Working Tax Credit and Universal Credit: Two-Child Limit

Carol Monaghan Excerpts

Thursday 21st April 2022 Westminster Hall

[Jim Shannon]

I wholeheartedly support the hon. Lady’s comments.

I am going to say something fairly harsh. I am not a harsh person, or I try not to be, but I always had a fear about the two-child limit—perhaps others agree with me—which is why I opposed what I dubbed at that time the “Chinese limit”. We do not have an authoritarian state just yet, but in China they have—I know they are going to change the two-child rule, or at least they are hoping to change it—and in a way that is the authoritarianism of this DWP directive, which inadvertently or directly has put in place the Chinese limit.

I was talking to the hon. Lady before the debate, and I said that if there had been a two-child limit when our parents were born, I would not be here because my mother would not be here; she was the fourth child out of five. The hon. Lady and others—perhaps even the Minister—would not be here either. If the two-child limit were enforced here with the regularity that it is in China, but with an income base that makes it almost authoritarian, there would be children who are not born—people who would not be here. I want to highlight that dark perspective, because that is where I see this draconian, dictatorial and very authoritarian directive from the DWP going.

[Carol Monaghan (Glasgow North West) (SNP)]

The hon. Gentleman mentions China, and he knows that it is having huge problems now because there is an expectation of low numbers of children. It is having difficulties with its birth rate. It is interesting that since 2012—since austerity kicked in—the birth rate in the UK has dropped by 12%. That is significant, and it has huge implications for pension contributions and for many jobs.

[Jim Shannon]

I thank the hon. Lady for that intervention. It is about not just the two-child limit on its own, which means that a person cannot have a third child because there will not be the same structures in place to help them. It is also about issues such as the impact on income and pensions. She is absolutely right. The Minister in his place is the man who is placed to answer all these questions. I hope he will give us his thoughts on how this situation can be corrected. I go back to my point of a few moments ago about the Chinese Government. The policy does not simply impact the third child—it impacts every child in that home.

I have three sons. The first two each have two children and made a decision themselves not to have a third one. The third boy has one child and another one on the way. That is not because China’s limits are impacting upon the Shannon family, because they are not—it is a decision made by families themselves. If a family was to have a third child, why should they not be allowed to? Why should we not look at the issue of income of all the other families, and maybe say to those who said that the policy would cause there to be fewer births and cause people to use birth control, that that is proving not to be the case? We are simply taking money from households.

I referred to the fertility aspect of the two-child limit in the research summary, and want to quote further from the research:

“This raises the question of whether the two-child limit reduced the overall fertility of third and subsequent births in the UK. Survey evidence from the British Pregnancy Advisory Service found that 57 percent of women who were likely to be affected by the two-child limit said it was a relevant factor in their decision to have an abortion”.

I know some may not agree with me—I know others who do—but I am very clear in my mind. We have a duty. That is how I have always voted in this House, though others may have a different opinion. I believe in the sanctity of life—the life of the mother and the life of the child—and this policy has done something that I think is morally wrong. I think it is wrong that people should have an abortion because they cannot afford to keep the child that they carry. It is as simple as that. I very much disagree with the policy.

The researchers say that the 57% is a random sample, but also that it is bigger than that. They took it a wee stage further on income and divided

“adult women of childbearing age into those who are on benefits (or are likely, given their socio-economic status, to be on benefits) or not; and those who already have two or more children or not.”

The stats provide an evidential base for the Minister; I am happy to make them available to him, if he thinks they would be helpful. I think they would be, including for civil servants, when it comes to looking at the bigger picture.

Data published in April 2021 shows that 1.1 million children were affected by the two-child limit—237,000 more than the previous year. Updates for 2022 are not yet available. The number of children affected will continue to grow as nearly all low-income families with three or more children eventually become subject to the limit. What we are doing—I say “we”, but it is not the people here; it is the Government—is imposing an income limit on those who already have three children or more.

