Universal Credit (Removal of Two Child Limit) Bill [HL]

Lord Bishop of Durham Excerpts

2nd reading
Friday 8th July 2022 Lords Chamber

Moved by

[The Lord Bishop of Durham]

That the Bill be now read a second time.

[The Lord Bishop of Durham]

My Lords, I am glad to bring before you this Bill, which would abolish the two-child limit to universal credit. In doing so, I declare my interest as patron of the North East Child Poverty Commission.

When this policy was originally debated, I made it clear that we would seek to hold the Government to account for its impact. Working with others, including the Child Poverty Action Group, the Joseph Rowntree Foundation and many others, I have sought to do this. Before the policy was rolled out, its impacts were predicted—notably, that many children would pay the price. They are, with more families affected every year.

Children are a gift, not only to their parents but to the wider family and to society. Every child should be treated as of equal value. I believe this is recognised across all Benches of this House. Sadly, this policy directly contradicts that.

This policy is the biggest driver of the increase in child poverty. Families falling into difficulty are discovering that the social security system is not supporting their whole family as they expected where they are a larger family. People are discovering that not every child is of equal value. The third child is ignored and thus the whole family suffers. This policy punishes children. Further, it does not even live up to the terms on which it was initially defended. I feel for the Minister in her difficult task today.

The original terms were, in the Government’s own words, that

“families on benefits will have to make the same financial decisions as families supporting themselves through work.”

This line has been repeated often. Although the Government have denied that the intention of this policy is to influence the fertility rates of those claiming universal credit, it is acknowledged in their own impact report. The IFS report cited by the impact assessment, Does Welfare Reform Affect Fertility?, demonstrated a significant increase in fertility rates of people whose benefits were increased.

So when academics looked at the trends resulting from this policy, they were surprised to find the very small decrease in fertility rates in the relevant group. This is bad news for the effectiveness of the policy. Following its logic, a successful outcome would be adults, in full knowledge of the consequences of the two-child limit, making different decisions than they otherwise would about having children. They may be more financially stable as a result, more likely to progress into work and less likely to need the social security system to stay afloat. This would, in addition to the money saved solely restricting support to two children per household, save the Government money in the long term. The money-saving factor of this policy is another term on which it was presented.

However, if there is not a significant trend to say that adults’ decisions to have a child are being affected, how is the two-child limit influencing anything at all? I pay tribute to the Benefit Changes and Larger Families project, which has been an invaluable resource on this subject. Its recent conclusion to this question is that

“the two-child limit’s main outcome is to drive financial hardship and often destitution.”

This is unacceptable. It is enough reason for the policy to be scrapped.

But, following the Government’s logic again, the cost to the public purse of such high levels of poverty in early childhood is likely to be far greater than the money saved through withholding support. Professor Donald Hirsch’s ground-breaking research on this subject highlights that children who have experienced poverty are less likely to pay tax, less likely to have high-paid jobs and more likely to need support from public services. More important are the unquantifiable impacts: the suffering of living in an overcrowded home, or not being able to join in with costly school activities and the shame that sometimes accompanies that. The truth is that this policy, designed in part to save public money, will likely increase the long-term cost to the public purse.

Why has this policy failed to level out the financial decision-making playing field? The Benefit Changes and Larger Families project, the CPAG and others agree that the policy works on the assumption that everyone is aware of it and its consequences and, further, that everyone has the tools to make a decision in this way about having a child. The director of the North East Child Poverty Commission recently sent me some relevant stories of clients from Citizens Advice Newcastle. “Stephanie” is a full-time carer for her three children, aged six, four and 11 months. She was unaware of the limit and was informed only when she claimed support for her youngest. She had no savings. The Government’s response to the Work and Pensions Committee in 2020 that claimants are free to have

“as many children as they choose, in the knowledge of the support available”

shows a lack of understanding about people’s lives and the way this policy actually works.

This policy also assumes that those claiming benefits and those who do not are divided along employment lines. Actually, the majority of those subject to the limit are in work. I quote again from the impact assessment: the limit is about

“ensuring those on benefits face the same financial choices around the number of children they can afford as those supporting themselves through work.”

