Front-loaded Child Benefit Bill [HL]

Lord Kennedy of Southwark Excerpts

2nd reading
Friday 8th July 2022 Lords Chamber

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, there are two points I wish to raise regarding the Bill proposed by the noble Lord, Lord Farmer. The first refers to the expense of raising a child in the latter years of their youth and the second to the potential unintended consequences of allowing eligible parents to front-load benefit payments.

With the cost of living crisis and our current rates of inflation, the cost of raising a child is higher than ever. A study conducted by the Child Poverty Action Group found that, in 2020, 28% of parents were using their child benefits for general expenses. Following a similar study conducted in 2012, this figure was a mere 2%. Inflation is now at its highest rate for 40 years. What percentage of parents do noble Lords think are using child benefits for general expenses today? Surely it can only be greater than the 28% that were doing so in 2020.

According to the noble Lord, Lord Farmer, the answer is to give eligible parents the opportunity to front-load the benefits in the early years of their offspring’s youth. The Bill in question strikes one as interesting, shall we say, in light of figures that reveal the age-specific expense of raising a child. From research conducted by Moneyfarm, we know that the period between the ages of 15 and 18 is when raising a child is the most expensive. From nought to three years old, food costs alone are on average £675 annually, whereas between the ages of 15 and 18 that increases to a staggering £2,489. The evidence here swims against the tide of the Bill. If anything, it seems wiser to backload the benefit.

The director of policy, rights and advocacy at the Child Poverty Action Group, a person who is well equipped to speak on this issue, warns us that

“now’s the time … to reflect on the erosion of child benefit”.

In real terms, with freezes and sub-inflationary uprating, child benefit is worth 23% less than it was in 2010. It is the erosion of child benefit that ought to be the focus of our attention, not its arrangements. Child benefit amounts to £21.80 weekly for the first or only child and £14.45 for each additional child. Some may be keen to point out that from April the Government increased child benefit by 3.1%. Let me point out what that increase amounts to: it translates to 65p per week per eldest child and 45p per week for each consecutive child. What could you do with an extra 65p a week?

There is currently a campaign under way, endorsed by over 70 organisations, calling on the Government to increase child benefit by £10 a week, per child. According to their calculations, this would cost an estimated £6.6 billion per year, yet it would do more to tackle child poverty than even the £20 uplift to universal credit, which has of course now been withdrawn.

I am sure that your Lordships’ House can appreciate the importance of child benefit as a means of ensuring that targeted support directly reaches those children who need it. The constancy of payments provides a vital layer of security for eligible parents, who can be assured that they have a steady source of income for their children whether they are in work or not.

Of course, giving eligible parents the opportunity to increase the sum of money received in the early years of their child’s youth gives such parents a much-needed layer of financial security when their child’s needs are often most acute. But when making the choice to front-load the benefit, will such parents bear in mind the fact that they must accept a lower sum when the child is older? How does the noble Lord, Lord Farmer, propose that we avoid the prospect of backloading the financial problems by front-loading the benefits?

If the financial situation of the person to whom child benefit is payable worsens by the time their child has reached the latter years of their youth, would they still be forced to receive the reduced amount of child benefit? What does the noble Lord, Lord Farmer, suggest such parents should do in that situation, given that we have just learned about the rising expense of raising a child as the child grows older? The Bill appears to be an indirect way of reasserting the same inadequate rate of child benefit that falls short of what is needed to prevent millions of children from slipping into poverty.

This is not the first time the idea of front-loading child benefit has been brought to our attention. Such a proposal was previously suggested by the Centre for Social Justice, predicated on the suggestion that the early years of a child’s life are the most critical. But all years of a child’s life are equally critical. In the words of the noble Lord, Lord Farmer, the Bill is about increasing choice for parents. I put it to him that the best way to increase choice is to increase child benefit, not adjust the timing of its payments. Pay what is deserved, rather than change when it is paid. Put simply, if the benefit were high enough, there would be no need for this Bill. A time of unprecedented price rises is not a time for minor tweaks to our social security system; it is a time for us to start talking about major increases to child benefit to secure the future of our children.

I conclude by saying that when we have these debates, I always think of our dear and much-loved friend Lady Jowell, who is missed, and the work she did in developing Sure Start, which the coalition Government and the Government opposite destroyed. That is to their eternal shame.