Working Tax Credit and Universal Credit: Two-Child Limit

Margaret Ferrier Excerpts

Thursday 21st April 2022 Westminster Hall

[Margaret Ferrier (Rutherglen and Hamilton West) (Ind)]

An exception to the two-child limit is where the child was conceived in non-consensual circumstances, but to be eligible for this exception the parent must be able to point to either a conviction or a criminal injuries compensation claim. Does the hon. Member agree that as rape conviction rates are so low, because the bar for evidence is so high, this requirement further victimises claimants?

[Alison Thewliss]

That is absolutely correct. I will go on to talk about some of the exemptions to the policy and how ludicrous they are, but for a crime such as rape to have some place within Government policy on benefits is quite abhorrent.

The first difficulty with this policy is that it gives an arbitrary cut-off date, resulting in two classes of families: those with children born prior to 6 April 2017 and those with children born after that. For the arbitrary quirk of fate of bringing a baby into this world a minute after midnight, a family will find itself £2,935 worse off per year. I give some credit to the former Secretary of State, Amber Rudd, for not making the policy retrospective, as was originally intended. However, having recognised the inherent unfairness of the policy, she ought to have abolished it altogether.

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[Beth Winter (Cynon Valley) (Lab)]

I very much welcome the time allocated to this debate today. It is vital we have this discussion, because the two-child-limit policy is yet another legacy of the low-pay, low-income experience that is the stamp of the Conservative Government. We have already discussed in recent weeks in this building the impact of the real-terms cuts in social security benefits and the minimum wage, and what we all anticipate will be a real-terms public sector pay cut. The debate today has reflected on the first of those: the appalling offer of a 3% increase in social security while inflation is increasing at 7% and could well go up to 10%. That is a real-terms cut in people’s incomes. How people will survive I have no idea.

Some households do not even receive a 3% rise because, under the two-child limit, parents are not entitled to any extra support through universal credit or child tax credit to help with raising a third or subsequent child born after 6 April 2017.

[Margaret Ferrier]

Does the hon. Lady agree that following the Government’s decision to cut universal credit payments, with inflation rates rising astronomically and a real cost of living crisis, a decision to keep the two-child limit is actively pushing children below the poverty line, which will undoubtedly impact on the UK’s levels of social mobility?

[Beth Winter]

I totally agree. Action needs to be taken on all those policies, including reinstating the £20 universal credit uplift and extending it to those on legacy benefits. We need a whole raft of policies to prevent, reduce and tackle the extreme levels of child poverty that currently exist in this country.

I refer briefly to the Child Poverty Action Group and Church of England report commissioned for the fifth anniversary of the two-child-limit policy. It is very clear in saying that the two-child limit breaks the historic link between need and entitlement. The benefit should be an entitlement, but that link, which was the founding principle of our social security system, has been broken. The report is clear that our social security system should support families and give children the best start in life, regardless of how many siblings they have. They are our future and we should invest in our future generations. The report concluded that the Government must remove the two-child limit to allow all children to thrive.

April’s below-inflation benefits rise means that affected families with three children face a further £938 a year shortfall in benefits to cover the basic costs of raising them, on top of the pre-existing £6,205 shortfall from 2021, with larger families facing an even bigger hole in their income. That is absolutely appalling and devastating for millions of families throughout the UK.

The two-child limit restricts child allowances in universal credit and tax credits worth £2,953 per year to the first two children in a family unless the children were born before 6 April 2017, when the policy came into force. As the hon. Member for Glasgow Central (Alison Thewliss) has already outlined, the disparities, inconsistencies and discriminatory practices in terms of who is and is not entitled are completely unfair.

Unless this two-child limit is abolished, the number of children affected will reach 3 million, as more are born under the policy. We currently have 4.3 million children across the UK living in relative poverty. That equates to around nine in every 30 children in a UK classroom.

As the two-child limit is the biggest driver of this rising level of child poverty, CPAG has estimated that it will push another 300,000 children into poverty, and 1 million more into deeper poverty, by 2023-24. By 2026-27, over 50% of children in families with more than two children will be living in poverty—half of the population in poverty.