In more recent times the reasoning has changed to those supporting themselves “solely” through work, but that does not change the intention of the policy and is indicative of its outworking. It is simply not always possible for people in either group to increase their incomes. The social security system is designed to be a safety net for any of us who unexpectedly fall into financial difficulty through loss of work, sickness or disability.

I pay tribute to the Member for Glasgow Central, with whom I have worked on the resistance to this policy. It is very unusual for the Church of England and the Scottish nationalists to work quite so closely together. In her recent Westminster Hall debate, she laid out the stunning inconsistencies with which exemptions to the policy are applied. Although the exemptions are designed to mitigate the assumptions made, they do not account for the disproportional impact on people of ethnic-minority and faith backgrounds, who are more likely to have larger families. Some faith groups are penalised because, for them, contraception and termination are simply not valid options.

Another result of the policy lies within a survey taken by the British Pregnancy Advisory Service during the pandemic. It spoke to women who were aware of the two-child limit and likely to be affected, 57% of whom said that the policy was

“important in their decision-making around whether or not to continue the pregnancy.”

The fact that some women could feel pressured by a government policy to terminate a pregnancy that they may have otherwise wanted seems abhorrent.

I would like to correct the Minister in the other place who, when taking part in the recent Westminster Hall debate, argued that the lack of significant change in fertility rates refutes the impacts of the policy that we have heard through the BPAS survey about women’s experiences. These experiences cannot be refuted, and we must recognise both impacts.

It is clear to me that this policy is ineffective, devastating in impact and essentially immoral in character. The Minister has encouraged me to keep presenting evidence on the impact of the policy. With the wonderful help of the groups I have mentioned and many others, I have done so, and I pay tribute to the Minister for the fact that she regularly meets me when we are looking at this.

Rather than taking this evidence seriously, the defence of the policy has remained unaltered. It is a policy which is defended on terms that do not add up. It should be embarrassing that the price paid for its fallacies are our children. I pay tribute to those working constantly to try to ameliorate the entrenched, long-lasting poverty that is affecting families, but they can only ease the pain, not heal the wound. The Resolution Foundation’s Living Standards Outlook 2022 concluded that even in the context of the pandemic recovery and the war with Ukraine,

“the level of absolute and relative poverty in the UK each year is to a large extent a policy choice.”

If the Minister cannot commit to supporting this Bill today, will she commit to carrying out an impact report of the policy by the end of this year? Will she further commit to speaking with the Minister in the other place—I think it is still the same person— the department and the Cabinet about this debate and the evidence we have put forward? We could keep debating this for years, but ultimately it is a choice; a choice for this Government and, today, a choice for this House. I beg to move.

--- Later in debate ---

[The Lord Bishop of Durham]

I thank the Minister for her full response, for giving us an answer and for repeating some of the stuff around the exemptions and so forth. However, she is right: I am disappointed, and I know that others will be. I am very grateful to those who have spoken; I thank the noble Baroness, Lady Bennett, for her tireless support in this, and I thought her point about there not being a single Conservative Back-Bencher here to speak for the policy did say something.

I thank the noble Lord, Lord Desai, for his reminder about economics and even going back all the way to Reverend Malthus, who I remember reading when I was doing my degree. The noble Baroness, Lady Brinton, highlighted—as did others—the increase in child poverty, and that is really one of the reasons I am disappointed. We are seeing an increase in child poverty, yet there seems to be a lack of willingness to address that where it is growing. I accept that some action is being taken, but it is not stopping some getting poorer and poorer and some becoming in danger of falling into destitution. The noble Baroness, Lady Sherlock, made a point about the funding balance and tax cuts, which I thought was very well made and very helpful.

I look forward to the letter around how the number of two children was arrived at. I remember sitting with Iain Duncan Smith and having that conversation with him where he gave me a convoluted explanation which I still do not think makes any sense. But I am grateful; the Minister is right that we will not stop having this debate. Simply, I am not going to stop until this policy is scrapped.

Bill read a second time and committed to a Committee of the Whole House.

