Child Tax Credits

Dan Jarvis Excerpts

Wednesday 12th October 2016 Westminster Hall

[Alison Thewliss (Glasgow Central) (SNP)]

I beg to move,

That this House has considered Government plans to restrict tax credits to two children.

It is a pleasure to see you in the Chair, Mr Howarth.

I come to this debate in great frustration. When I first uncovered this issue in the Budget on 8 July last year, I did not expect that I would still be talking about it one year, three months and four days later. Incredibly, unless the Minister can tell me differently this afternoon, the Government are still unable to say exactly how their pernicious and medieval policy will operate.

To set the context, the then Chancellor, the right hon. Member for Tatton (Mr Osborne), outlined in his Budget the Government’s intention to limit the child element of tax credits and universal credits to the first two children in a family. The Budget stated:

“The Department for Work and Pensions and HMRC will develop protections for women who have a third child as the result of rape, or other exceptional circumstances.”

None of the questions asked on the Floor of the House or put directly to Ministers by me or my colleagues over the past year have been answered with a justification or explanation for this fundamentally flawed policy. I want to set out my anger about writing a rape clause into our social security system and about the wider impact of the two-child policy. Neither the rape clause nor the two-child policy is fit for a Government who proclaim their support for families.

Let me deal with the rape clause first. I put on record the public opposition to it from Scottish Women’s Aid, Rape Crisis Scotland, Engender and the more than 10,000 people who signed a petition on the issue. I am deeply upset and disturbed with the attitude that the Government have taken to very vulnerable women and children. No woman should have to prove that she has been raped in order to get tax credits.

I suppose it is not in the spirit of the chummy way in which people in this place like to do things, but I am unapologetic about the way I have spoken out about the meeting I had with the welfare Minister, Lord Freud, back in May. As he is a Member of the House of Lords, I have no opportunity to challenge or question him. I have been to many meetings in my eight years as an opposition local government councillor and in my year in this place, but I have never been so furious. For a Government Minister to open a meeting by saying “I’ve had to learn a lot more about this issue than I really wanted to” is appalling, and to go on to suggest flippantly that women facing the extremes of domestic violence should just flee demonstrates a dangerous ignorance. I hope the Minister will take the opportunity today to dissociate herself from her colleague’s comments. I do not think it is radical to suggest that Government Ministers ought to understand the implications of a policy before they inflict it on some of the most vulnerable people in our society.

Children being born of rape is not something that tends to happen because a rapist jumps out of the bushes and attacks a woman, as awful as that very rare circumstance is. Rape happens when women are so vulnerable and so powerless that they are in fear for their lives. Rape happens as the result of control in relationships. Rape happens in marriage. If a woman is in such a relationship, she is not going to nip down to her local jobcentre and report to a Government official that her child was born as the result of rape. For a start, with the single household payment in universal credit, she is not going to see the money in any case; it will go straight to her partner and he will know what she has done. Nor will she want to go through a third-party reporting mechanism, as suggested by Lord Freud. She will not want to tell her family GP. If the family are not known to the social work system, she will probably not want to alert social workers. She might not yet have sought the support of her local Women’s Aid or of other sources of assistance. She will almost certainly not want to contact the police just for the tax credits.

There is no clear statement from the Government on how their policy will operate. Once the rape is disclosed, what burden of proof will be acceptable to Her Majesty’ Revenue and Customs and the Department for Work and Pensions? After all, they are not organisations known for taking people at their word. What will the time limit be? Once a woman has left an abusive relationship and is in a position of safety, will she be able to make a claim retrospectively? Can that claim be backdated? For how long? If a woman needs to claim tax credits at a later stage in her life, because that is the nature of tax credits, will she need to trawl through her sexual history to identify that one of her children was conceived by rape?

How will a claim be recorded? I cannot conceive of a way of doing that that would not be hugely stigmatising both for the woman and for the child. Lord Freud suggested to me that it might take the form of a letter that a woman would have to retain in her records at home. I cannot imagine the distress caused if somebody else in the family came across that letter at a later stage. Alternatively, will the information have to be held on the woman’s records with DWP and HMRC? Will staff have access to it? Which staff? Will they receive appropriate training? The Public and Commercial Services Union has come out against the policy because of the difficult position it would put its members in.

Tax credits may be required at different stages in a woman’s life; would her claim be flagged up on any further occasion when a claim was made, or would she have to declare it on each separate occasion and relive that abuse again and again? Asking a woman to recount such abuse, perhaps on multiple occasions, to different officials is not protection in any sense of the word. The Government are not protecting any woman, or indeed any child, with this policy. In her heart of hearts, does the Minister believe that putting women through such trauma and humiliation is worth it? The rape clause must be scrapped.