I have already discussed in this place on several occasions the need for the child benefit limit, set in 2013, to be uplifted, because working families are affected. Someone who earned, for example, £49,000 in 2013 was on a good wage that would allow their partner to work part-time hours to take care of their children. They are in a completely different scenario today, with energy costs. The hon. Member for Cynon Valley spoke at some length about energy costs and the impact on income. It is no different in Cynon Valley from Strangford or Glasgow Central, or anywhere else.

With gas, electric and fuel at treble the price of 2013, now more than ever we need to do the right thing by families—review, change and abolish this rule. We need to give some decency, compassion and understanding back to families, who are under incredible pressure. A review of the policy and then its abolition are essential.

The data also suggests that the probability of having a third or subsequent child declined by some 5% after the reform, which suggests that the two-child limit has led to a decline in the number of third and subsequent births of approximately 1%. The evidential base is there. This measure has a success rate of only 1%, while children in our homes are suffering. If it has only achieved a change of 1%, why pursue it? Some might say that if a party wins an election by 51% to 49% they have still won it, but as I understand it, the whole idea behind this policy was to focus on saving money. The savings are not there, so it comes down to the critical question of what this policy is really all about. Five years on from its implementation, research has found that the policy has a very marginal impact on families having more than two children but has deprived low-income families of approximately £3,000 per year—the hon. Member for Cynon Valley referred to that at some length, and the hon. Member for Arfon (Hywel Williams) spoke about it as well. They both did surveys in their constituencies, so they have done their homework. They have got the evidential base; they have got the proof.

I am conscious of time, so I will conclude with this: given the pressure that families are under, we in this place must take appropriate steps to alleviate that pressure. The Minister is an honourable man and is always incredibly friendly; it is his nature, and he does take on board the issues that we bring to his attention. However, today we are not just looking for the decent side of the Minister—which we will always get—but for concrete evidence that some of the changes that we on the Opposition side of the Chamber seek, which we feel are important, will be made. I can foresee a time when working families will be unable to make ends meet, and we in this place have a duty to the vulnerable and to the children who are suffering as a result of policies that do not reflect the issues that people have but are outdated and based on wrong assumptions. In my opinion, that 1% figure means that a wrong assumption has been made, so it must change. The time is right to make those changes, so again I look to the Minister, not just for reassurances but for a change in the law.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is a pleasure to serve under your chairmanship, Mr McCabe, and I commend my hon. Friend the Member for Glasgow Central (Alison Thewliss) for having secured this debate. More importantly, I thank her for the tireless campaigning she has done on this two-child policy, which victimises and stigmatises families and children. It is worth putting on the record that my hon. Friend was the first Member to identify the pernicious rape clause, on Budget day in July 2015, and her speech shows just how much she has immersed herself in highlighting the unfairness of this policy and the ludicrous exemptions that go with it. As she has said, it is a poverty trap. The fact that children born beyond the midnight deadline are not deemed worthy of support, and that we now have two tiers of families—two families might be the same size, but by virtue of when one child was born, one family gets more support than the other—is absurd.

I also pay tribute to all other hon. Members who have contributed or made interventions. As the hon. Member for Cynon Valley (Beth Winter) said, this is about the need to support all children and ensure basic fairness; why do this UK Tory Government find it all too easy to breach human rights? The hon. Member for Arfon (Hywel Williams) made a powerful speech, talking about his own circumstances and how political attitudes have changed. The example he gave about the moral condemnation in the past of people stuck in mental institutions, and how we are returning to moral judgments of people having children, should make the Minister sit up, because it certainly made me sit up.

Then, of course, we had a fantastic contribution from the hon. Member for Strangford (Jim Shannon). It did start with his “better together” comparison, but apart from that, I agreed with every word he said. When the hon. Member for Strangford uses such strong language and condemns a policy so much—I genuinely think that was the best speech I have heard from the hon. Gentleman; that says a lot, but it was a really powerful speech—if the Minister does not take note, something is far wrong. The hon. Gentleman gave the example of the Chinese limit, and how it would have impacted families and people here had such a policy been implemented, but he also spoke about the dark perspective of this policy. It is morally wrong, and not just that: it has been an abject failure in its aims. That really summed it up, so I pay tribute to the hon. Gentleman for his speech.

