Working Tax Credit and Universal Credit: Two-Child Limit

David Rutley Excerpts

Thursday 21st April 2022 Westminster Hall

[The Parliamentary Under-Secretary of State for Work and Pensions (David Rutley)]

It is a pleasure to serve under your chairmanship, Mr McCabe; we have seen a fair bit of each other this week. I congratulate the hon. Member for Glasgow Central (Alison Thewliss) on securing this debate, on a subject on which I know she has campaigned at length. In fact, we have sparred on a few different issues, because this is not the only subject she has concerns about.

The Department for Work and Pensions is committed to supporting families and helping parents into work. Since this has come up in the debate, it is worth reminding colleagues of the 1.3 million vacancies available for people to find work. We want there to be strong work incentives to help people to fill the opportunities that are available, while providing support for those who need it. We also need to ensure that there is a sense of fairness for the taxpayer; many working families who do not receive benefits do not see their incomes rise when they have more children. That is why we judge that the policy to support a maximum of two children, whether that is with universal credit or child tax credit, is a proportionate way to achieve those aims. Our overall approach is working, as evidenced by the fact that between 2016 and 2021, the number of couples who are in employment and have children increased by 460,000; that is a 2.3 percentage point increase in the employment rate for that group.

The two-child policy was introduced five years ago. Since April 2017, families have been able to claim support for up to two children. There may be further entitlement for other children if they were born before 6 April 2017 or if an exception applies—I will come back to that in a minute. The child element of universal credit is worth £290 for the first child born before 6 April 2017. It is worth a standard rate of £244.58 per child for the second and any other eligible children. Child benefit continues to be paid for all children, plus the additional element in child tax credit or universal credit for any disabled children. The 2021-22 rates for the disabled child addition in universal credit are £128.89 per month for the lower rate and £402.41 per month for the higher rate. Additional help for eligible childcare costs through working tax credit and universal credit are also available, regardless of the total number of children in the household. We discussed that at length in the Work and Pensions Committee yesterday—although that feels like quite a long time ago.

We recognise that some claimants are not able to make the same choices about the number of children in their family. That is why exceptions have been put in place to protect certain groups. Exceptions apply to third and subsequent children who are additional children in a multiple birth; an extra amount is payable for all children in a multiple birth other than the first child. Exceptions also apply where the child is likely to have been born as a result of non-consensual conception, which for this purpose includes rape or where the claimant was in a controlling or coercive relationship with the child’s other biological parent at the time of conception. A further exception applies to any children in a household who are adopted when they would otherwise be in local authority care, or who are living long term with friends or family and would otherwise be at risk of entering the care system. Another exemption is where a child under the age of 16 who is living with their parents or carers has a child of their own—until they make a separate claim upon turning 16.

Statistics from the Office for National Statistics show that in 2020, 85% of all families with dependent children had a maximum of two in their family. For lone parent families, the figure was 83%. Based on the latest figures, 62% of households with a third or subsequent child who are in receipt of universal credit or child tax credit are not affected by the two-child policy.

[Hywel Williams]

The Minister has given a long list of the benefits available to people and some of the ameliorative procedures that have been put in place, but what is the actual effect of the two-child limit? Is he saying that it has no effect at all or that its effects have been ameliorated? What is the effect on the kids in those families?

[David Rutley]

The point that I am trying to make is that the benefits system is important—it provides support—but it is not the only thing that we are trying to do for people and for claimants.

As the hon. Member for Westminster North (Ms Buck) has highlighted, many of those people are working while on benefits. We want them to get into work and, when they are in employment, to progress. As has been debated long and hard in this Chamber, we have recently introduced work coaches who focus on in-work progression; we have 37 champions across the country who are helping to push that agenda forward. That is vital so that people can progress. People do not depend just on the benefits system; we want them to see more in their wage packet, and we have provided work incentives to do that, be it through the UC taper rate changes that have been put in place or through the increased work allowances. Those are vital incentives.

[Alan Brown]

rose—

[Ms Buck]

rose—

[David Rutley]

I will give way to the SNP spokesperson, but then I will make some progress, because others have made many points and I have several to make myself.

[Alan Brown]

I thank the Minister for giving way. On the point about helping people’s wage packets and making work pay, does he not agree that the minimum wage should reflect the national living wage so that people get a proper, fair wage?