We already knew in 2019, from the Work and Pensions Select Committee report on the two-child limit, of concerns that it breached not only the Government’s wider responsibility and international commitments to equality but human rights, including the European convention on human rights and the United Nations convention on the rights of the child. Breaching such human rights commitments appears to come easily to this Government, however; we only need to look at the United Nations High Commissioner for Refugees’ comments on yesterday’s Nationality and Borders Bill for another example of that.

One of the core authors of the Child Poverty Action Group report, Dr Ruth Patrick, says:

“the two-child limit is a poverty-producing policy and one which should be removed”,

but what about the voices of the parents who have contributed to those pieces of research? I will quote just one, who says:

“We wear extra layers of clothes as I cannot afford to put the heating on. We shower on a Wednesday and Saturday to reduce energy bills but we shouldn’t have to live like this.”

Nobody should have to live like that, and I am sure the Minister would agree on that point.

As in Scotland, the Welsh Government have tried to take action to counter some of the worst aspects of this policy, the cost of living crisis, and child poverty in Wales, for example through the commitment to extend free school meals to all primary school pupils from September 2022. However, unfortunately, the main problems causing child poverty lie here in Westminster. The Welsh Affairs Committee, on which I sit, recently looked at the benefits system in Wales.

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[Jim Shannon (Strangford) (DUP)]

It is always a pleasure to speak in Westminster Hall, but it is a special pleasure to follow the hon. Member for Glasgow Central (Alison Thewliss). The hon. Lady and I have many things in common—apart from the independence of Scotland, of course. However, when it comes to social issues we are on the same page on just about everything; I can comfortably support her on those issues. I thank her for setting the scene, and I thank all other Members who have contributed.

I love accents. I love the accent of the hon. Member for Cynon Valley (Beth Winter). I hope I have pronounced that correctly—I probably have not. I think the Welsh accent adds to this Chamber; there are a number of Welsh Members who, through their voice and accent, add to the Chamber. I hope that my Ulster Scots accent from Northern Ireland also adds in some way to the Chamber, bringing the cultural values of all four nations together. It is always a pleasure to do that.

I fully support the comments of the hon. Member for Glasgow Central, and indeed those of everyone who has spoken and will speak afterwards. Hopefully, the Minister will give us some succour and support. Opposition Members’ comments are clear, and we look to the Minister in hope of a response. I am going to take a slightly different angle. I think the hon. Lady probably knows this, because she is always well versed in the subject matter, but the London School of Economics has been very clear. Its research set out to explore how the policy, in operation since April 2017, has affected fertility of third and subsequent births, and it said:

“Using quantitative methods, we find the policy led to only a small decline in fertility among those households directly affected. This implies that the main impact of the policy has been to reduce incomes”—

this hits on the issue that the hon. Lady referred to—

“among larger families who are already living on a low income”.

There are therefore two issues to this debate. It continued:

“and hence to increase child poverty.”

Those are the things that this debate and my short contribution will address. That is why I am very much opposed to the two-child policy and its effect on tax credits and universal credit.

[Margaret Ferrier]

Research from the New Field Foundation found that the limit does not discourage families from having more children, and has only worsened their financial difficulties. Does the hon. Gentleman agree that Ministers must actively engage with charities and organisations with expertise in policy impact to understand the real-terms impact of such policies?

[Jim Shannon]

I wholeheartedly support the hon. Lady’s comments.

I am going to say something fairly harsh. I am not a harsh person, or I try not to be, but I always had a fear about the two-child limit—perhaps others agree with me—which is why I opposed what I dubbed at that time the “Chinese limit”. We do not have an authoritarian state just yet, but in China they have—I know they are going to change the two-child rule, or at least they are hoping to change it—and in a way that is the authoritarianism of this DWP directive, which inadvertently or directly has put in place the Chinese limit.

I was talking to the hon. Lady before the debate, and I said that if there had been a two-child limit when our parents were born, I would not be here because my mother would not be here; she was the fourth child out of five. The hon. Lady and others—perhaps even the Minister—would not be here either. If the two-child limit were enforced here with the regularity that it is in China, but with an income base that makes it almost authoritarian, there would be children who are not born—people who would not be here. I want to highlight that dark perspective, because that is where I see this draconian, dictatorial and very authoritarian directive from the DWP going.