the noble Lord, Lord Walker of Broxton. I acknowledge that he provides employment to many in the retail sector. I have no doubt that he will have much to offer from his high street experiences and, as he said himself, a fresh way of thinking, however that can be defined.
The noble Baroness, Lady Antrobus, delivered an excellent maiden speech. She will be invaluable in using her experience and knowledge of the Armed Forces, both in the air and terrestrially, in contributing to the House. We have been very lucky this afternoon.
I thank all other noble Lords who contributed to this debate and set out their views with such conviction on what is—in my view and in our view on this side—a deeply mistaken policy. I say that as someone who is proud of the compassion that defines this country. The British people are generous, fair-minded and instinctively willing to help those in genuine need. That spirit of neighbourliness and of looking out for one another is something we should always cherish and protect. The noble Baroness, Lady Teather, is right: handling language and collaboration and getting these matters right are important factors in communities, where matters can be extremely sensitive.
However, compassion must also be balanced with fairness, as my noble friend Lady Jenkin alluded to. I am afraid that this policy tips that balance too far the other way. It asks those who work hard, pay their taxes and support the system to shoulder ever-greater burdens while expanding reliance on the state in a way that risks undermining the very foundations that sustain it.
It would be easy for me to say that raising the cap would be the right thing to do, and I was very pleased to note that the right reverend Prelate the Bishop of Leicester and, indeed, my noble friend Lord Redwood acknowledge that we all want to reduce child poverty—I personally want to, we all want to, but how we do it continues to divide opinion; that much I think we can agree on.
I was struck by the remarks from the noble Lord, Lord Bird, in his powerful speech. I believe his clarion call for greater social mobility is a key point: a hand up, perhaps, to a better future—or, indeed, to any future for those who are really wallowing in poverty, particularly children. The noble Lord, Lord Watson, echoed this sentiment.
As my noble friend Lady Stedman-Scott set out, it cannot be right that parents who do the responsible thing, who go out to work, contribute to our economy, and carefully manage what they can afford for their families, are expected to fund a system in which others face far fewer of those same constraints. At its heart, that is the problem with the Bill: it seeks to address a serious issue but does so in the wrong way. In trying to demonstrate compassion, it risks undermining fairness and, without fairness, surely public confidence in the welfare system itself will begin to erode. Is it any wonder that an overwhelming majority of the country oppose this policy, as my noble friend Lady Stedman-Scott said?
This policy comes at a time when our welfare system is facing what can be described only as a mounting crisis. At the Spring Statement, the OBR confirmed that welfare spending is set to rise by £74 billion over the next five years. Forecasts also show that spending on health and disability benefits alone will be £1.3 billion higher than previously expected. At the same time, the economic outlook is deteriorating. The OBR now forecasts unemployment reaching 5.3%, higher than the 4.9% peak predicted only at the time of the Budget.
Despite the Chancellor’s repeated claims of responsible fiscal management and careful stewardship of the public finances, the reality is that welfare spending continues to surge. The total welfare bill will rise by £18 billion this year alone, then by roughly £15 billion every year across the forecast period. In total, the OBR expects the Government to spend £333 billion on welfare this year—10.9% of our entire economy. By 2030-31, that figure is projected to reach £407 billion—11.7% of GDP. The think tank Onward has warned that on this trajectory welfare payments will, in effect, cost individual taxpayers around £3,000 a year by the end of the decade as Britain’s benefit system edges towards becoming unsustainable.
The noble Baroness, Lady Sherlock, stated in her opening remarks that some think it is all about cost. Cost is a big factor, but it is not the only one, and I make the point that other benefits are there, including for larger families, to help with essential household needs, such as the household support fund directed through local authorities.
I understand the points the noble Lord, Lord Babudu, and the noble Baroness, Lady Sherlock, made about those being in work making decisions at that time about family size and then finding themselves out of work—that is an obvious and important point—and the need, which I feel strongly about, to support single-parent families.
My noble friend Lord Redwood eloquently iterated that there are other reasons why children wallow in poverty, such as dysfunctional family life and, as he said, which is very important, a lack of love. The noble Lord, Lord Sikka, made the very important point about the need for better pastoral help for parents. Handouts are not just the key. In short, the system is lurching in the wrong direction. Costs are already enormous and continue to climb at the same time as unemployment is expected to rise. This is simply not a sustainable position.
