Latest news with #universalcredit
The Independent
8 hours ago
- Business
- The Independent
How much money could families get if Labour scraps two-child benefit cap?
Scrapping the two-child benefit cap could lift up to 470,000 children out of poverty, according to the latest estimates, by allowing low-income families to claim an extra £3,513 per year in universal credit for every extra child. After months of firm support for maintaining the limit, Prime Minister Sir Keir Starmer has appeared to leave the door open to the possibility of lifting the limit, put in place by the Conservative government in 2017. 'We'll look at all options of driving down child poverty,' Sir Keir said last week, in response to questions on whether he would scrap it. It came after mounting pressure from his own MPs and Reform leader Nigel Farage, who committed to scrapping the limit if he were PM. What is the two-child cap - and who loses out? There are 1.2 million families with three or more children in the UK and around 370,000 of these are households on universal credit (UC). Families receiving UC - who are on low or no income - receive an extra £339 each month for their first child born before 2017, and £292.81 for first or second children born after 2017. This amounts to £7,581 per year for families with two children. But in most cases, parents are unable to claim UC benefits for any further children. There are rare exemptions, for example, in the case of twins, or adopted children. Most families can still claim general child benefit payments for more than two children, which amounts to £897 per child per year. But if the government scrapped the two-child benefit cap, families on UC could claim a further £3,513 per year for every extra child. However, there is an upper limit to how much families can claim in benefits with an overall cap of £22,020 a year, or £25,323 for households in London. How many children would it help lift out of poverty? The number of children living in poor households has been steadily increasing over the past decade, with 4.5 million children - around 1 in 3 - now living in poverty. Poverty can be defined in several ways but the Department for Work and Pensions (DWP) uses 'relative low income' as a marker, referring to people in households which earn below 60 per cent of the median income of £36,700 in 2024, or £14,680. Some of these children are going without essentials, according to the Joseph Rowntree Foundation, such as food, heating, clothing or basic toiletries. Removing the two-child benefit cap could lift 350,000 out of poverty, according to analysis from researchers at the Child Poverty Action Group (CPAG). A further 700,000 children could see their lives improved with the extra cash, their research has found. Meanwhile, the Resolution Foundation has estimated that around 470,000 children could be taken out of poverty by lifting the cap, or 280,000 if the limit was extended to three children. Since the Labour government came into power in July last year, some 37,000 more children have been pushed into poverty by the two-child limit, according to CPAG estimates. 'No road to better living standards, economic growth and wider opportunities starts with record child poverty. The policy must go - and sooner rather than later,' said CPAG's CEO Alison Garnham. Since the cap applies to families receiving UC, the children affected are in low-income households. And 6 in 10 families affected by the two-child limit have at least one parent in work, CPAG found. What would it cost the government? The estimated cost of removing the two-child limit, extending it to three children, or removing a household cap varies. Getting rid of the cap could cost the government £3.5bn in 2029/30, according to estimates from think tank the Resolution Foundation earlier this year. Meanwhile, CPAG suggests that the move would cost £2bn. The Independent's own calculations suggest that extending the limit to three children could cost at least £1.3 bn a year; assuming that 370,000 households claim an extra £3,513 of UC each year. Consecutive governments have refused to commit to removing the cap, despite its unpopularity with voters. Last year, Sir Keir enforced the whip on seven Labour MPs who voted against their party to oppose the two-child benefit cap. The current Labour government had consistently maintained that they would not take action to remove the cap, due to tight resources in the budget; yet Sir Keir's statements last week appeared to open up the possibility of a U-turn.
The Sun
3 days ago
- Business
- The Sun
I grew up in poverty – but lifting the 2 child benefit cap for all families is not fair on taxpayers
AS KING Canute found over a thousand years ago, it is quite difficult to stand on a beach and order the tide to recede. Today, it is equally difficult to make the argument that giving families cash is not always the best way of lifting them out of poverty. 2 This is especially true when one particular measure becomes the symbol of whether or not you're on the right side of the debate about child poverty. But as someone who now can afford the comforts of life, I constantly remind myself of my childhood. The grinding poverty that I experienced when my father was killed in a work accident when I was 12 – leaving my mother, who had serious health problems, to fight a long battle for minimal compensation. Having only bread and dripping in the house was, by anyone's standards, a hallmark of absolute poverty. Why on earth would I question, therefore, the morality of reversing a Tory policy introduced eight years ago? This restricts the additional supplement to universal credit – worth over £3,000 a child per year – to just two children. I should know, my friends tell me, that the easiest and quickest way of overcoming the growth in child poverty is to restore the £3.5 billion pounds it would cost to give this additional money for all the children in every family entitled to the credit. It is true that the policy, introduced in 2017, failed its first test. Women did not stop having more than two children even when they were strapped for cash. It is still unclear why. After all, many people have to make a calculation as to how many children they can afford. 