Universal Credit (Removal of Two Child Limit) Bill [HL]

Lord Bishop of Durham Excerpts

Order of Commitment discharged
Wednesday 26th October 2022 Lords Chamber

Moved by

[The Lord Bishop of Durham]

That the order of commitment be discharged.

[The Lord Bishop of Durham]

My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Unless, therefore, any noble Lord objects, I beg to move that the order of commitment be discharged.

Motion agreed.

Universal Credit (Removal of Two Child Limit) Bill [HL]

Lord Bishop of Durham Excerpts

3rd reading
Friday 24th March 2023 Lords Chamber

Moved by

[The Lord Bishop of Durham]

That the Bill do now pass.

[The Lord Bishop of Durham]

My Lords, I request your Lordships’ patience for a few minutes as I make a few remarks. I express my deep gratitude to all those who have supported this Private Member’s Bill and the effort to remove the two-child limit. I thank those across all Benches who have contributed during the passage of the Bill. I particularly thank the noble Baroness, Lady Stedman-Scott, who, for much of the time I sought to highlight the wrong of the two-child limit, was the Minister who had to respond. She was always willing to engage and debate with me. We did not reach agreement, but I publicly thank her for the way that she worked with me.

I recognise particularly the work of the Child Poverty Action Group, the Joseph Rowntree Foundation, the North East Child Poverty Commission, and their staff, who have provided valuable support and encouragement throughout this process. I publicly thank my two parliamentary assistants who have worked with me on the Bill, Emily King and Becky Plummer. They have been superb. I also thank Kim Johnson MP, who has agreed to take the Bill forward in the other place, and many other MPs who have already promised their support.

In less than two weeks, it will be the six-year anniversary of the introduction of the two-child limit, restricting universal credit support to only the first two children in a family. The policy was originally introduced to ensure that

“people on benefit should face the same choices as those in work and those not on benefits”,

while driving real action to

“make the biggest difference to the most disadvantaged children now and in future.”—[Official Report, Commons, 20/7/15; cols. 1258-63.]

It has indeed made a difference to those children’s lives, though regrettably not the one that was intended. While the policy aimed to address the root causes of poverty, the two-child limit has instead become the greatest contributor to driving more children into poverty. It impacts an estimated 1.3 million children, disproportionately affecting children of certain religions and ethnic-minority backgrounds.

Just this week, Barnardo’s has included in its new report, A Crisis on our Doorstep, a recommendation that the policy should be removed. Most families that it applies to are already in work, negating the reasoning behind the policy of ensuring that those on benefits face the same decisions as those in work. In some circumstances, the policy has forced parents to instead make a different decision—the choice between terminating an otherwise wanted pregnancy or raising a family for which they cannot properly provide. That is a choice no parent should be faced with.

Life can be unpredictable, and larger families who fall on hard times, whether it is due to losing a job, falling ill or experiencing a pandemic, have no guarantee that they will be able to afford even the essentials. There is no longer a safety net to catch them and help put them back on their feet. My hope is that the Bill will change this. Through removing the two-child limit, each and every child will be valued, and children will no longer be reduced to a number but be seen as individuals with worth and potential. Ultimately, I hope that the Bill will mark one step towards making child poverty in this country a matter for the history books. I beg to move.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I speak on behalf of my noble friend Lady Sherlock, who cannot be here today due to ill health. I will not detain the House for long, but I commend the right reverend Prelate on the perseverance he has shown in raising this issue with Ministers in every conceivable way, in Oral Questions and debates, by publishing reports, in meetings with Ministers, and now through a Private Member’s Bill. In doing so, he has given us the chance not just to discuss the important issue of the two-child limit but to highlight the growing problem of child poverty in Britain today. Sending the Bill to the other place will now give MPs the opportunity to reflect on the important issues it raises. However, before the Bill reaches them, it may be helpful if Ministers could do two things.

First, Ministers can clarify what they are trying to achieve through this policy, because it has felt a bit of a slippery target. It was initially about saving money to reduce the deficit, even though evidence now shows that the money the coalition Government saved on benefit cuts was then spent on tax cuts. Then it was about being fair to those in work, even though the two-child limit affects in-work benefits such as universal credit, and then, at least implicitly, it was to affect decisions on how many children people have. Since the evidence suggests that people hit by the two-child limit are not having any fewer children, and since most people hit are in work, can the Minister tell the House whether the policy has been a success?