We must remember who ultimately bears that cost. An additional £3,000 a year does not fall on some abstract entity called the taxpayer, but on ordinary working people—teachers, nurses, those who work in the retail sector and families who rise early, work long hours and try to balance their household budgets without the benefit of generous state support. These are not the super-rich; they are the people who make up the backbone of our country. Before we expand the welfare state still further, we should at least ask ourselves what burden we are asking them to carry. I am not convinced that the Government have asked a question more searching than how they can placate their Back-Benchers for another few weeks. My noble friend Lady Stedman-Scott was absolutely right to point that out. It has to be said, although I see the Minister shaking her head.
My noble friend Lady Stedman-Scott set out clearly the fundamental flaw in the Government’s logic. Ever-increasing welfare spending does not solve poverty; it helps conceal it. A welfare offer of this scale risks doing something else far more damaging. It will begin to erode the very foundations on which the welfare system depends. The system ultimately relies on a balance—a word we have heard this afternoon. Those who can work do so, and through their work they support a safety net for those who genuinely cannot.
However, that balance is now under real strain. Welfare spending is forecast to rise by around a fifth over the next five years, at the same time as one in five working-age adults is not in work. We are well aware of those statistics. That trajectory should concern all of us. The welfare state was never intended to become an alternative to work. If too many people come to rely on benefits rather than the rewards of employment, the model will simply cease to function. I was struck by the strong points made by the noble Lord, Lord Walker, in this area. The system depends on contribution as well as support.
Yet instead of confronting that challenge, the Government’s response has been to step away from reform and move in the opposite direction, expanding spending commitments that the public finances can scarcely sustain. A welfare system that discourages work does not reduce poverty in the long term but risks entrenching it. If we are serious about giving people the best chance of a secure and independent life, that is a reality we cannot afford to ignore. This policy tips that balance even further in the wrong direction and the Government should be really concerned about the long-term effects that it risks having on our public finances and the welfare system as a whole. Labour Back-Benchers, I fear, are too wedded to the idea of the welfare state. It is akin to somebody inching their way along the branch of a tree further and further until it snaps.
When we step back from the detail of this debate, the question before us is very simple: what kind of welfare system do we want for this country? Do we want a system that is fair to those who fund it, sustainable for the long term and focused above all on helping people into work and independence, or do we want a system that grows ever larger, more expensive and more detached from the principle that work should always pay? The British people instinctively understand that balance. My noble friend Lady Stedman-Scott pointed out the statistics and polling. They are compassionate, but fair. They believe in helping those who genuinely need support, but also that those who can work should do so and that the system should never place the greatest burden on those already doing the right thing. For that reason, and in the interests of fairness, sustainability and the long-term health of our welfare state, I cannot support the Bill and I firmly believe that the cap should be reintroduced as soon as possible.
Baroness Sherlock (Lab)
My Lords, I am so grateful to all noble Lords who have contributed to this debate. I love listening to maiden speeches, when we get an insight into the range and depth of experience coming into this House. Today we heard three magnificent examples. If anyone outside is listening, that exceptional richness of experience is what this House can bring to debates. We have heard about defence and air power; conflict and resolving conflict; climbing mountains, both literal and metaphorical; the importance of business; the compelling relational power of tea in the Long Room and learning to play dominoes—I may be better at one of those than the other, but maybe time will tell. I thank all noble Lords so much for coming in and contributing.
In developing our child poverty strategy, we engaged extensively with all kinds of people, including families, campaigners and experts. The aim was to try to work out what would have the greatest impact on the day-to-day lives of children living in poverty. The message was really clear: remove the two-child limit. I am grateful to my noble friend Lady Shah for pointing out the challenges we inherited and why it takes time for Governments to work through dealing with everything that comes out.
The Bill is supported by over 60 organisations, representing anti-poverty charities, which is perhaps not surprising, but also children’s doctors, teachers and health visitors—the people who know only too well the damaging effects of poverty and see its consequences every day. I remain very grateful for the work of the campaigning organisations, those professionals who support our children and all those who pushed for this change, including the Bishops’ Bench. I share the remembrance of the former right reverend Prelate the Bishop of Durham, who pushed for this in his time in this House.
