As a leading think tank says parents should only be able to claim child benefit for their first four children, Helen Barnard questions what the move would actually achieve.
What’s the best way to save £1 billion? This week the Policy Exchange think tank proposed saving £1 billion over the next parliament by limiting child benefit to the first four children in any household. Families would lose £13.50 per week that they currently receive for the fifth and subsequent children.
However, just 3 per cent of families receiving out-of-work benefits have five or more children. This group are not driving rises in the welfare bill. It is a relatively small group, but one with higher poverty than other families.
The poverty rate for families with three or more children is 22 per cent, as opposed to 16 per cent for smaller families. We don’t know the current poverty rate for families with five or more children, but previous research for JRF suggests it will be higher still. These families are also more likely to have been affected already by the benefits cap.
Policy Exchange justifies the policy partly on the grounds that the main impact on family income comes with the first child, and costs reduce for subsequent children. The income shock from a first child is the biggest, but it is still more expensive to have four or five children than one or two. Our research into the cost of an adequate standard of living shows that a couple with four children needs £49,318 a year while a couple with one child needs £31,661.
So what is the goal of this policy?
Deter people from having more children? There is no evidence that reducing incomes in this way will affect those decisions. Internationally, the best way of reducing birth rates is to increase women's education and opportunities in the labour market.
Punish people who already have large families? Reducing children’s welfare because we don’t like their parents’ family planning practices is uncomfortable territory. In addition, at least some of those parents may have formed their families when their incomes were higher and then been pushed into problems through illness, bereavement or redundancy.
Increase work rates? If this is the aim, then we should address the real barriers to work for parents of large families: childcare costs, juggling arrangements for childcare for children of different ages, lack of flexible and part time jobs, low wages.
Save money? A billion pounds is a significant amount. But we should consider whether this is a fair and sensible way to make that saving. Focusing on a small group who already have high poverty rates and pushing them further into poverty does not seem to pass the fairness test. It is also risky for the future – growing up in poverty makes it much less likely that children get a good education and stable work later, and more likely they will be unemployed and low paid. Overall child poverty costs £29 billion per year. This policy could make that situation worse among this group.
If any government decides to go ahead with this measure, they could protect families in poverty (or on the edge of it) by giving back the £13.50 per week per child through the tax credit system. This would reduce the savings, but would also reduce the harm to low-income families and their children’s future.