Written evidence from the Church of England (TCL0001)

Executive Summary

1. We are opposed to this policy, above all because it penalises children through no fault of their own. It will contribute to a sharp rise in child poverty and have detrimental impacts on children’s health, education, and well-being, the full effects of which will not be felt for around a decade. 

2. This policy is meant to be about fairness, but is unfair on children, religious minorities, and low-income working families, all of whom will be substantially and disproportionately affected. It is particularly unfair on families who had their children before the two-child limit came into effect, but who will be affected by it if they make a new claim for Universal Credit from February next year.

3. One of the unintended effects of this policy is that it will make it very hard, or even impossible, for many larger families to escape the poverty trap however much they try to improve their situation, severely undermining the Government’s welfare reforms.

4. The Government’s Impact Assessment claimed that the policy would increase families’ financial resilience and improve children’s life chances, but the DWP has offered no evidence to support these assertions – and all the evidence from other sources points in the opposite direction.

5. The decision to extend the two-child limit to all new Universal Credit claimants from February 2019 should be postponed until the effects of this policy – intended or otherwise - have been properly assessed and reviewed. The Government should explore alternative ways to achieve its policy goals without increasing child poverty.

Impact on child poverty

6. This policy has a disproportionate impact on children: 70% of those affected are children, many of whom are living in or close to poverty.[1] According to forecasts by several respected think tanks, including the Joseph Rowntree Foundation, this policy is the main contributor to rising child poverty over the next few years. Poverty rates are already starting to rise among families with 3 or more children – up from 33% in 2012/13 to 42% in in 2016/17[2], even before the two-child limit came into effect. Largely as a result of this policy, this is expected to reach 52% by 2021/22 – nearly twice the rate for families with two children.[3]
7. CPAG analysis comparing the impact of Universal Credit with and without the two-child limit, shows that removing the limit would protect around 200,000 children from poverty by the time UC is fully rolled out. Many more children, who are already in poverty, would be protected from being pushed even deeper into poverty.

8. Families everywhere are affected by the two-child limit, but some areas will be hit particularly hard. In the worst affected constituencies, more than a quarter of families and up to a half of children could eventually be impacted by this policy. These are families that are currently receiving tax credits for a third or subsequent child, and who will no longer qualify for additional support once the transitional protection runs out (see Table 1).

9. Academic studies consistently show that reductions in household income lead to wide-ranging negative effects on children, with the strongest impact on cognitive development and school achievement.[4] The size of the impact is roughly comparable to spending similar amounts on school or early education programmes (in this case, around £4,000 per affected family, on average).

10. One of the mechanisms by which lack of money affects children’s outcomes is through increasing parental stress and anxiety, adversely affecting their capacity to parent well. Contrary to the claims made in the Government’s Impact Assessment, this policy is likely to have a detrimental impact on family stability and children’s life chances, by increasing the financial pressures on low income families.

Table 1: Number of families and children potentially affected by the two-child limit, selected parliamentary constituencies*

Sources:

(1)    Child Benefit statistics geographical analysis: August 2017 (Tables 6 and 11)

(2)    Child and Working Tax Credit Geographical Statistics: April 2018 (Table 4)

(3)    Personal tax credits: finalised award statistics – geographical statistics 2016-2017 (Table 1D)

(4)    Figures are rounded to the nearest 100 (cols 3 and 4) or the nearest percentage point (col 5).

Impact on religious minorities

11. This policy will have a disproportionate impact on Muslim and Jewish communities and other families that have a religious or moral objection to birth control or abortion. According to Census data, 60% of Muslim children and 52% of Jewish children live in families with three or more children, compared with 31% of all children living in the UK (see Table 2).

Table 2:  Number of children living in large families by religion

Source: Census 2011, specially commissioned table from ONS by the Church of England.

12. Our own research into the impact on Muslim communities in Bradford and Northampton found that the policy was poorly understood by the women we spoke to, and by local community and faith leaders. Once explained, there was widespread agreement that it will have a detrimental impact on families, even though there was some appreciation for the rationale behind it. Poverty levels are already very high in some of these communities, and the two-child limit will make their lives even harder with many families already struggling to get by week-by-week or even day-by-day.

13. Strong cultural norms, religious taboos on the use of contraception, and a widely-held understanding that families are dependent primarily on God’s benevolence, make it likely that many Muslim families will continue to have more children in spite of the reduction in state support. Some participants thought that the policy could start to influence decisions around family size once the financial constraints on larger families become too great, though only in the long-term.

14. As increasing number of families are affected, participants anticipated a number of unintended effects, including a rise in youth crime, an increase in mental health problems and a gradual disintegration in community self-help.

15. Many of the women felt strongly that the ‘system’ does not respect the choice of mothers to stay at home and look after their children. This policy is seen to be forcing mothers back into work or fathers to work even longer hours, which is expected to have a negative impact on family life and children’s upbringing. Participants felt that the policy is particularly unfair on families with very young children and on single parents, because local job opportunities are limited and childcare costs are likely to outweigh potential earnings.

Impact on work incentives

16. The majority of those affected by the two-child limit are low income working families – 59% of all affected families, according to the Government’s published statistics. Many non-working families with three more children are already subject to the benefit cap, so the two-child limit is primarily directed at working families who are exempt from the benefit cap but rely on Child Tax Credits or Universal Credit to top up their earnings.

17. Ministers have argued that families can compensate for welfare cuts by working longer hours, but this is much easier said than done. A single parent with 3 children and working 16 hours at the minimum wage would need to work 45 hours to compensate for the loss of income resulting from the two-child limit (not taking into account any additional childcare or travel costs associated with working longer hours). This policy will make it very hard, or even impossible, for low income families with three or more children to escape the poverty trap, however much they try to improve their situation.

18. From our discussions with Ministers and officials, it is clear that the interaction between the two-child limit and the benefit cap has not been thought through. The primary means of avoiding the benefit cap is to move into work. But the two-child limit policy means that this will cease to be an escape route for families who would instead be hit by the two-child limit, creating a strong disincentive for them to work and trapping them in poverty.

19. Instead of simply stating that the aim is “to support families to move into and progress in work to give them the best opportunity to move out of poverty”, Ministers need to reconsider the work incentive effects of this policy more closely to ensure that it doesn’t undermine the Government’s broader welfare reform programme.

Lack of monitoring and evaluation

20. The Government published statistics showing the number of families affected by this policy in its first year and has committed to producing these statistics annually. However, we are not aware of any plans to formally evaluate the policy against its original aims, or to assess the impact on children’s well-being or family stability. All the onus seems to be on the voluntary sector to collect evidence to prove that the policy is having a detrimental impact, rather than on Government to demonstrate that it is working as intended.

21. The Government’s Impact Assessment in July 2015 claimed that the policy would increase financial resilience and support improved life chances for children, but Ministers have provided no evidence to support either of these assertions, despite a succession of written questions from the Lords Spiritual.

22. Given the huge potential ramifications of this policy for the families and communities affected, it is vital that a formal evaluation and review of the policy is conducted before extending it to all new Universal Credit claimants. This review should consider whether there are alternative ways to achieve the policy goals without increasing child poverty.

December 2018