It is disappointing that there are no Tory Back Benchers here to back up the policy. Maybe that says how bad the policy is, or maybe they are just choosing to back the corrupt Prime Minister in the “other place.” The point is that agreeing to provide welfare support for only two children is a horrible policy, backed up by dog-whistle politics. The concept clearly was that people should be able to afford children, just like those who rely solely on work for their income and therefore do not need additional welfare support. That is language designed to imply that anyone on benefits is a scrounger, and that people have children just to screw the welfare system. It is truly awful, and it actually puts a price on children.

As we have heard, in affected families, who suffers the most? The children. Hungry kids cannot learn in school. They will be disadvantaged and less likely to have a positive outcome, so whatever circle the Tories think they are breaking, they might be condemning more people to underachieve and have a higher chance of unemployment, and to be less likely to participate in higher and further education and more likely to end up in lower-paid, semi-skilled work. As the hon. Member for Strangford said, if some children suffer, others do. It is not just the ones directly affected.

Worst of all, the entire concept is based on politics and prejudice and not evidence. What we now have, clear as day, is evidence of how the policy works for those affected by the two-child policy. The Library briefing confirmed that of the 317,500 families affected in April 2021, 56% had somebody in the household working. The majority, also 56%, were in dual-parent households, so the majority of families affected are dual-parent households with somebody in employment. That is proof that the policy is based on falsehoods and proof that the bigger issue is that too many people are in low-paid, insecure jobs, and that is the issue that should be tackled.

What about the people who have lost jobs or faced reduced income due to covid? They now find that the so-called safety net of the welfare state is a lot smaller than they would have anticipated. The Tory Brexit has also impacted jobs, too. The Tories deny that, but I have a meeting tomorrow with somebody who runs a haulage company, and he is close to going under, which will take other jobs with him, because of the ludicrous cabotage rules that the Tory Government signed up to.

Covid unfortunately gave us fire and rehire—another policy that the Tories have done nothing to eliminate, but a policy that is vastly reducing the incomes of thousands of workers or seeing them sacked. Workers that the Tories might otherwise have seen as model families who were able to afford their children without welfare support will now need that support, and it might not be there for them. Families and people who have lost jobs are now having to readjust their outgoings accordingly, and now find that they have been categorised as scroungers by the Tory Government.

Another key issue of the two-child policy is that, as others have said, it disproportionately affects orthodox Jewish and Muslim families who may have religious or ethical views on family size. I agree with the intervention by the hon. Member for Strangford that the religious aspect in terms of discrimination has possible human rights implications as well.

We have heard that some women have considered abortion because they worry about not being able to afford a child. There are debates about how many women have actually undertaken an abortion because of that, but the reality is that women are having to face that choice, and they should not have to. Again, that is something the Minister needs to look at and review.

[Carol Monaghan]

There are debates about that, but the statistics are clear. The National Audit Office numbers show that since 2016, since the policy came into being, there has been a 24% increase in the number of abortions in England and Wales.

[Alan Brown]

I thank my hon. Friend for that. I will not disagree. The hon. Member for Strangford also referred to evidential work done by the LSE. This is evidence that the Government should look at. We are discussing a Government who talk about family values. How can they talk about family values when they are forcing women to consider abortion?

That takes us to other evidence of the impact of this policy. Since 2013-14, child poverty among larger families has risen dramatically; almost half of all children living in families that have more than two children live in poverty. Also, recent research for the report “Benefit changes and larger families” by largerfamilies.study shows that most of the recent rise in child poverty overall has been driven by rising poverty among those larger families.

Sara Ogilvie of the Child Poverty Action Group has said:

“The two child limit is a brutal policy that punishes children simply for having brothers and sisters. It forces families to survive on less than they need, and with soaring living costs the hardship and hunger these families face will only intensify.”

