Proposed changes to child benefit - a reasonable idea turned nightmarish

Iain Duncan Smith has proposed limiting benefits payable for children in any family to a maximum of two children. If the parent or parents then went on to have more children, they would not receive additional money for the third or higher child.

In some ways, this is quite a reasonable idea. The additional amounts of benefit paid for families with more children can be fairly generous. Each additional child can currently bring in approximately £70pw in tax credits and child benefit. It also entitles the family to rent a larger house and to a higher income disregard in housing and council tax benefit worth about £50pw for each child.

I have thought for some time that some kind of limit to how many children a person can have while claiming benefits, just as someone who wants to claim help for a mortgage cannot usually take out a new mortgage while on benefit.

The extent of additional money for each child has already been somewhat limited by the new, and highly flawed, benefit cap of £500 a week per household. That system will only affect people with 4-6 children, depending on a number of factors such as the amount of rent they pay. If this new change were implemented, then it would make the cap completely obsolete as nobody with under four children would ever be affected by it. But this is where we get into difficulties with what has now been proposed.

The first problem with the new proposal is that Duncan Smith is once again making it into an issue of those in work against those out of work. From his description of things, you would get the impression that 'those with three or more children' and 'those in work' are two separate groups on a Venn diagram that don't overlap. But this is wrong - people in work can obviously have more than two children.

Despite purporting to make this distinction, there is nothing in IDS's announcement that suggests this change will be limited to those out of work. It seems that everyone will be affected. So it's not just something aimed at the unemployed - we need to be clear on that, or a falsehood is spread.

As I said above, I think it would be reasonable to limit people from having more children while on benefits and immediately claiming more money for them. But it would definitely not be fair to say that if a parent with 4 children loses his or her job, then he or she is unable to claim enough money to live on. It's not as though someone who has lost a job can give up children.

And this is the point where fridge horror sets in. Benefits for children include help with higher rent, for the larger family. This proposal means that a parent with 4 children losing his job would almost immediately become both homeless and un-houseable. This completely undermines the idea of safety net. We may see families forced to split up and children being sent to live with other relatives (who will then be able to claim benefits for them - ruining the point of the idea once again.)

This government has no idea what it is doing. It just pushes through seriously flawed ideas without thinking them through, before and again. No-one who looked carefully at the last benefit cap thought it was a good idea, so I am very worried about this new idea.

Is the benefit cap really pushing thousands back into work?

Short answer: no. But a Daily Mail article nevertheless claims this is the case.

IDS claims that the upcoming benefit cap of £500 pw is causing 'thousands' of families to look for work. So that's already a bit of a climb down from them already going back into work, for a start. 1,700 people in this group have found work, which is 3% of the group. And we don't know over what time period that is: in any case it is a pretty low take-up rate.

The cap of £500 which starts in April 2013 will affect very few people. It will only apply to families with a lot of children. Families with a lot of children can indeed receive relatively high rates of benefits: after all, they have a lot of people to split that money between. On the other hand, it is not necessarily unreasonable to limit the number of children people can have and immediately request state support for them all.

But this is where the reasoning for this particular system of cap breaks down. It is wrong to compare it to the amount 'an average couple would earn in work'. This is for two reasons:

1. A family of the same size with the parents in work can also claim a lot in benefits - possibly the same or even more than one out of work. (This is even lampshaded in the Mail article!)
2. The £500 a week in benefits has to support between 5-8 people, whereas an average couple in work earning that only have to support two people. (And if they have children they will get additional money through benefits.)

The cap also creates a new 'couple penalty' - remember, that thing Cameron promised to abolish but hasn't? The cap applies per household. The obvious thing for a large family with two parents affected by the cap to do would be to split into two nearby households - who then only have a total cap of £1000 pw between them, which would be absolutely impossible ever to reach.

If the cap of a mere £500 per week really is causing 'thousands' people to look for work, how could IDS possibly know about it?

The only way would be where they are claiming jobseeker's allowance, the DWP would have a record of their jobsearch activity and requirements. But in that case, those jobsearch requirements would have already applied without the cap. Most families with children need to claim JSA, and to look for work as a basic condition of entitlement. That has been the law since the 1920s.

Look again at the exact words used:

 "Despite all the scaremongering, research now shows that of those housing benefit claimants affected by the cap, a third said they would now be looking for a job."

Note that it doesn't say this is new, or because of the cap. They could have been looking for a job all along - and must have been.