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

Volume 828: debated on Friday 24 March 2023

Third Reading


Moved by

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.

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.

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.

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.