The Bill is an investment to deliver a better future for children and for our country. Many noble Lords, including the noble Baroness, Lady Teather, and the right reverend Prelate the Bishop of Leicester, have set out the devastating impact that poverty has on children. Many, including my noble friend Lord Babudu, have pointed out that poverty is not evenly distributed.
Poverty imposes really significant costs on individuals and the country. Let me start with the Official Opposition, because they have set out clearly why they oppose this. It is my experience, in many years in and around politics, that, if you want to defend the indefensible, the first thing you do is set up some clearly false dichotomies. What have we listened to today? “It is children versus defence”. Of course it is not. If I were going to play politics, I would point out that, if the Conservatives felt that passionately about it when they were in government, maybe they should not have cut £12 billion from defence spending in their first term alone; maybe they should not have cut spending from the 2.5% the last Labour Government left, pushing us to raise it to 2.6% by next year; maybe they should have slashed child poverty. They were not choosing between the two things: they attacked both of them. Now, we could have that kind of conversation, or we could have a different kind of conversation. Let us take a step back and look at what actually happens with the policies.
What is the other false dichotomy? I think we fall into making a mistake if we try to set up social security versus work. I am not repeating the figure that 59% of families hit by the two-child limit are in work, in order to make a political point; I am pointing out that our social security system is there to help people in and out of work, and to help them get from being out of work into being in work. If the barriers get in the way of people being able to move into work, the system is not doing its job. Every time we start trying to pretend that this is contrasting people lying in bed all day with the blinds shut with those who go out to work, we do everyone a disservice. Please let us not have that conversation.
What we want to do is recognise that we have to enable work, encourage work and take away the barriers to work—that is really important—and that neither those in nor out of work are static populations: people move between those states, for a whole range of reasons. Our job is to make sure that, for those who can work, they stay in work as much as they can, for as long as they can, and, if they come out, to help them back into it when they can—but, if they cannot, to support them, because that is what we do by pooling risk.
The noble Lord, Lord Redwood, made some very interesting points. I parted company with him when he got to a certain point in his speech, but he made a really interesting point in saying that this policy is clearly not a panacea. The state cannot and should not pretend that it can solve all the problems families have, and the state does not raise children: families do.
The starting point, however, is that, if we want to tackle child poverty, as the noble Viscount, Lord Younger, said he does, the first thing we have to do is stop making it worse: stop tipping more children into poverty every year. The second step is to work out what the barriers are to people moving into work and developing in their lives. The noble Lord, Lord Redwood, mentioned some of those that are nothing to do with money, and the state can only do what it can to try to make it as easy as possible for families to do the right thing: investing in relationships education, supporting families —all kinds of education—and communities and relationships. What the state can do is tackle the things it can do something about. It is definitely not all about money, but it is not not about money: the statistics show really clearly, for example, the impact of poverty on family breakup and on parents struggling to do the right thing by their kids. We need to do both.
The next thing we need to do is create opportunities. I always hate disagreeing with the noble Lord, Lord Bird, because I know that he will come back at me, rightly, but we have to start to move not away from but beyond “handout versus hand up”. I absolutely agree with him that our job is to give people a hand up. He has done that in his time—as, indeed, has the noble Baroness, Lady Stedman-Scott—but I would not contrast that with any support the state gives to those who are struggling when they need it. A lot of what we do is on both those things. Like my noble friend Lord Walker, I have a real interest in how we use my department to help those who are struggling to get into work. Just this week, I was at a conference talking to businesses that are helping ex-offenders into work.
Lord Bird (CB)
Is it not wonderful that social security can be used as a hand up? That is the point I am trying to make. I am not trying to make the point of work versus social security. I am saying that a hand up is absolutely marvellous. The greatest hand up that I got was a probation officer.
Baroness Sherlock (Lab)
Indeed, and that probation officer clearly did a very good job: look where the noble Lord has ended up. Would that they were all that successful. I suppose that that is quite a high bar at which to set them, but I commend it. That is a really great point, and I am now violently agreeing with the noble Lord; but I will move on.
I want the social security system to do its job, and for most people its job is to support them into work, and in work, and to develop them in work. That is very much what this Government are seeking to do.
One of the challenges with universal credit is about assumptions. It was designed to move people into and out of work—to work in and out of work—and when it works it does so very well. All we are doing is making sure that the system works even better than it does. But the assumption that this Government are doing the wrong thing by spending money on tackling child poverty is fundamentally mistaken. My noble friend Lord Walker talked about the need to make sure we tackle NEETs, for example. We have one in eight of our young people not in employment, education or training. They did not start at 16.
