Working Tax Credit and Universal Credit: Two-Child Limit

Beth Winter Excerpts

Thursday 21st April 2022 Westminster Hall

[Beth Winter (Cynon Valley) (Lab)]

I very much welcome the time allocated to this debate today. It is vital we have this discussion, because the two-child-limit policy is yet another legacy of the low-pay, low-income experience that is the stamp of the Conservative Government. We have already discussed in recent weeks in this building the impact of the real-terms cuts in social security benefits and the minimum wage, and what we all anticipate will be a real-terms public sector pay cut. The debate today has reflected on the first of those: the appalling offer of a 3% increase in social security while inflation is increasing at 7% and could well go up to 10%. That is a real-terms cut in people’s incomes. How people will survive I have no idea.

Some households do not even receive a 3% rise because, under the two-child limit, parents are not entitled to any extra support through universal credit or child tax credit to help with raising a third or subsequent child born after 6 April 2017.

[Margaret Ferrier]

Does the hon. Lady agree that following the Government’s decision to cut universal credit payments, with inflation rates rising astronomically and a real cost of living crisis, a decision to keep the two-child limit is actively pushing children below the poverty line, which will undoubtedly impact on the UK’s levels of social mobility?

[Beth Winter]

I totally agree. Action needs to be taken on all those policies, including reinstating the £20 universal credit uplift and extending it to those on legacy benefits. We need a whole raft of policies to prevent, reduce and tackle the extreme levels of child poverty that currently exist in this country.

I refer briefly to the Child Poverty Action Group and Church of England report commissioned for the fifth anniversary of the two-child-limit policy. It is very clear in saying that the two-child limit breaks the historic link between need and entitlement. The benefit should be an entitlement, but that link, which was the founding principle of our social security system, has been broken. The report is clear that our social security system should support families and give children the best start in life, regardless of how many siblings they have. They are our future and we should invest in our future generations. The report concluded that the Government must remove the two-child limit to allow all children to thrive.

April’s below-inflation benefits rise means that affected families with three children face a further £938 a year shortfall in benefits to cover the basic costs of raising them, on top of the pre-existing £6,205 shortfall from 2021, with larger families facing an even bigger hole in their income. That is absolutely appalling and devastating for millions of families throughout the UK.

The two-child limit restricts child allowances in universal credit and tax credits worth £2,953 per year to the first two children in a family unless the children were born before 6 April 2017, when the policy came into force. As the hon. Member for Glasgow Central (Alison Thewliss) has already outlined, the disparities, inconsistencies and discriminatory practices in terms of who is and is not entitled are completely unfair.

Unless this two-child limit is abolished, the number of children affected will reach 3 million, as more are born under the policy. We currently have 4.3 million children across the UK living in relative poverty. That equates to around nine in every 30 children in a UK classroom.

As the two-child limit is the biggest driver of this rising level of child poverty, CPAG has estimated that it will push another 300,000 children into poverty, and 1 million more into deeper poverty, by 2023-24. By 2026-27, over 50% of children in families with more than two children will be living in poverty—half of the population in poverty.

We already knew in 2019, from the Work and Pensions Select Committee report on the two-child limit, of concerns that it breached not only the Government’s wider responsibility and international commitments to equality but human rights, including the European convention on human rights and the United Nations convention on the rights of the child. Breaching such human rights commitments appears to come easily to this Government, however; we only need to look at the United Nations High Commissioner for Refugees’ comments on yesterday’s Nationality and Borders Bill for another example of that.

One of the core authors of the Child Poverty Action Group report, Dr Ruth Patrick, says:

“the two-child limit is a poverty-producing policy and one which should be removed”,

but what about the voices of the parents who have contributed to those pieces of research? I will quote just one, who says:

“We wear extra layers of clothes as I cannot afford to put the heating on. We shower on a Wednesday and Saturday to reduce energy bills but we shouldn’t have to live like this.”

Nobody should have to live like that, and I am sure the Minister would agree on that point.

As in Scotland, the Welsh Government have tried to take action to counter some of the worst aspects of this policy, the cost of living crisis, and child poverty in Wales, for example through the commitment to extend free school meals to all primary school pupils from September 2022. However, unfortunately, the main problems causing child poverty lie here in Westminster. The Welsh Affairs Committee, on which I sit, recently looked at the benefits system in Wales.

[Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)]

I congratulate the hon. Lady on making a very powerful case during her speech. However, ultimately, has she come to the position that I have, in my political life, that a just and fair economy and society for Wales will never be created by Westminster? The only solution for us is to take control of those powers ourselves. As the hon. Lady outlined in her speech, where we have those levers, we are making a positive difference, but ultimately, we need all of those levers. Surely, that should be the normal position for her to take now.

[Beth Winter]

I was just coming on to that. The Welsh Affairs Committee quite strongly recommended that we should be exploring the possibilities of devolving the administration—at the very least—of social security and benefits to Wales. We are still awaiting the Minister’s response to the report.

The Committee also recommended an urgent review on ending the £20 universal credit uplift, and on the five-week wait for universal credit, the benefit cap, the bedroom tax, and—crucially, for the purposes of this debate—the two-child limit. We would be very interested to hear the Government’s response to that report.

This policy is having a devastating impact on a large number of my constituents in Cynon Valley, where wages and household incomes are already well below the UK and Welsh averages. The two-child limit therefore has an even deeper impact on my neighbourhood. I recently commissioned some research from the Bevan Foundation on the economy in my constituency. There were some alarming findings on people’s incomes and the levels of benefit-dependent families. They are being impacted drastically by this pernicious policy, and we all know that it will get worse—and already has—with the cost of living crisis, which is having a devastating impact on so many people.

A fortnight ago, I launched in my constituency a survey on the cost of living crisis. Within 48 hours, I had received in excess of 400 responses. I am in the process of collating and analysing those responses to produce a report, but at first glance, the stories coming through from local people are absolutely harrowing—the way people have to live, not having food on the table for their children, not having the heating on. It is absolutely appalling and needs to be addressed urgently. A lot of those people are affected by the two-child limit. I will share that report with the Minister when it is completed—within the next month, I hope.

I very much look forward to the Minister’s response outlining why the Government remain determined to pursue their low-pay, low-income agenda, despite the misery that it imposes on millions of people and their children across the country. Diolch yn fawr.