Universal Credit (Children)

Angela Crawley Excerpts

Tuesday 10th May 2016 Commons Chamber

[Angela Crawley (Lanark and Hamilton East) (SNP)]

When the Government announced their plans to introduce universal credit, their rationale was to lift people out of poverty and help them into work. It was billed as a mechanism to end cycles of poverty and to help parents give their children the best start in life. In 2011, the Government forecast that universal credit would lift 350,000 children out of poverty. In 2013, this was downgraded to 150,000 children. Today, the Government cannot say exactly how many children will be helped by the process. Will they tell us how many families they are actually helping through the universal credit system?

Based on estimates from the Children’s Society and the Child Poverty Action Group, it seems that the downward trend has continued to the point at which the number of children who will be helped out of poverty will be heavily outweighed by those who have been made poorer. That is deeply concerning. As an MP, I often hear from constituents who are struggling under this Government’s programme of austerity. I want their voices to be heard today, and I want the Minister to seriously consider the unintended—I am sure—negative impact that universal credit is having on many children and families.

Among the most damaging parts of this welfare reform are the eligibility criteria. From April 2017, only two children per family will be eligible for the child elements of universal credit. The child elements are intended to allow families to meet their children’s basic needs. How dare this Government discriminate against a third or fourth child? No matter how many children a family chooses to have, the Government should not discriminate against any child.

[Neil Gray]

Alongside the rape clause, which my hon. Friend the Member for Glasgow Central (Alison Thewliss) has raised repeatedly, this is one of the most disgraceful aspects of these provisions. People plan a family based on the circumstances in which they find themselves at the time. Let us take the example of two working parents. What would happen if, further down the line, having had three children, they were unable to work? The two child policy is an absolute disgrace.

[Angela Crawley]

I wholeheartedly agree with my hon. Friend. This Government have absolutely no right or reason to dictate to families how many children they ought to have, or to place a monetary value on a child’s life or someone’s livelihood.

This Government have scrapped the first child premium, worth £545 a year. That is the equivalent of the family element in tax credits, which was designed to help families with the extra cost of their first child. Obviously, this Government do not prioritise the need to give every child the best possible start in life. The Scottish Government and the First Minister have ensured that every new-born child in Scotland will receive a box that will allow the family to deliver the best possible care, health and support for their child. In what initially appears to be a benefit to low-income families, support for childcare has been increased from 70% to 80% of the cost. However, this policy will not compensate for the far greater losses families will see as a result of other changes to the benefits system.

That brings me to my final point, which relates to disabled claimants. Disabled individuals are often the worst off as a result of benefit reforms, and they are certainly the worst-off group as a result of universal credit. They have been wholly ignored in the process. At present, families with a disabled child can claim £60 per week through the disability element of child tax credits. Under universal credit, £29 per week of support will be claimed under disability additions, but according to the Government’s own estimates, this means that 100,000 disabled children stand to lose more than half their entitlement. How can the Government look at those figures and honestly justify their actions? Disabled lone parents with young carers stand to lose £58 per week as a result of the loss of the severe disability premium under universal credit. Again, this Government have failed to take those individuals into consideration. Lone parents and those under 25 are likely to lose up to £15 per week as a result of reductions in standard allowances for those groups under universal credit.

The Government must commit to fairer arrangements, especially for those most at risk. While they continue to balance the books on the backs of the poor, many more children will continue to grow up in poverty. While they continue to allow tax avoiders and big business to benefit, those who work hard to put food on the table for their loved ones will continue to lose out. When will this Government learn? The fact is that one child growing up in poverty is one too many.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

We have had an unexpectedly concise, but nevertheless interesting, debate is afternoon. I echo the remarks of others who have paid tribute to the right hon. Member for East Ham (Stephen Timms) for securing the debate and giving us this opportunity to highlight the impacts that the universal credit scheme will have on children. Right at the heart of this matter are the recent cuts to the work allowance—implemented just last month—which are set to drive up child poverty quite considerably in the months and years ahead.

Back in January, when the Government performed their U-turn on tax credits, it was clear that the relief would be only temporary for many families. As we have heard today, the transition to universal credit will mean that 3 million working families will no longer be eligible for the support that they would have had under the tax credits system. A further 1.2 million working families will still receive support, but will be worse off. Therefore, according to the Resolution Foundation, 4.2 million families will be on average more than £40 a week worse off, even taking into account increases in the minimum wage and tax allowances.

When universal credit was first introduced, we were told that it would simplify and streamline our benefits system, that it would introduce greater flexibility for those in seasonal jobs or with fluctuating earnings and, crucially, that it would remove the financial disincentives to work created by the previous system. However, that is not what is happening in reality. The introduction of universal credit has simply been an excuse to cut family incomes, taking £3 billion a year out of the pockets of low-paid parents. As the Resolution Foundation report puts it, the latest cuts to universal credit risk leaving it

“little more than a vehicle for rationalising benefit administration and cutting costs to the Exchequer.”

That is a truly damning indictment.

