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Paul Vallely: Two-child benefit cap is a tax on hungry children

26 July 2024

So why is Keir Starmer not committed to scrapping it, asks Paul Vallely

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The Prime Minister leaves 10 Downing Street to face his first Prime Minister’s Questions, on Wednesday

The Prime Minister leaves 10 Downing Street to face his first Prime Minister’s Questions, on Wednesday

IT IS an unlikely alliance. Suella Braverman, Gordon Brown, Ed Davey, Jeremy Corbyn, and a handful of dissident Labour backbenchers came together this week to register disapproval at the Government’s refusal to scrap the “two-child benefit cap”, which says that parents can claim benefits only for the first two children in their family — and no more.

The policy has driven almost half of Britain’s three-child families into poverty over the past six years. Three-quarters with four children are in hardship. Families with children under the age of four are hardest hit, as are single-parent families, and those of Pakistani or Bangladeshi heritage. The policy applies to children born after April 2017; so more children will be affected with each year that passes.

So, why is Labour, historically the party of economic and social justice, not simply committed to scrapping this tax on hungry children? The answer raises a series of ethical questions about fairness, deterrence, affordability, and compassion.

The scheme was introduced by the then Chancellor, George Osborne, as part of an austerity package. But he gave it an ethical top-dressing by claiming that it would ensure that “families on benefits face the same financial choices about having children as families who are supporting themselves solely through work.”

It was an implied appeal to fairness which a majority of the public still support. Six out of ten British people, including half of Labour voters, support the cap — arguing that, if middle-income people have to make financial trade-offs and sacrifices when it comes to deciding how many children to have, so should the poor.

The trouble is that this deterrent on big families on benefits hasn’t worked. The number of children born has remained relatively stable. Most couples don’t think of benefits when they decide — or don’t actually decide — to have another child. Redundancy, unemployment, or bereavement can force people to claim benefits unexpectedly.

Academic studies show no evidence that parents have increased their working hours as a result of not receiving the extra benefit. Indeed, their reduced income means that childcare costs are less affordable and increase stress on their mental health. Thanks to the law of unintended consequences, it is a policy that might have been explicitly designed to create hardship. It has been called “cruel” and “the worst social security policy ever”.

The dilemma for Labour is that it will cost £3.4 billion to scrap it — something that Sir Keir Starmer stated explicitly, during the election campaign, that his Government would not do because of the state of the public finances. If reversing it were a top priority, it would be affordable. The trouble is, there are a lot of top priorities. The Government has hinted, for example, that it is minded to agree to above-inflation pay rises for teachers and NHS staff — for which another £3 billion must be found.

One of the main planks of Sir Keir’s manifesto was that he would not put up taxes or increase borrowing, and would stick to current spending limits. He is, therefore, clearly disinclined to be seen as another politician who breaks his promises as soon as he is in power.

So, is Starmer socialism to be merely managerial or ethical? Gaining power is one thing. Now, we’ll see what he wants it for.

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