Baroness Stedman-Scott (Con)
We are not saying that the Government should not spend money. It is about what you spend it on, and how it is spent to get the best outcome from what you are trying to do.
Baroness Sherlock (Lab)
My Lords, I understand that, but I have looked at what the last Government spent the money on and at the results, and I do not like them, so we are going to do something different.
My simple view is that if we will the end of tackling child poverty, we have to will the means. We believe that removing this barrier is fundamental. Those young people who were NEETs at 16 did not start at 16: they started without the opportunities, without the education, and without the start in life they should have had. The evidence shows quite clearly that children who grow up in poverty are likely to have poorer mental health, fewer opportunities and less chance to do all those things we want them to do. What we are doing is enabling those people to have opportunities, giving them the start they need. If we can get that in place, the whole country benefits. Instead of supporting people not to work, we are giving them the chance to flourish as individuals and to make the contribution to our society that they will not get the chance to make otherwise.
Before I get myself into any more flights of rhetoric, I should answer some of the questions that have been asked. My noble friend Lady Lister asked about council tax reduction. I think she knows this, but just for the record, local councils are of course responsible for designing and reviewing their own council tax reduction schemes. My department has been working with the MHCLG to communicate the change to local authorities, and they have been encouraged to consider the impact of their schemes in the light of the removal of the two-child limit. In 2029-30 an estimated 560,000 families will see an increase in their universal credit award, with these families gaining, on average, £440 a month. The impact of transitional protection is included in the impact assessment, but not on the numbers of households.
The benefit cap was raised by my noble friend Lady Lister, and by the noble Baronesses, Lady Teather and Lady Bennett, and by my noble friend Lord Davies and a few others. This Government want to preserve the fundamental principle that work is the best route out of poverty. We believe that leaving the overall benefit cap in place encourages personal responsibility while maintaining the incentive to work. Where possible, it is in the best interests of children to be in working households. Being in work substantially reduces the chance of poverty: the poverty rate of children living in households where all adults are in work is 17%, compared to 65% for children who live in households where no adults work. We will continue to protect the most vulnerable—those who are unable to work because of a disability or a caring responsibility are protected and exempted from that.
The noble Baroness, Lady Bennett, asked about numbers. When I answered her Written Question, the impact assessment had not been published at that point. I can say that among households in scope to gain from the removal of the two-child limit in 2029-2030, approximately 50,000 are estimated to be capped before the policy change, and a further 10,000 households will be capped afterwards. In contrast, 550,000 households in Great Britain will gain in full from the removal of the two-child limit in 2029-30, as will an estimated 2 million children in the United Kingdom.
The noble Baroness, Lady Janke, and my noble friend Lady Shah raised the impact of poverty on children and schools—
Baroness Lister of Burtersett (Lab)
I am sorry to interrupt my noble friend, but a number of us have made the point about the thresholds for the benefit cap and the fact that child benefit is taken into account. When we were in opposition, we said that child benefit should not be taken into account in the cap. Can she comment on that?
Baroness Sherlock (Lab)
I have given the same answer about the levels a number of times. The cap has to be reviewed by 2027. The Secretary of State will review it at the appropriate time, certainly within the statutory deadline, and he will make the judgments he makes at the time. I am happy to convey the comments made on this to my colleagues in the department, but the Government have taken the view that they have on the cap. We will simply have to leave it at that, I am afraid.
On schools and education, it is striking that schools are using their stretched resources on services such as food banks and providing essentials to children. Research by the Joseph Rowntree Foundation shows that now one-third of primary schools run food banks, one-quarter are providing essentials, and 38% say staff provide for pupils and families out of their own pockets. We got the Children’s Commissioner’s office to do some research to support the development of the child poverty strategy. Children and young people spoke about how low income impacts their education and at times limits their career aspirations, including by restricting their access to extracurricular activities. This is an incredibly important point made by my noble friend Lord John, or possibly by my noble friend Lord Walker—I am sorry, I am getting very bad at names. We listened carefully to families when we did that, and the consistent message was that a whole range of benefits came from lifting the two-child limit. It is not just about money; it is about all the things that enables. This goes also to the points made by the noble Lord, Lord Redwood.
