Universal Credit and Child Tax Credit: Two-child Limit

Lord Sharma Excerpts

Tuesday 27th November 2018 Westminster Hall

[The Minister for Employment (Alok Sharma)]

It is a pleasure to serve under your chairmanship, Mr Streeter. I thank the hon. Member for Glasgow Central (Alison Thewliss) for securing this debate. I know she has a long-standing interest in the subject, and earlier this year we met at the Department for Work and Pensions to discuss issues relating to this particular policy. Yesterday, as the shadow Minister just pointed out, there was a cross-party roundtable led by the Bishop of Durham to discuss these issues and I took part for some of the time, as did the hon. Lady. I thank all Members who have contributed to today’s debate.

My style is generally not to feed rancour in a debate, because I think it is important that we have a civilised discussion and colleagues have an opportunity to raise issues that are important to them, but the hon. Member for High Peak (Ruth George) talked about the fact that an economic mess has been created over the past eight years. I respectfully say to her that she was not in this House in 2010. A number of us were, and I would say that the economic mess we inherited was from the previous Labour Government. I must point out that 3.3 million jobs have been created since 2010—I see hon. Members shaking their heads in disbelief, but that is a fact—and wages are now outpacing inflation. The vast majority of those jobs are full-time and permanent, at a high level of education. That is not an economic mess.

[Rushanara Ali]

Will the Minister address the social mess that his Government have created? That includes not only this policy, but welfare and policing—the list goes on. Will he respond to the serious concerns that hon. Members have raised today? That is what we are after: not looking backwards, but addressing the problem at hand.

[Alok Sharma]

Of course I will address the issues, but it is important to look back and see where we have come from to reach the policies that we are now putting in place.

Several hon. Members mentioned universal credit. I know that this debate is not about universal credit, but I am afraid I must point out that the legacy benefits system is not really fit for purpose. It is incredibly complicated, and as a result 700,000 households are not claiming—or are not able to get hold of—the full amount owed to them. Under universal credit, those households will be £285 better off on average per month. Likewise, 1.4 million people spent the best part of a decade on unemployment benefits under the last Labour Government, but that is changing.

I accept there has been discussion about finances, but I must say to SNP colleagues that, as Labour Members have pointed out, the Scottish Government have the power to create new benefits in devolved areas. They are able to provide assistance to meet short-term risk and they have the ability to top up reserved benefits from their own resources.

[Neil Gray]

Will the Minister give way?

[Alok Sharma]

I will, but I point out for the record that the hon. Gentleman did not give way when Labour colleagues wished to raise that precise point with him.

[Neil Gray]

The Minister points out that I did not give way, but of course I was at the end of my speech; I was winding up to allow him enough time to contribute to the debate. He says that the Budget interventions will make people better off, but the former Secretary of State, the right hon. Member for Tatton (Ms McVey), suggested that people on universal credit were £2,400 worse off. If the Government are suggesting that their intervention will make people £600 better off, does that not mean that people will still be £1,700 worse off as a result of their actions on universal credit?

[Alok Sharma]

Again, I must respectfully say to the hon. Gentleman and to other Opposition colleagues that it is one thing to say that they want to support their constituents and that I should be prepared to look people in the eye—but they too should be prepared to look their constituents in the eye and explain why they would not vote either for the additional £1.5 billion that we brought in earlier this year to support people on universal credit or for the Budget measures, which I will talk about in more detail.

[Several hon. Members rose—]

[Alok Sharma]

If I may, I would like to make some progress.

The fundamental aim of our policy is to strike the appropriate balance between support for claimants with children and fairness to taxpayers and families with children who support themselves solely through work. Colleagues may disagree, but a benefits structure that adjusts automatically to family size is ultimately not sustainable. Our benefits system needs to be fair both to those who need the support and to taxpayers, but ultimately it needs to be sustainable. Parents who support themselves solely through work would not generally expect to see their wages increase simply because of the addition of a new child to their family. Of course we recognise that some claimants are not able to make the same choices about the number of children they have; that is why we have exceptions in place for additional children in multiple births and children likely to be born as a result of non-consensual conception.

[Ruth George]

The Minister makes his case about children who are due to be born. What arguments does he make to parents and families who already have three or more children, who are all going to be affected by this policy and who have absolutely no choice about it?

--- Later in debate ---

[Alok Sharma]

The hon. Lady raises a perfectly valid point, which I will get to if she gives me the opportunity.

From 28 November, exceptions will also apply to children in kinship care, regardless of the order in which they joined the household. The exception will also be extended to children who are adopted who would otherwise be in local authority care. It is also worth noting that as a result of natural or managed migration to universal credit, families’ existing entitlement will be protected as long as they remain responsible for the same children and remain entitled to benefits; that will apply regardless of the number of children in their household or their date of birth.

As hon. Members will know, a judicial review of the policy was heard in the High Court earlier this year. The Court found that it was lawful overall—a judgment that the Government welcomed. Several colleagues have spoken about the impact of the policy on particular groups, but I should point out that the High Court judgment on 20 April found that the policy did not breach the right to freedom of thought, conscience and religion.

The Government remain committed to providing support for families. Under universal credit, 85% of childcare costs are covered—up from 70% under the old system—and, for the first time, people in part-time work can get help. That comes on top of the Department for Education’s 30 hours of free childcare provision for three and four-year-olds in England.

[Mr Ivan Lewis]

Will the Minister give way?

[Alok Sharma]

No, I will not, if the hon. Gentleman does not mind.

The flexible support fund is available to help eligible parents who are moving into work to pay up-front childcare costs or deposits. Child benefit continues to be paid to parents regardless of the number of children within the household. There is also an additional amount in universal credit designed to support disabled children, again regardless of the total number of children in a household.

To return to the Budget, we have listened to feedback about the support available for families on universal credit and we have acted. In last month’s Budget, the Chancellor announced that an extra £1.7 billion a year will be put into increasing work allowances for families with children and disabled people, strengthening universal credit work incentives and providing a boost to the incomes of the lowest-paid. This will result in 2.4 million families keeping an extra £630 per year of what they earn.

[Alison McGovern]

Does the Minister concede that a reduced cut to someone’s income is still a cut?

[Alok Sharma]

I have just explained how, as a result of these work allowances, more money is going into the system. As I say, if the hon. Lady wants that to happen, she should help us and vote for these policies.

Given the points made about poverty, it is worth pointing out that 1 million fewer people are living in absolute poverty than in 2010, including 500,000 working adults and 300,000 children. That is a positive outcome. Children living in workless households are approximately five times more likely to be in poverty than those living in households in which all adults work. There are now 637,000 fewer children in workless households than in 2010—a 33% decrease. The number now stands at a record low.

The Government continue to take action to help families with the cost of living through the national living wage, through reducing the universal credit taper to 63%, through raising the income tax personal allowance, and through childcare support, which I have already spoken about.

Several colleagues raised the changes to be made in February. I will simply point out that the High Court has found the policy to be lawful. From the Government’s perspective, this is an issue of fairness, but I will reflect on all the discussions that we have had in this debate.

This has been a useful debate in which colleagues have had the chance to air their views. I hope that I have demonstrated that we are a Government who listen. We have introduced support for families in the system and, of course, we will continue to listen and reflect.

[Mr Gary Streeter (in the Chair)]

Alison Thewliss has the final word.