TWO-CHILD LIMIT FOR UNIVERSAL CREDIT: 200,000 MORE CHILDREN PUT IN POVERTY

April 3, 2017

New cuts limiting universal credit to the first two children in a family – starting Thursday April 6th - will push another 200,000 children below the official poverty line, new analysis from the Child Poverty Action Group (CPAG) and the Institute for Public Policy Research (IPPR) shows (1) 

The biggest group affected will be working families with three children, who will miss out on up to £2,780 per year as a result of the cut. Larger, non-working families already have their benefit awards limited by the benefit cap so are not the main target of the policy.

 Overall, upwards of an estimated 850,000 families with more than two children are likely to be affected, around two thirds of whom will be working. Approximately two thirds will have only three children. (2)

Families hit by the cut will include those who were not on universal credit when the children were born but who will need to claim in future because of an unforeseen change such as redundancy, ill-health, separation or even death of a parent.

 The cut, which affects new claims only, could create disincentives for single parents to form new, 'blended families', CPAG warns. It will undermine the rights of parents who have conscientious or religious objections to birth control and could penalise children in separated families who switch the parent they live with – for example to be with siblings from a certain age, or to remain in their school if one parent moves from its catchment area.

 The reporting requirements for women who conceive a third or subsequent child as a result of rape and who apply for exemption from the limit, risk a grave breach of claimants' privacy.

 Children in families with more than two children are already at a higher risk of poverty: 39% of children in families with three or more children live in poverty after housing costs, compared with 26% for those in families with one or two children. (3)

 Last month the Government's annual poverty statistics showed child poverty jumped for the second year running. 100,000 more children went into relative poverty in 2015-16 after housing costs, taking the total to 4 million (4). The IFS is projecting a 50% increase in child poverty by 2021. (5).

 The child element of universal credit is currently £277.08 per month for a first or only child and £231.67 per month for second and other children.

 Chief Executive of Child Poverty Action Group Alison Garnham said:

 "This is a particularly pernicious cut because it suggests some children matter more than others. It's also illogical because no parent has a crystal ball. Families that can comfortably support a third child today could struggle tomorrow and have to claim universal credit because, sadly, health, jobs and relationships can fail. Our analysis shows another 200,000 children will be in poverty once Universal Credit is fully rolled out, directly because of this cut. Surely children should not have their life chances damaged because of the number of siblings they have."

 Notes to Editors:

(1) The analysis, commissioned by CPAG from IPPR, shows 200,000 more children will have moved into poverty once Universal Credit is fully rolled out as a result of the two-child limit. 'Broken promises: what has happened to support for low income working families under universal credit'. CPAG, 2017. http://www.cpag.org.uk/content/broken-promises-what-has-happened-support...

  (2) So far few families are claiming Universal Credit which is rolling out to replace tax credits by 2022. But latest figures show 872,000 families with more than two children claimed tax credits in 2014/15 so it is likely that there will be a similar number of families with more than two children who will claim Universal Credit and will be will be affected by the two-child limit. 65% of the 872,000 families were working and 68% had only three children. Child and Working tax Credit Statistics, UK: Finalised Annual Awards in 2014-15. HMRC, 2016.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/fil...

 (3) Households below average income (HBAI) statistics 2015/16, Table 4.5db. DWP, 2017. https://www.gov.uk/government/collections/households-below-average-incom...

 (4) 2017-03(2)Households Below Average Income https://www.gov.uk/government/statistics/households-below-average-income...

 (5) IFS Report (R114) Living standards, poverty and inequality in the UK: 2015-16 to 2020-21 https://www.ifs.org.uk/publications/8171

 CPAG press contact: Jane Ahrends 0207 812 5216 or 07816 909302