I will not be content, though, with solely removing the rape clause, because doing that would offer no protection to families either. The two-child policy must go too. Women’s Aid, the Child Poverty Action Group and the StepChange debt charity all believe that the policy runs counter to the Government’s much-vaunted family test and produces a perverse incentive for families to separate or for single parents to forgo entering new relationships.

The Government have stated that twins and multiple births will also be protected, but I have discovered that that is true only if the twins come after a single birth. According to the Government, people who have twins first have had their lot. That is despicable.

The letter I received from the Chief Secretary to the Treasury on 30 September stated that the Government’s intention was that

“all families—those in receipt of benefits and those supporting themselves solely through work—will be faced with the same sorts of financial considerations when making decisions about having more children”.

Aside from sounding as if it has come from some kind of totalitarian regime, that statement is absolute nonsense. Quite evidently, not all families start from the same point, but all families are valuable and worthy of support. The state has a duty to protect the most vulnerable among us.

The Chief Secretary to the Treasury is also quite wrong in his assumptions about those claiming tax credits. Some 63% of families who currently receive tax credits for a third or a subsequent child are in work. They are the very “just managing” families that the Prime Minister referred to on the doorstep of Downing Street. Will she make good on her commitment through deeds and not just warm words? Pursuing the two-child policy would pull the rug from underneath the very families she claims to want to protect.

The two-child policy is completely disproportionate. The Child Poverty Action Group notes that 42% of those who claim child tax credits have only one child, 36% have two children, 16% have three children and only 7% have four or more children. The policy will have a devastating impact on those families and their income but a very limited effect on Treasury coffers.

The Chief Secretary to the Treasury’s claim about people

“making decisions about having more children”

fails to recognise that perhaps when a family had their children, they were well able to afford them. I also doubt that many families make life decisions solely on the basis of their future tax credit income. Is this the thin end of the wedge from the Government? Life is not that simple. It could take only sudden illness, the death of a partner or changes to circumstances that could not reasonably have been foreseen to plunge a family into a situation in which they might need to claim tax credits. The third child that we are speaking of already exists and needs to be cared for. The extra support that tax credits provide could make the difference that gives that family enough food to eat or the ability to pay their bills. Providing for people in such situations is the very essence of why social security exists.

Evidence that I have received from StepChange demonstrates that if the two-child policy were applied to their current clients who have three or more children, 90% of those families would have absolutely no money left at the end of the month. The charity fears that, faced with mounting bills, unexpected everyday expenses and other commitments, those families will become extremely vulnerable to going into unmanageable debt. The cost of the bankruptcies that will follow will then end up being passed on to the state. StepChange’s research says that the average client that it deals with would be £327 worse off per month under the Government’s plans.

The policy also has very serious equalities implications, which the Government have not addressed at any stage. Concerns have been expressed to me by the Interlink Foundation, which represents the Orthodox Jewish community and which strongly believes that the policy will perpetuate disincentives to work for families with three or more children, as any additional earnings would reduce their entitlements. It will also make it impossible to achieve the Government’s aim of being better off in work. Interlink points out the substantial differential impact on religious communities, where reproduction, use of contraception and family size can be determined by beliefs and prevailing cultures, which the Government do not appear to have taken into account. According to Interlink’s figures, 52% of Jewish families have three or more children. For the Muslim community, the proportion is 60%. That stands in stark contrast to the population as a whole, out of which only 30% of families have three or more children. I am shocked that the Government have not addressed such a clear equalities issue.

It has been said by no less than the former Prime Minister—perhaps the Minister will repeat these claims today—that I am endlessly whinging, and that the Scottish Government now have the powers to deal with this issue. Those who say that are being extremely misleading, and also unfair to women and children in the rest of the UK, with whom I express my solidarity. The powers being transferred by the UK Government do not allow us in Scotland to set the eligibility criteria for child tax credits. Tax credits are a reserved benefit, and our Government in Scotland should not have to pay for the UK Government’s regressive policies. We have already spent £55 million on mitigating the hated bedroom tax. I would rather see the Scottish Government making positive choices, with all the powers of a normal Parliament, supporting families and lifting people out of poverty.

[Dan Jarvis (Barnsley Central) (Lab)]

The hon. Lady is making a powerful speech and I very much agree with the argument she is advancing. I am pleased that she mentioned the Child Poverty Action Group; I pay tribute to the work it is doing on this matter. Does she agree that if the Government are determined to pursue such a punitive policy, at the very least they should publish an analysis of its impact on child poverty levels?

