The two child policy and the end of means testing

This financial year has seen a large number of new changes to the benefts system. Maybe it’s a symptom of the relentless pace of goverment cuts, but the response to some of these policies has hardly been in proportion to their significance. A policy such as the restriction of benefits for those with three children is a fundamental change to how state support for those on low incomes is provided. Current government policy is that the state is not there to provide support for children in families with low incomes. At least, not for families with more than two children. Regardless of their circumstances, familes with three, four or more children need will not receive what the government itself has deemed to be the necessary amount of money they need to live on. 

Since the Coalition government first started to tackle the benefits system they have undermined the system of means testing that underpins support for the poorest in society. Means tested benefits, such as housing benefit, income support, universal credit or tax credits identify an amount of money that a single person, couple or family need to live on. They ensure that claimants receive enough money to live on, pay their rent, council tax or whatever need the specific benefit is designed to meet. This is not a large amount of money. It is a minimal income for that family to meet their basic needs. Recent government policies such as the benefit cap, the under occupation charge (aka the bedroom tax) and now the two child policy impose an arbitrary cap regardless of the means test result. This means that the government establishes the amount of money a person or family needs to live on to meet their basic requirements and then pays them less than that. Sometimes substantially less.

The two child policy imposes a restriction on support for families with children to a maximum of the rate prescribed for two children. From April 2017, in universal credit, child tax credit and housing benefit, new births that bring the number of children in a family above two do not lead to an increase in the amount of money the government believes that family needs to live on. This is regardless of their financial circumstances or their actions: if they are working full time on a low wage, if they are out of work due to illness, if they cannot work due to a disability, if they have always worked and had their children during well-paid employment. None of this matters. The government believes that two children is enough and they won’t support any more than this (there are very few exceptions, such as the controversial rape clause). The government is ignoring its own means test and giving the family less than the basic minimum for their needs, simply because of the birth of a third child.

Similarly the benefit cap establishes the amount of money that a family needs to live on and limits it to a fixed rate. As I have discussed before, living in an area with high rents or having children, in some areas only two or three children, leads to a family’s benefits being capped. They do not receive the amount the government believes they need to meet their basic expenses. Likewise, the so-called bedroom tax cuts a person’s housing benefit or universal credit if they have a spare bedroom in their council or housing association property. This is after being means tested. The government works out through a means test how much help a person needs in order to be able to pay their rent. They then cut that amount because of the spare room. Affected people will not have enough money to pay the rent, according to the government’s own calculations. 

Many councils have followed suit in local schemes. The government’s policy to localise support for council tax in 2013 led many councils to require all residents to pay a fixed percentage of their council tax bill, no matter their circumstances. A means test is done and an amount the person can reasonably pay towards their council tax is worked out. The council then requires them to pay more than that.

This continual undermining of the benefit system means that the state is failing in its mission to support those that need help. Some justification of this is attempted by the explanation of encouraging people into work, but work incentives are not created by arbitrary caps on benefits. Generous tapering of support for those who move into work, to allow them to ease off benefits and into employment, good childcare provision, quality training and support for entrepreneurship are all methods for helping people into work. Giving families less money than they need simply because they have a third child after April 2017 is not a work incentive. 

There are reforms needed in the benefit system. It could be less complicated. It could be better targetted at those who need help. Administrative errors cost too much and cause unnecessary pain. But setting out a minimum standard of living for citizens and then not giving it to them is irrational, cruel and self-defeating.