The bottom line is that cutting the work allowance under universal credit has destroyed the very aspect that reduced work disincentives—the thing that made it a distinctive policy. The most potentially valuable aspect of universal credit has been butchered, and we are now left with a system that will reduce the incomes of more than 4 million low-income families. People are already working hard to support their families and are struggling to make ends meet. The change is set to send child poverty skyrocketing over the next few years. Far from creating work incentives, the reality is that cuts to the work allowance mean that parents in low-paid jobs face staggering levels of marginal taxation if they take on extra hours. There is no way around the fact that that reduces the incentive to take on extra work. If someone is going to be only 35p in the pound better off per hour, the extra earnings might not even cover their transport costs, much less their childcare.

Working single parents will be particularly badly affected by the changes, because they are being hit with dramatic income cuts. There is also a big disparity between those who live in rented accommodation and those who are owner-occupiers or otherwise not paying housing costs. In rented accommodation, a working couple with children will lose £234 a year, and a working single parent will lose £554 a year. The reductions in income are even starker for those not in rented accommodation. A working couple with children will lose more than £1,000 per year, but working single parents are set to lose a massive £2,628 a year on average.

[Angela Crawley]

A single parent already working full time on the national living wage—otherwise known as a modern increase on the minimum wage—of £7.20 an hour will have to work an additional 46 days a year, equating to two additional months. Does my hon. Friend agree that that is unacceptable?

[Dr Whiteford]

It is not only unacceptable, but completely unrealistic. When the measures were first debated, the Government tried to argue that families affected by the losses could simply work a few extra hours to cover the shortfall. Notwithstanding the availability of extra hours being entirely dependent on the employer’s circumstances—there might not be many extra hours going around in many workplaces at the moment—the Child Poverty Action Group pointed out, as did my hon. Friend just now, that a single parent working full time on the minimum wage would essentially have to work an extra day a week just to make up the shortfall. It is already hard for single parents to manage full-time work and family responsibilities, and I just cannot believe that it is good for them or their children for them to be taking on an extra day a week. Something has to give. People’s health will collapse. People’s children and family life will suffer. It is not the right thing to do.

The effect on families affected by disability will be disproportionate. At Work and Pensions questions yesterday, I mentioned the impact that the introduction of universal credit will have on disabled children. Some time ago, the Children’s Society and Citizens Advice published “Holes in the safety net”, a report which warned that the introduction of universal credit would mean dramatic cuts in support for some disabled children. Some 100,000 disabled children in the UK are likely to be affected and will see their support halved to just £29 a week. As we have heard today, families with a disabled child are twice as likely to be low-income families living in poverty. We know that. We also know that those who live with a significant disability face extra living costs, but it is sometimes too easy to gloss over the realities of day-to-day life for such children, their parents, and their brothers and sisters. Disability affects the whole family.

Some time ago, I worked for Carers Scotland and will never forget my conversations with parents of disabled children about their experiences, many of which were positive, but nevertheless also often enormously challenging, both financially and emotionally. I remember one working mother describing how she had had to give up a full-time professional career and work part time in a lower-paid job, simply because she could not find a nursery willing and able to take on the complex needs of her little boy. I remember another mother talking about realising that she would have to become a full-time stay-at-home parent after her second child was born with quite significant physical disabilities. She and her husband had recently bought a three-bedroom house to accommodate an expanding family, but they had to sell up and downsize, because that was all that they could afford on one income. At the very moment when they needed more space to accommodate growing toddlers and a wheelchair and to enable their elder child to sleep through the night without being woken up by a disabled sibling who needed care during the night, they were instead struggling to make ends meet. Families such as those, for whom £30 a week makes an enormous tangible difference to their quality of life, are being put on the front line.

On the other side of the coin are the cuts under universal credit to the severe disability premium paid to disabled adults, affecting some 25,000 children who live with a severely disabled parent. The level of support will be £58 a week less for such families. Even those in the ESA support group—those who have absolutely no prospect of being fit for work—will be entitled to £28 a week less than under the current system. That will inevitably have an impact on the children in those households, most of whom do not get any extra support at the moment, and it will make life even harder for young people who in some cases are already taking on age-inappropriate levels of domestic responsibility. The Government talk a lot about improving life chances, which we have heard again and again today, but slashing support for disabled children and the children of severely disabled adults who have no prospect of work will only harm those children’s already diminished life chances.

I asked the Government yesterday if their intention really was for low-income families and disabled children to bear the brunt of their cuts agenda. We have heard lots of suggestions today, such as those put forward by CPAG, the Children’s Society, the Resolution Foundation and others, for how the failing universal credit project could be redeemed, not least the need for a credible and up-to-date assessment of the overall impact on child poverty. Instead of trying to defend the indefensible, the Government have an opportunity to go back to the drawing board on universal credit and restore its original policy intent of supporting low-income working families. If they fail to take that opportunity, they will be confirming their reputation as the sort of people who think it is okay to make disabled children and hard-working parents in low-paid jobs pay for the tax breaks being enjoyed by the wealthiest in our society.