[David Rutley]

As I think the hon. Gentleman knows, the national minimum wage has gone up to £9.50—[Interruption.] There is a bit of head-shaking going on; it is very disturbing. The national minimum wage is now £9.50 and is projected by many to reach £10. The £9.50 figure is a 6.6% increase, which is very welcome. I am sure that the hon. Gentleman will join me in welcoming that significant increase.

A few things have been said about the non-consensual conception exemption. We recognise that it is a difficult and sensitive issue, and we have put in place procedures that are mindful of the sensitivities involved. Third-party professionals include healthcare professionals, registered social workers and relevant specialist charities, which can also signpost claimants to further support, so claimants will get the support that they need and be assisted through the light-touch processes in challenging circumstances. The hon. Member for Glasgow Central made a point about rape conviction rates. I reassure her—I think she knows this, but let me put it on the record—that the criteria for the non-consensual conception exemption is much wider than just conviction. The third-party professionals can assist in those circumstances as well.

The hon. Member for Strangford (Jim Shannon), who I think everybody in this Chamber loves, highlighted many situations—nearly all of them, actually. I agree with him that there are a few exceptions, but clearly, we will have differences of opinion on this point. He and I share a love of ensuring that people can express their faith freely—that is a fundamental part of our democracy—and the policy does not seek to get in the way of that vital democratic right and freedom that we all cherish. The Government have published an impact assessment noting that ethnic minority households may be more likely to be impacted by the policy because they are, on average, more likely to be in receipt of child tax credit or universal credit, or to have larger families. That could also be the case for households of a particular religion, but the DWP has insufficient data to confirm that. I highlight that the Supreme Court found that the two-child policy was lawful and not in breach of the European convention on human rights.

Points have been made about abortion and fertility rates. The Nuffield Foundation’s research consortium on larger families has this month published a report outlining that fertility rates for those claiming, or eligible to claim, benefits have changed very little since the introduction of the policy. That would seem to refute the evidence from the British Pregnancy Advisory Service that was discussed earlier. The policy was never designed to affect fertility rates; it is fundamentally about seeking to provide fairness with those who are unable to access benefits, when it comes to the choices that they have to make.

The hon. Member for Glasgow Central also asked the question—

[Alison McGovern (Wirral South) (Lab)]

Will the Minister give way?

[David Rutley]

I do not think that the hon. Member was here for the whole debate. I will take interventions from others, who have had the courtesy to be here for the whole debate, but I will carry on for now.

On the point about monitoring, we are keeping all our policies under review, but this policy seeks to strike the right balance between supporting those in need and fairness for taxpayers and those who support themselves primarily through work, who do not see their incomes rise when they have more children.

The hon. Members for Arfon (Hywel Williams) and for Cynon Valley (Beth Winter) made some points about poverty and whether this policy is impacting it. I am sure they are assiduously following the latest households below average income statistics, which show that the support we put in place around benefits and incentives for people to get into work—creating a vibrant labour market so that people can get into work and progress—means that 1.2 million fewer people were in absolute low income, before housing costs, in 2020-21, compared with 2009-10. That included 200,000 fewer children and 500,000 fewer working-age adults. Furthermore, there are now nearly 1 million fewer workless households and, very importantly, almost 540,000 fewer children living in such households than in 2010.

[Ms Buck]

Can the Minister confirm that he accepts the point I made in my speech—that the number of families with three or more children that are in absolute poverty has gone up significantly?

[David Rutley]

Our policy is to seek to ensure that we get more children out of workless households, which we are succeeding in doing, and that there are more employment opportunities for people. We are moving that agenda forward very successfully in the current labour market, and we need to continue to move it forward.

The most sustainable way to lift children out of poverty is by supporting parents to get into, and progress in, work wherever possible. The Government have consistently said that the best way to support people’s living standards is through good work, better skills and higher wages. We have provided significant work incentives, which I have already highlighted, through universal credit, but also through our plan for jobs and the kickstart and restart schemes, which demonstrated the Department’s commitment to supporting families to get into, or to progress in, work. We have a range of policies that support people and families across the tax and benefits systems, and the household support fund for those who are particularly vulnerable.

I would highlight, one final time, that on 9 July 2021, the Supreme Court handed down the judicial review judgment on the two-child policy. The court found that the policy was lawful and not in breach of the European convention on human rights. The policy to support a maximum of two children strikes a balance between providing support for those who need it and ensuring a sense of fairness to taxpayers.