Also, according to CPAG:

“Removing the policy would lift 250,000 children out of poverty”,

doing so immediately. So, surely the Minister must review the evidence, act accordingly and take that action to

“lift…children out of poverty”.

Then, if we look at the rape exemption clause, it is apparent that it was thought up on the hoof at the time. It was probably some loose nod by the Government towards thinking that they were adding a moral, even noble, exemption to support children born after their mother’s traumatic experience of being raped. However, it is no wonder that Ministers at the time could not even explain how the policy would be implemented, because it was so absurd. No thought was given to the traumatic psychological effects of a woman having to relive such an experience and being asked to fill in forms to justify financial support for her child. Also, the bizarre logic of the exemption only applies for subsequent children, beyond the two-child limit, born of rape. So, as if the clause in itself is not abhorrent enough, it is somehow seen as being morally okay to decide which child born from rape is worthy of support, which is truly disgusting.

The other big thing aligned with this policy and other policies at the time was the whole “balancing the books” mantra. This debate made me revisit the 2015 summer Budget Red Book. I looked back at that and honestly it is truly horrifying to see how evil that Budget was. The two-child clause was estimated to save £3.4 billion by 2021; freezing benefits, £11.3 billion; benefit cap reduction, £1.7 billion, clawed back from the poor; and increasing the tax credits taper to 48% while reducing income thresholds for tax credits and work allowance was estimated to save—astonishingly—nearly £20 billion by 2021. So, there was a complete and utter hatchet job on the welfare state, and there were also incoherent policies, given the attack on some of the job-related welfare support—so much for “making work pay”. That was an awful Budget and I have to point out that it was shameful that Labour abstained on it.

However, what about the “balancing the books” mantra? Clearly, as I have just illustrated, it is “balancing the books” on the poorest, the most infirm and the lowest-paid in society. But what it also allowed in subsequent Budgets was tax giveaways to those who the Tories deemed worthy of benefiting from them.

Previously, I had the Library conduct analysis on some of the key Budget decisions that were implemented from 2016 to 2018. The Library extrapolated those figures, which were based on figures that were presented in the Budget books, up to 2025, and it estimated that, up to 2025, the Treasury was giving away £80 billion. Increasing the higher rate threshold was estimated to be a giveaway worth £5 billion; changes to individual savings accounts, or ISAs, £7 billion; inheritance tax changes, a £6 billion giveaway; and the personal allowance increase and further raising of the higher threshold to £50,000 of income was estimated to be an £11 billion giveaway by the Tories. There was also a £50 billion giveaway in corporation tax, although at least they realised the error of their ways on that one. All of that shows that plenty of money was found for giveaways, rather than for continuing to balance the books properly. And those figures show that the Tories could easily afford to reverse this two-child policy, if the political will to do so was there.

Returning to the here and now, another issue with universal tax overall is of course the removal of the uplift, or—more appropriately—a cut of £1,040 a year. As the hon. Member for Cynon Valley said, if the pandemic merited an uplift to allow people a more dignified life, then surely—with inflation running at 7% to 8%, the energy cap up 75% compared to April 2021 and petrol at record prices—there is a clear need for a permanent increase in universal credit.

I cannot finish without comparing this with what is happening in Scotland with the Scottish Government, just as my hon. Friend the Member for Glasgow Central did. The Scottish Government introduced the game-changing child payment, doubling it to £20 a week, and it will increase to £25 a week when the benefit is extended to under-16s at the end of this year. As that has been done on a fixed budget in the Scottish Parliament, it cannot have the positive impact it otherwise would have had because we are still living with the impact of Tory austerity. That is proof that whatever the Scottish Government do is undertaken with one hand behind their back. It is interesting that there was a strong theme earlier in the debate about the Welsh Government needing more powers too, so Tory policies are clearly having an impact on the Union, which should make the Minister take note.

Will the Minister pledge to review the effects of the impact of the Scottish Government’s child payment policy and the support it has received from charitable organisations? The Scottish Government have shown that they are treating all children equally. That should not be too much to ask of any Government, and surely it is time for the UK Government to think again.