Secondly, the right reverend Prelate asked at Second Reading whether the Government would introduce an impact assessment. That is not unreasonable, given that the policy has now been in operation for over six years. The then Minister, the noble Baroness, Lady Stedman-Scott, replied:

“To be truthful and straightforward, I cannot commit to an impact assessment. I do not believe, with what I know, that the Government would welcome from me the request that he has made”.—[Official Report, 8/7/22; col. 1228.]


The fact that Ministers in the other place would not like being asked to do it is not a good reason for the Government to refuse to tell us what the impact of the policy would be. Will this Minister be brave enough to go and ask the Secretary of State to produce an impact assessment? That would inform the debate in the other place rather well. I look forward to his reply.

[Lord Evans of Rainow (Con)]

My Lords, I am grateful to the right reverend Prelate for bringing the Bill to the House and giving us the opportunity to debate this important issue, and I thank those who have participated and engaged on the Bill.

The Government think that it is of utmost importance to support children and families and are committed to helping parents into work. That requires a balanced system that provides strong work incentives and support for those who need it, but which ensures a sense of fairness to the taxpayer and many working families who do not see their incomes rise when they have more children. We believe that the policy to support a maximum of two children is a proportionate way to achieve these objectives. That our overall approach is working is evidenced by the fact that, between 2016 and 2022, the number of people in couples with children in employment has increased by 372,000—a 2.7 percentage point increase in the employment rate for this group. However, 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.

Child benefit may be paid for all children, plus the additional amount in child tax credit or indeed universal credit for any qualifying disabled children or qualifying disabled young people. Additional help for eligible childcare costs through working tax credit and universal credit is available, regardless of the total number of children in the household.

The most suitable way to lift children out of poverty is by supporting parents into, and to 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. The reduction in the universal credit taper rate and the £500 increase to the work allowance, in addition to the normal benefits uprating, alongside the landmark Kickstart and Restart schemes, demonstrated my department’s commitment to supporting families to move into or to progress in work.

The Government clearly recognise that high childcare costs can affect parents’ decisions to take up paid work or increase their working hours, which is why the changes to the universal credit childcare element announced in the Spring Budget 2023 will provide generous additional financial support to parents moving into work and/or increasing their working hours.

The department will exempt any flexible support fund payment for up-front childcare costs made to childcare providers from the universal credit childcare cost calculation when parents move into work or significantly increase their working hours. In practice, this means that the parent will be reimbursed for up to 85% of that FSF payment, as if they had paid it themselves. This provides parents with a significant payment of childcare costs, up front, to use for their next set of childcare costs, thereby easing universal credit claimants into the universal credit childcare costs payment cycle.

The department will also increase the generosity of the universal credit childcare costs caps, allowing parents to claim back over £300 more for one child or over £500 for two or more children of their childcare costs per month. This increase is roughly in line with CPI since 2006, and will increase the caps from £646 for one child and £1,100 for two or more children to £950 and £1,600 respectively.

By September 2025, eligible working parents of children aged nine months to when they start school will be able to get 30 hours of free childcare in England.

The Bill introduced by the right reverend Prelate seeks to remove the limit on the number of children or qualifying young persons included in the calculation of an award of universal credit. The Government have a range of policies which support children and families across the tax and benefits system and public services. However, this requires striking a balance, and the Government’s view is that providing support for a maximum of two children in universal credit and child tax credit ensures fairness between claimants and those who support themselves solely through work.

As regards the noble Lord’s question to the noble Baroness, Lady Stedman-Scott, regarding an impact assessment, I will certainly feed that request back to the department.

[The Lord Bishop of Durham]

I thank the noble Lord, Lord Kennedy, and the Minister for their comments, and I thank the Minister for agreeing to feed back about the impact assessment—that would be very helpful. It would serve the Government well to respond to all the reports that keep coming from the organisations that show how damaging this policy is in terms of increasing the number of children in poverty. This is not the time to reopen the debate, but the Minister will not be surprised to hear that I am not going to let this go.

Bill passed and sent to the Commons.