Universal Credit and Child Tax Credit: Two-child Limit

Alison McGovern Excerpts

Tuesday 27th November 2018 Westminster Hall

[Mike Amesbury (Weaver Vale) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Streeter, and I thank the hon. Member for Glasgow Central (Alison Thewliss) for securing such an important debate. She shares my view, and that of many colleagues, that the two-child limit is unfair and adversely affects tens of thousands of families. That policy stands out, tragically, as a clear example—perhaps the clearest example—of a Tory welfare system that is failing and unsupportive of those most in need. That view is shared not just by those of us in this debate; it is shared by charities and many advocacy groups, and much of civil society.

Earlier this year, 60 Christian, Muslim and Jewish religious leaders strongly condemned the policy, arguing that it sent a message that some children matter less than others. Disappointingly, however, some do not share that view. The former Work and Pensions Secretary, the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith), described it as a “brilliant idea”, and believed that it would force claimants to make the same life choices as families who are not on benefits, and incentivise them to seek work or increase their hours. We have heard from this debate that it is certainly not a brilliant idea. The claims about life choices and incentives show nothing but disdain for the people and families who our welfare state should be supporting and show no understanding of the precarious reality of the world of work for many at the sharp end.

While the two-child limit was possibly the most pernicious element of the approach, we should not forget that it was part of a package of welfare reforms to tax credits and universal credit announced in the 2015 Budget. The Child Poverty Action Group has estimated, as my hon. Friend the Member for Bury South (Mr Lewis) pointed out, that the two-child limit alone will lead to 200,000 more children growing up in poverty by 2020. It is also a policy that causes one sibling to lose out at the expense of another, with one child being of more value than another. Surely that is not fair or right.

[Alison McGovern (Wirral South) (Lab)]

Does my hon. Friend agree that there is a simple unfairness at the heart of the policy? We should no more support it than support one child in a family getting access to education and another not, or one getting access to health services and another not.

[Mike Amesbury]

I agree entirely with my hon. Friend and neighbour. Children are children.

From April 2017, low-income families lost entitlement to additional support through child tax credits or the child element of universal credit for a third or subsequent child born after that date. If the family was already claiming support for three or more children before that date, in principle they continue to receive support. However, to demonstrate the absurdity of the policy, if a third or subsequent child born after April 2017 is disabled, the family will receive child tax credits or the child element of universal credit for that child, but one of the other two children will lose out. As was rightly pointed out by hon. Friends across the Chamber, that is an attack on some of the most vulnerable in society: children. The policy also discredits the claim of this Conservative Government that they are the party of the family and of religious freedom. It is yet another example of why the roll-out of universal credit needs to be stopped.

The Government must end the delays in payment, and it must also end one of the most shocking consequences of the legislation: the rape clause. Another former Secretary of State for Work and Pensions, the right hon. Member for Tatton (Ms McVey), made the extraordinary claim that the policy potentially offered rape victims double support: social security and “an opportunity to talk” about the assault. That was insensitive to say the least. As hon. Friends have pointed out, it was absolutely appalling.

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[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.