Two-Child Limit: Discriminating against families locally as well as nationally

As the legal and political challenge to the two-child limit on Tax Credits and Universal Credit gathers pace, many local authorities are also quietly applying it to their local Council Tax Reduction schemes

In a couple of weeks’ time, our friends at Child Poverty Action Group will go back to court to challenge the legitimacy of the Government’s two-child limit on Tax Credit, Housing Benefit and Universal Credit.  This policy is discriminatory – against both the third and subsequent children born after April 2017 and also those families who for religious or other reasons don’t believe in birth control – and so we will be backing CPAG and its lawyers all the way.

At Zacchaeus 2000 Trust, we are beginning to see families affected by this change because they have a third child born since April 2017.  We also expect to see many more as families with three or more children get caught up by it from next February when they are moved onto Universal Credit after a change of circumstances.  As CPAG has argued this is especially unfair if the Government’s intention really is to “ensure that those of benefits face the same financial choices around the number of children they can afford as those supporting themselves through work”.  We reject that kind of argument wholesale.  But even by its own logic, those families made their choices years ago.

But this policy is already turning out to be even more pernicious than its architects perhaps imagined.  One potential consequence of a reduced entitlement to Tax Credits, Housing Benefit or Universal Credit, is a potential increase in entitlement to Council Tax Support under individual local authority schemes.  And we saw several London boroughs undertaking snap consultations in late-2016 and early 2017 on “aligning” their Council Tax Support schemes with the Two Child Limit by introducing a “Two Child Allowance” of their own as those extra costs became apparent.

For example, we saw Newham’s former Mayor rushing through a change to that borough’s scheme on 30th January 2017 – the day before the deadline for it to be in place.  The report authorising it prophesised a cost of £382,000 to Newham’s taxpayers if changes weren’t made to both the Two Child Allowance and the Family Premium, though it was never entirely clear how that figure had been calculated or even whether it was an immediate cost or one for a bit further down the line.  To be fair, it did offer “Transitional Protection” for third children born in 2017/18 – perhaps recognising that this was somewhat late notice for already pregnant Mums and “behavioural change” at that stage was not an appropriate demand.

We have a degree of sympathy for local authorities in this position, and especially those back bench councillors like Newham’s notified about it so late in the day and bounced into a decision.  It is simply yet another way of shunting costs from central Government onto local government, which has been a consistent modus operandi of Whitehall in the past eight years, and especially through the abolition of the national system of Council Tax Benefit.  However, the reality is that these family’s incomes have been reduced and so on that basis they should be entitled to the extra Council Tax Support.

Prompted by the Bishops in the House of Lords the campaign against the two-child limit and especially its application to families applying for Universal Credit from next February onwards is gathering pace.  And earlier this week, the Scottish Nationalist Party secured a Parliamentary adjournment debate on the Two-child limit on Universal Credit and Tax Credits.  Their spokeswoman has been a consistent campaigner against this policy, as have a number of back bench Labour MPs.  It was encouraging to hear Labour’s front bench spokesman, Mike Amesbury MP, speak out so strongly against it as well.

Given the strength of that opposition from Labour MPs, it is perhaps worth them reflecting on what some of their own local authorities are doing.  Our informal enquiries suggest as many as half London’s Boroughs are now quietly applying the Two Child Allowance in the calculation of Council Tax Support entitlements – several of whom like Newham are Labour-controlled.  And the impact can be very significant – families in low paid or part-time work are left facing bills approaching that of full Council Tax.  Several other Boroughs who are either consciously or unconsciously covering the increased costs are now thinking of following suit.

For Zacchaeus 2000, it’s important that politicians walk the walk, as well as talk the talk.  If the two-child limit really is as “obscene”, “inhumane” and “callous” as they say, Labour’s spokespeople and MPs really ought to be telling their councillors not to apply it locally to their Council Tax Reduction Schemes either.

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