As for paying for this, the Government have always made clear how they will pay for things when they announce them. It was made clear that the removal of the two-child limit was fully funded by policies in the Budget, including reforming Motability tax relief, clamping down on fraud and error in tax and social security, and reforming the assessment process. Together, those measures will save £4.9 billion in 2030-31 versus the £3.2 billion cost of removing the two-child limit.
The noble Viscount, Lord Younger, raised the OBR and the welfare cap. The Government are committed to ensuring that social security spending remains on a sustainable path. We set a new welfare cap in the Autumn Budget 2024 to make sure that it remains under control for the course of this Parliament. The forecast for social security spending is virtually unchanged from the last OBR assessment, increasing by only 0.1% in 2029-30 in the forecast. Welfare spending is forecast to rise by less than half the amount it did under the previous Parliament—just over 0.3% of GDP by 2030-31 compared with 0.7% previously—and health and disability spending is expected to rise by only 0.3 percentage points compared with 0.5 under the previous Government. This Government inherited a system which did not do all the things the Opposition say they wanted it to do. In fact, we saw growing numbers of people economically inactive as a result of ill health and disability. That graph went up. We have been working hard to bend that graph by taking the steps needed to do it.
On employment, parental employment rates are already high, but if we want to get more parents into work, it is important that we remove the barriers to getting them there. One of the key barriers is childcare. That is why we have announced 30 hours of funded childcare for working parents, saving eligible families using all 30 hours up to £7,500 per eligible child per year. When we talk about the parents in larger families being in work, one of the challenges was childcare again. We are extending eligibility for universal credit upfront childcare costs to parents returning from parental leave to ease that transition back to work, and we are providing UC childcare support to help with the childcare costs of all children, instead of limiting it to two children, so that parents who have larger families can afford to go back to work. It clearly is not about work or social security; it is about social security enabling work and supporting it, as the noble Lord, Lord Bird, said so clearly. We know that there is more to do, which is why we are committing to a review led by the Department for Education across government about access to early education and childcare support and delivering a simpler system.
What is coming next? We have been clear that the child poverty strategy will not solve problems overnight. This is one step in a journey looking forward 10 years. We have already made a number of significant steps: investing heavily in expanding free school meals; introducing a fair repayment rate into universal credit; investing in support to help people with their energy bills; investing in support across the piece; raising the minimum wage; looking at what is happening with affordable housing; and investing in helping people to get into secure jobs.
The most important thing will be to monitor that, to make sure that we do it. There will be a comprehensive programme of analysis, making sure that we know the exact impact of the changes we are making. If the Opposition are worried, we will be monitoring the impact of what we do. This will enable us to work with government departments and the devolved Governments to consider what we do in future and to capture the data as we go.
This Government are determined to break down barriers to opportunity, to deliver economic growth and to raise living standards. Removing the two-child limit in universal credit remains the single fastest and most cost-effective lever we have to reduce the number of children growing up in poverty. It is at the heart of a wider strategy to drive down child poverty and set the next generation up for success. Far from being anti-work, this strategy includes our plan to make work pay, to improve job security and living standards, and to enable people to get on into work. We do not simply want to move people from being out of work into jobs from which they can never progress. If we want social mobility, we need to enable people to develop skills so that we can become a high-skilled, high-wage, high-investment economy, as we have been challenged to do. We have also announced increased universal credit support, getting people into work and into more hours because, above all, we believe in the value of every person and the contribution they can make.
The noble Baroness, Lady Teather, and the right reverend Prelate the Bishop of Leicester made some very interesting points. Part of what we have to do is to invest in communities and relationships. All we can do with money is remove barriers. What we need to do as a country is look at how we engage with our neighbours and our communities, and how we can support all those in our communities to develop and to fulfil their potential.
My noble friend Lord John said that a Labour Government are nothing if they do not do something to tackle poverty and inequality. That is exactly what we are doing here today. The Bill, along with the wider actions in the child poverty strategy, will help deliver the biggest reduction in child poverty over a Parliament since comparable records began in the 1990s. It is time to put this counterproductive and cruel policy into the dustbin of history, and to focus instead on building a system that gives children and their families the security and opportunities to build a better life, no matter their background. I commend the Bill to the House.
Bill read a second time. Committee negatived. Standing Order 44 having been dispensed with, the Bill was read a third time and passed.