Universal Credit (Removal of Two Child Limit) Bill

Lord Sikka Excerpts

2nd reading & Committee negatived & 3rd reading
Thursday 12th March 2026 Lords Chamber

[Lord Sikka (Lab)]

My Lords, I support this Bill, though I am disappointed that some oppose lifting people out of poverty while constantly supporting greater spending on the welfare of corporations and the super-rich.

Eradication of child poverty could boost the UK economy by around £40 billion a year. Children in poverty struggle to realise their full education and employment potential, which leads to lower earnings and contributions to the public purse. They are more likely to have healthcare problems, make greater demands on public services throughout their lives and have shorter life expectancy. Lifting children out of poverty makes perfect economic and moral sense.

The £3 billion expenditure will boost the spending power of the poorest families and stimulate local economies. The real cost to the public purse would be much less, because it would, in large part, return to the Government in the form of VAT, other indirect taxes and lower demand on public services. The Opposition can support redistribution of income and wealth by, for example, calling for alignment of the taxation of capital gains with wages, which would raise £14 billion. There would be plenty there to cover the costs of this measure, but they do not actually call for redistribution.

I am concerned that thousands of children will not receive any improvement from this Bill because of the overall benefit limit, which is set at around £22,020 a year for most families and £14,753 for single adult households. Some 119,000 households have their universal credit capped and 82% of benefit-capped households include children. Can the Minister explain the impact of the overall benefit cap on child poverty and its relationship with the Government’s strategy for reducing or eradicating child poverty?

Child poverty is linked with parental poverty, so we need a strategy for that. The median gross wage of a UK employee is £31,056, or £25,880 after income tax and national insurance. Graduates take home even less. Inevitably, 14.2 million people live in poverty, and 25.3 million people live below minimum income standards. In other words, they lack the income to meet material needs and to enable participation in society. This comprises 48.6% of children and 35% of working-age adults. Some 81.6% of children in lone-parent families are growing up in households with inadequate incomes.

Those who oppose the Bill should be reminded of the horrific consequences. For example, the UK has a higher rate of infant mortality compared with peer countries, because many women cannot afford good nourishment, not only before but also during pregnancy. Due to poor food and living conditions, British five year-olds are up to seven centimetres shorter than children of the same age in Europe. One in four young people in England has a mental health condition, and illnesses such as rickets and scurvy have returned. Altogether, some 7 million children are growing up in households which lack the income needed for a dignified standard of living. So, there is a clear need for an effective strategy for parental poverty eradication.

Trickle-down economics has long failed. Average real wage has hardly moved since 2008; workers have no say in how wealth generated by their brain and brawn is to be shared; there are no curbs on profiteering; some 3 million people are malnourished or are at risk of malnutrition; and the poorest 20% pay a higher proportion of their income in taxes than the richest 20%. Due to the visible hand of successive Governments, the bottom 50% of the population has less than 5% of the wealth, and the bottom 20% has only 0.5%. Such an environment cannot banish child poverty. So can the Minister say something about how the Government are going to develop a comprehensive strategy for the eradication of parental poverty?