Photo by Hannah McKay/Reuters
In one short Budget intervention this afternoon, Chancellor Rachel Reeves has done more to transform the lives of 450,000 of Britain’s poorest children than any of the seven previous Conservative chancellors, who, in 14 long years, did nothing but harm to the lives of vulnerable children.
The measure that lifts so many out of poverty in one stroke is the abolition of the two-child benefit cap – a change the New Statesman called for in a special issue of the magazine themed around child poverty, published in May.
But the challenge for Labour does not end with the abolition of the two-child rule. Ministers, MPs and party members now have to go out into the country and explain and expose the prejudices and dispel the myths that the Conservative Party has popularised about the rule, which denies tax credits to new-born third and fourth children.
It was the first of the seven Tory chancellors, George Osborne, who claimed that middle-class taxpayers – who cannot afford to have children –are paying their taxes to subsidise work-shy welfare claimants having third and fourth children and gaming the benefit system.
This is a charge now being echoed by Kemi Badenoch, who will be whipping up faux outrage at what Tories slanderously claim to be the new beneficiaries of the abolition: parents whom they claim to be feckless and indolent.
Labour must rebut these falsehoods. The truth is very different. The Conservatives have been misleading the public for years about the apparent merits of their policy that was destined to put one million new-born children into poverty.
Treat yourself or a friend this Christmas to a New Statesman subscription from £1 per month
In fact, 60 per cent of the children hit by the two-child cap live in households that contain at least one working parent. These 275,000 families are not part of a dependency culture. They are working people at the sharpest end of the cost-of-living crisis. Poorly paid, they have suffered the biggest cuts of all in their living standards – losing since 2017 what is the equivalent now of £66 every week, and, for some, £132 per week. They are our shop assistants, warehouse workers and care helpers, who are trying to bring up their families and to make ends meet on a minimum wage that simply cannot cover the cost of food, heating and children’s clothes.
Most of the 90,000 single parents whose youngest child is under three – that is, 14 per cent of all households with three or more children receiving Universal Credit – are unable to work because they cannot afford childcare or their child has just been born.
Many of the rest affected by the two-child rule will, contrary to Tory claims, not receive the extra cash in full because they will still be subject to the benefit cap, which limits the total amount their family can receive.
The truth is that, since 2010, low-income families have borne the brunt of social security cuts. Their living standards have fallen due to Conservative benefit freezes, the introduction of the housing benefit cap, the abolition of the social fund, the “five-week wait” rule for new Universal Credit claimants and the widespread use of benefit deductions to repay loans.
No one could be anything other than moved to tears when, this month, Alison McGovern, the homelessness minister, spelled out the tragic fallout from rising poverty: 80,000 children living in homeless accommodation and 74 children who have died between 2019 and 2024 in unsuitable, often damp-ridden, temporary housing.
Not only is the abolition of the two-child rule the fastest and most cost-effective way to lift around 500,000 children out of poverty, but it also signals a renewed commitment to treating each child equally – sending the message that there are no second-class citizens in our country and that, in a Labour Britain, systemic discrimination against children is wrong.
This two-child limit policy should be scrapped for another reason: its rules were so complex that 17,730 households with twins, triplets, or other multiple births, 1,740 with adopted children, and 3,280 in non-parental care (looked after by a relative or family friend) had to be exempted. Its complexity veered into outright perversity, requiring mothers who had been victims of involuntary conception to undergo an intrusive “rape test” before they could even claim tax credits for a child who would otherwise fall foul of the cap. Some 3,670 mothers underwent the tests. Many more felt unable to face this demeaning process, leaving themselves and their children without support. From April, for once and for all, this iniquitous “rape clause” will be gone.
Ending the two-child rule is more than securing the immediate release of children from poverty. It is an invest-now, save-later policy – one designed, as an excerpt from the soon-to-be-published Child Poverty Review notes, “to help people succeed,” with improved educational outcomes and higher adult earnings, ultimately paying for itself through increased tax receipts.
As the report finds, only 25 per cent of English children in the bottom income cohort achieve five good GCSEs, compared with 70 per cent in the top two higher-income cohorts. This means the cycle of poverty continues, with these young people five times more likely to be poor as adults.
It is this link between poverty and low educational attainment that, as the review notes, is one of the “key risk factors” behind the number of Neets – young people not in employment, education, or training – approaching one million under the Conservatives. This is precisely the group the Budget aims to lift into work and out of poverty, generating significant welfare savings in the process.
It is one of many initiatives – from breakfast clubs, free school meals and family hubs to mentoring struggling families – that will form the basis of the Child Poverty Review report. When enacted, its recommendations promise to be the most substantial government intervention against family poverty since the Child Poverty Act of 2010 – legislation the Conservatives supported before that year’s election and then cynically abandoned. Experience from the 2,600 Sure Start centres created before 2010 has shown that the savings from tackling child poverty far outweigh the costs of inaction.
And so Reeves’ reversal of Tory cuts maintains the tradition of Labour governments that first introduced family allowances in 1945, legislated for universal child benefit in 1977, ushered in child tax credits in 2003, and then built around them child trust funds, educational maintenance allowances, Sure Start and a law to abolish child poverty in a generation.
I thank the Chancellor for her decisive stand in favour of childhood equality. And I have an immediate reply to Kemi Badenoch and her Conservative apologists, who say they will reinstate this pernicious two-child rule legislation: shame on you!
Shame, for leaving the country with 4.5 million children in poverty, the worst level of child poverty in living memory. Shame, for taking Britain to near the bottom of the European and rich countries’ league for children’s well-being. Shame, for undermining the aspirations of defenceless, vulnerable children growing up in poverty today.
It is time for every party to realise that the country’s future depends on investing in the potential not just of some of our children, but all of our children. In recent weeks, scores of charities, anti-poverty campaigners, faith leaders and political leaders have come together to demand change, including Lucy Powell and Bridget Phillipson, who made the reduction of child poverty the centrepiece of Labour’s deputy leadership contest.
The next step is to build a permanent four-nation, all-party anti-poverty alliance, a coalition of compassion led by charities and faith groups to keep the needs of children at all times uppermost in the public mind. Together, we can bring an end to child poverty and wipe out what has in recent years been a scar on the country’s soul and a stain on our collective conscience.
[Further reading: The Budget of last resort]
Content from our partners