[Alison Thewliss]

I absolutely agree. The United Nations suggests that impact assessments should be carried out on policies that affect children. Such an assessment appears not to exist for this policy.

The Scottish Government can provide top-up benefits where someone is already eligible, but not where they are not. There is also a gap: the two-child policy and the rape clause come into force early next year, but it is unlikely that the full range of social security powers will be operational in Scotland until 2018.

I shall conclude by speaking briefly about our obligations to protect and support children. I contend that the limiting of the child element of tax credits and universal credit to the first two children in a family runs counter to our obligations under the United Nations convention on the rights of the child. We are obliged by article 2 of the UNCRC not to discriminate on the basis of birth, but the two-child policy clearly does so, by apportioning value according to when the child was born into a family. We are obliged under article 3 to make the best interests of the child a primary consideration, but the two-child policy and the rape clause stigmatise, and say that the Government do not value all children equally. They also limit working parents’ ability to feed and care for the children they already have. We are obliged under articles 26 and 27 to provide access to social security and an adequate standard of living, to assist parents in the bringing up of their children. The two-child limit completely undermines that right.

The UN Committee on the Rights of the Child and the UN Committee on Economic, Social and Cultural Rights have both recently investigated the UK for its approach to welfare reform and highlighted in very strong terms their concerns about the Government’s austerity agenda and the cuts to tax credits that have already happened. In its July report, the UN Committee on the Rights of the Child stated that it was

“seriously concerned that…Recent amendments to the Tax Credits Act (2002), the Welfare Reform Act (2012) and the Welfare Reform and Work Act (2016) have limited the entitlement to child tax credits and social…regardless of the needs of the households”.

That is absolutely appalling. In their report to the UNCRC, the UK’s Children’s Commissioners said that

“measures should not discriminate against children from particular groups for example children of lone parents, children with disabilities or children from large families.”

The rape clause and the two-child policy do discriminate in those ways.

The two-child policy and the rape clause fundamentally punish families for the circumstances they are in— circumstances that may be beyond their control and in which children already exist. I urge the Minister and the Government to act in the best interests of children, as our international commitments make clear they must. I urge them to stand up for the most vulnerable in our society. Families in situations of poverty, who are working hard and doing their best, are extremely vulnerable. Women who have been raped are extraordinarily vulnerable. The Government need to think incredibly carefully about how they wish to pursue these policies, if they wish to pursue them at all. I call on the Government to protect the “just managing”—those people they say they value and wish to support—and to scrap the abhorrent rape clause and the pernicious and discriminatory two-child policy.

[The Parliamentary Under-Secretary of State for Welfare Delivery (Caroline Nokes)]

It is a pleasure to serve under your chairmanship, Mr Howarth. I congratulate the hon. Member for Glasgow Central (Alison Thewliss) on securing the debate. She is right to point out that she has been determined in her pursuit of this policy. She has certainly taken every opportunity to raise the matter with Ministers. I wish, though, to put on the record my support for my noble Friend Lord Freud, who has worked tirelessly on this matter. I entirely reject the hon. Lady’s portrayal of him, and believe that she has deliberately given an inaccurate and misleading account of a private meeting.

This debate explores the limitation of tax credits to two children, which was legislated for under the Welfare Reform and Work Act 2016. I know that the hon. Lady has a strong interest in this topic, and that it is something she has raised in the past. I welcome the opportunity to set out the purpose of the policy. In so doing, I hope that I can allay many of her concerns and particularly underline that we are absolutely committed to ensuring fairness for all families.

The welfare reforms that the Government have introduced are about much more than simply money. Our reforms seek to bring about a positive change in our nation. They are about putting welfare spending on a sustainable footing, but it is important to do that in a way that protects the most vulnerable. As the Prime Minister herself has said, we will fight against the injustices we see in our society.

The current benefits structure, which adjusts automatically to family size, is unsustainable, and it is not fair to the taxpayer or to families who support themselves solely through work and necessarily make difficult choices. That is why we have announced that, from 6 April 2017, families with third and subsequent children born after that date will no longer be able to claim additional support through child tax credit and universal credit. The policy will also apply to future new universal credit claims from families with more than two children.

[Dan Jarvis]

Is the Minister prepared to commit today to publishing an analysis of the likely impact of the policy on child poverty levels?

[Caroline Nokes]

I shall address the impacts of the policy later in my speech.

The Government believe that the policy strikes the right balance between protecting the vulnerable, such as by retaining extra support for families with disabled children, and encouraging families who receive tax credits to make the same financial decisions about the number of children they can afford to support as those families who support themselves solely through work do. Parents will continue to receive help with the cost of raising children through the payment of child benefit, which will continue to be paid regardless of family size.