Universal Credit and Child Tax Credit: Two-child Limit

Ivan Lewis Excerpts

Tuesday 27th November 2018 Westminster Hall

[Mr Ivan Lewis (Bury South) (Ind)]

It is always a pleasure to serve under your chairmanship, Mr Streeter, and I thank the hon. Member for Glasgow Central (Alison Thewliss) for securing this timely debate. As others have said, hon. Members might find themselves experiencing a sense of déjà vu, having once again gathered in Westminster Hall to highlight a Government policy focused on hitting the poorest families the hardest. There are 870,000 families with more than three children currently claiming these benefits, with the bottom fifth of the income distribution expecting to lose the largest proportion of their income. We know the policy is set to save the Government £1.6 billion by 2020, which is no small amount. That compares with the £2.7 billion that the Government are spending on giving an income tax cut to the highest earners; they continue to make it clear that they are not governing in the interests of ordinary working people.

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

The hon. Gentleman might be interested to know that I have House of Commons Library extrapolations of the Budget impact of the 2017-18 tax giveaways. The figure for inheritance tax, capital gains tax and corporation tax is £80 billion over the period 2017 to 2025. Does that not show how wrong the Government’s priorities are?

[Mr Lewis]

I agree entirely with the hon. Gentleman. The Prime Minister often talks about supporting those who are striving and working hard, but unfortunately in reality, the consequences of Government policy are the precise opposite.

We know that the Government are targeting minority and religious groups with this policy. In my constituency, the Haredi community will be the hardest hit. There is a substantial differential impact on religious communities for whom family size is determined by beliefs and for whom culture is also a determining factor. That was omitted from the Government’s impact assessment, and the Minister might want to respond to that in his concluding remarks. Some 31% of all children live in households with three or more children. For families of the Jewish faith, the proportion is 52%; for families of the Muslim faith, it is 60%; and we know that many families of the Christian faith also have three or more children. We do not expect that those families will change their behaviour because of this policy, which significantly penalises them for their religious beliefs. What has it come to when a Conservative Government are attacking the concept of religious freedom in our society, which is precisely what this policy does? I know that sometimes people do not like talking about faith, but we should say that the concept of religious freedom is central to British values. This policy goes right to the heart of undermining that principle, but it was not even part of the Government’s impact assessment, which is absolutely shameful.

Families with more than two children face a cruel poverty trap, as others have said. They are unable to work their way out of poverty because, for every extra pound they earn, the Government will reduce their two-child allowance by 75p. Those changes severely undermine the financial security of larger families, who stand to lose up to £2,780 for each additional child beyond the first two. Many families will be unable to meet their children’s essential needs. An estimated 200,000 more children will be in poverty as a direct result of this policy. Children raised in poverty, as many hon. Members know, face many disadvantages: worse life expectancy, worse educational performance, and poorer health. Although the policy may make some short-term savings, in the long term it causes tremendous economic and social costs to our society.

One of the most shameful things about the Government’s record is the abandonment of any notion of a child poverty strategy. Right at the heart of any Government who sought to govern in the interests of all of the people of this country, a top priority, whatever one’s ideology, should be the fight against child poverty. The Government have abandoned strategy and a cross-Government approach. They no longer have targets, which means there are consequences. There is no focus whatever in Government to tackle child poverty as a policy priority. We then end up with policies such as those we are debating today, where no impact assessments have been done, adding to child poverty. What kind of society is the Government seeking to create? Most of those affected are working families who are in the just about managing group. Again, the Prime Minister talks about that all the time, but there is a gap between rhetoric and reality. Substantially cutting support sends an unhelpful message about the rewards of work.

In conclusion, the policy does a number of things. It hits the poorest the hardest. It increases child poverty, risks an increase in abortion, undermines religious freedom and causes vulnerable women to be even more vulnerable. The Minister must surely accept that now is the time to U-turn on such an appalling policy.

[Several hon. Members rose—]

--- Later in debate ---

[Alok Sharma]

The hon. Lady raises a perfectly valid point, which I will get to if she gives me the opportunity.

From 28 November, exceptions will also apply to children in kinship care, regardless of the order in which they joined the household. The exception will also be extended to children who are adopted who would otherwise be in local authority care. It is also worth noting that as a result of natural or managed migration to universal credit, families’ existing entitlement will be protected as long as they remain responsible for the same children and remain entitled to benefits; that will apply regardless of the number of children in their household or their date of birth.

As hon. Members will know, a judicial review of the policy was heard in the High Court earlier this year. The Court found that it was lawful overall—a judgment that the Government welcomed. Several colleagues have spoken about the impact of the policy on particular groups, but I should point out that the High Court judgment on 20 April found that the policy did not breach the right to freedom of thought, conscience and religion.

The Government remain committed to providing support for families. Under universal credit, 85% of childcare costs are covered—up from 70% under the old system—and, for the first time, people in part-time work can get help. That comes on top of the Department for Education’s 30 hours of free childcare provision for three and four-year-olds in England.

[Mr Ivan Lewis]

Will the Minister give way?

[Alok Sharma]

No, I will not, if the hon. Gentleman does not mind.

The flexible support fund is available to help eligible parents who are moving into work to pay up-front childcare costs or deposits. Child benefit continues to be paid to parents regardless of the number of children within the household. There is also an additional amount in universal credit designed to support disabled children, again regardless of the total number of children in a household.

To return to the Budget, we have listened to feedback about the support available for families on universal credit and we have acted. In last month’s Budget, the Chancellor announced that an extra £1.7 billion a year will be put into increasing work allowances for families with children and disabled people, strengthening universal credit work incentives and providing a boost to the incomes of the lowest-paid. This will result in 2.4 million families keeping an extra £630 per year of what they earn.