2 But one thing must be certain: namely, that if you give parents a relatively substantial additional amount of money for every child they have whilst entitled to benefits, they are likely to have more children. Nigel Farage, leader of Reform UK, said as much last week. His argument for restoring the benefit to the third and subsequent children was precisely that we needed to persuade low- income families to have more children. Surely having children that you cannot afford to feed is the legacy of a bygone era? All those earning below £60,000 are entitled to the basic c hild benefit, so the argument is about just over £60 a week extra per child. One difficulty in having a sensible debate about what really works in overcoming intergenerational poverty is the lack of reliable statistics. Some people have claimed, over recent days, that over 50 per cent of children in Manchester and Birmingham live in poverty. I fear that such claims should be treated with scepticism. Those struggling to make ends meet – sometimes having not just one but two jobs – who pay their taxes and national insurance and plan their lives around what can be afforded, have the right to question where their hard-earned wages go. The simple and obvious truth is that child poverty springs from the lack of income of the adults who care for them. Transforming their lives impacts directly on the children in their family. There is a limit to how much money taxpayers are willing to hand over to pay for another family's children. Helping them to help themselves is a different matter. So, what would I do? Firstly, I would ensure that families with a disabled youngster automatically have the entitlement restored. This would self-evidently apply also to multiple births. In both cases, life is not only more difficult, it is also harder to get and keep a job. I would come down like a ton of bricks on absent parents. My mum was a single parent because she was widowed; many others are single in the sense that the other partner has walked away. The Child Maintenance Service should step up efforts to identify and pursue absent parents who do not pay their fair share towards their child. We, the community, have a clear duty to support and assist those in need. To help those where a helping hand will restore them to independence and self-reliance. But there is an obligation on individuals as well as the State, and mutual help starts with individuals taking some responsibility for themselves. Finally, if (and this is where I am in full agreement with colleagues campaigning to dramatically reduce child poverty) we make substantial sums of money available to overcome hardship, then a comprehensive approach to supporting the families must surely be the best way to achieve this. As ever in politics there is a trade off. What you spend on handing over cash is not available to invest in public services: that is the reality. Help from the moment a child is born, not just with childcare but with nurturing and child development. Dedicated backing to gain skills and employment and to taper the withdrawal of help so that it genuinely becomes worthwhile having and keeping a job. A contract between the taxpayer and the individual or household. Government is about difficult choices, that is why Keir Starmer and his colleagues are agonising over what to do next.
Telegraph
27-05-2025
- Business
- Telegraph
Farage is wrong about the two-child benefit cap. We must keep it
Spiralling welfare spending is bankrupting Britain. By the end of the decade it's forecast to reach £378 billion. We face a reckoning unless we do something radical. But the conversation in Westminster is untethered from reality. Instead of debating how to bring the welfare bill down, and move hundreds of thousands of people off welfare into the dignity of work, the question is whether we should add to that bill by scrapping the two-child benefits cap. Until now Starmer has upheld it. Morgan McSweeney – the advisor who directs the Prime Minister's every move – has told him that it's too unpopular to do away with. But with his hard Left backbenchers turning on him, the puppet Prime Minister has cut his strings and looks set to scrap the cap. Let's be clear what we're talking about here. The two-child benefit cap doesn't refer to child benefit. That benefit is available to all parents for all their children. It refers to those on universal credit. They received thousands of pounds on top of their child benefit for their first two children. The cap stops them receiving even more for their third, fourth and fifth child and so on. Why? Because allowing families to have children that they can't afford while prudent savers who do the right thing are forced to wait wasn't right. The two-child benefits cap is in place as a matter of fairness. I certainly thought carefully about the financial implications of having children – as do the vast majority. It is about personal responsibility; of living within your means so not to impose unnecessary burdens on others. Before the cap was introduced in 2017 there were scores of workless families with ten or more children living on state benefits worth more than £60,000 a year, much more money than they could hope to earn if they entered the job market. They would need to earn £93,000 to be left with the same amount of money after tax. And on top of that, they were entitled to be housed at the taxpayer's expense in ever-larger properties as their number of children increased. It was a trap for welfare dependency. The decision to scrap it would cost an estimated £3.5 billion a year, and would likely rise each year as workless families choose to benefit from it. As Kemi Badenoch rightly pointed out, it is a handout that will disproportionately benefit larger migrant families who could have lived here for as little as five years. So why is Farage backing this mad policy? Has a joint found its way into his usual pack of Marlborough Golds? Has he cooked this up after one too many pints at his local? This is without doubt Farage's biggest mistake. He's diagnosed the illness, but prescribed the wrong cure. We agree that demography is destiny. In the 1970s, there were four working age people to every pensioner. Now, we're fast approaching a ratio of two to one. That's pushed total tax receipts down and forced spending up for the same level of services. Without Brits having more children taxes will continue to rise, debt will explode, and public services will crumble under pressure. Most of the falling birth rate is explained by more women having no children at all. Scrapping the two-child policy would do nothing to change that, but will shred the fraying social contract between the state and our shrinking middle classes. The solution is to make families affordable again. Young adults are currently spending more money than ever on housing costs, leaving them with little disposable income to starts a family. It's why we must densify our cities and radically curtail housing demand from immigration, neither of which Labour are doing. A government serious about pro-family policy would make childcare cheaper and use the tax system to incentivise parenting – but Labour refuse to. Instead, Labour and Reform are locked in a bidding war to spend more in handouts. We already spend £100 billion annually just to service our debt – more than on healthcare, education or defence. Their dangerous game will eventually come crashing down. Robert Jenrick is the Shadow Secretary of State for Justice
