Why child benefit must be removed from the benefit cap

Sam Royston explains why child benefit must be removed from the government's proposed benefits cap.

 

Dr Sam Royston is the poverty and early years policy adviser for the Children’s Society

On Monday afternoon the House of Lords will discuss the government’s plans to cap household benefit entitlement for out of work households so that the amount received in benefits cannot exceed average weekly wages for working households. The cap is expected to be set at around £500 per week for couples and lone parent households.

The Government’s equality impact assessment (pdf) estimates that 50,000 households will be affected by the planned cap on household benefit entitlement. The average loss resulting from the cap will be around £93 per week of household income, and 7,500 households will lose more than £150 per week.

Analysis from The Children’s Society (pdf) reveals that children are disproportionately affected by these proposals. 210,000 children will be affected by the cap, compared to 70,000 adults. This means that 75 per cent of those affected are children, making them nine times more likely than adults to be affected. Only one in 556 adults are affected, but one in 64 children stand to lose out.

Based on analysis from the Department of Communities and Local Government, it is estimated that more than 80,000 children could be made homeless as a result of the policy.

One of the first amendments to be discussed on this issue is the option promoted by bishop John Packer to remove child benefit from the benefit cap for the purposes of calculating household income against the cap.

The government plans to include a number of key benefits in the calculation of benefit receipt calculated against the benefit cap. These include payments paid for the support of children in the household, including child benefit and child tax credits (or the child additions within universal credit). There are clear reasons to remove child benefit from household income for the purposes of the cap:

Child benefit is a non means tested benefit paid to all households with children.

Child benefit is a non means tested benefit paid to both non-working and working families, as such it would be fair to ignore child benefit for the purpose of calculating benefit income against the benefit cap.

Currently all households with children are entitled to receive child benefit at a rate of £20.30 per week for the oldest child, and £13.40 per week for each additional child.

From 2013, families with a higher rate taxpayer will no longer be entitled to child benefit. However (based on current tax thresholds), this means that some households earning in excess of £80,000 per year will continue to be entitled to receive child benefit.

The impact of this is shown in the example below:

A first child born to a two earner couple with a combined  household income of £80,000 would be entitled to receive financial state support of £1059 each year through Child Benefit.

A child born to an out of work couple with no income other than benefits, three other children and housing costs of £189 per week, would receive no welfare support.

It is not reasonable that children born into small families with earnings in excess of £80,000 per year receive child benefit, whilst children born into larger families with benefit income of £26,000 per year do not.

Child benefit is paid to assist with the costs of children.

The intention of the benefit cap is to promote fairness between working and non-working households. It may be seen as unfair for adults who are not working, to receive more in benefit support than families who are in work receive in pay.

However, child benefit is not paid for the needs of adults but of children in the family. Children do not make the employment choices of their parents, and should not be held responsible for these choices. Including child benefit, paid to support the needs of children, in household income against the cap, is to hold children responsible for these choices, and to penalise them accordingly.

This amendment represents a compromise position between children in larger families receiving full current levels of state support, and receiving none at all.

This amendment would represent a compromise position between the cap as it is currently proposed, whilst maintaining the principle of the cap. At present a child born into a family with benefit income in excess of £500 per week would receive £62.40 per week in benefit support (a combination of child benefit and child tax credits). Under the benefit cap, the child would receive no financial state support.

The proposal to remove child benefit from the cap would mean that the family received £13.40 per week on account of this child. The amendment would limit the level of additional support paid to families on account of each additional child, without eradicating it in its entirety.

Something must be done to limit the dispropotionate impact of the benefit cap on children.  The Government have suggested that removing child benefit from capped benefits would remove 40-50 per cent of households (20-25,000 families) from the benefit cap. This is a modest compromise which we hope will be acceptable to the House of Lords when they come to discuss this issue on Monday.

See also:

Exposed: The six myths of IDS’s benefits capShamik Das, January 23rd 2012

• Children’s commissioner slams welfare bill – Alex Hern, January 11th 2012

• Five reasons to oppose the welfare bill – Daniel Elton, December 12th 2011

• Cameron’s benefit cap rewards family break-up – Sam Royston, September 5th 2011

• Pickles letter to Cameron reveals inconvenient truth on benefits cap – Pete Challis, July 3rd 2011

36 Responses to “Why child benefit must be removed from the benefit cap”

  1. Me

    Ignore child benefit, that’s fine, but you can’t then also ignore that average wages are not what people get to spend at the end of the month. Take out the several hundred pounds most people have to cough up for their car or travel card, the large amounts of money spent on keeping a wardrobe fit for attending their place of work, the cost of actually getting you hair cut occasionally. It costs thousands of pounds a year to hold down a job. Even a cap of ‘only’ £26000 means you have to be a mug to get off your arse and actually work.

  2. Vashti

    Nobody gets £26k a year disposable cash. It’s either housing benefit (paid to the landlord and which working people are also entitled to), or it’s child benefit which (shock) is spent on keeping the children.

  3. Me

    Nor do working people have the disposable cash, they have to give the majority of their money to the landlord or the exchequor or the nursery. The taxes they pay and the hours of their lives spent working and commuting are used to pay others more than they receive for doing nothing. It’s as if society is laughing at the idiots prepared to work. When is Labour going to stand up for the labourers?

  4. Where is Labour on welfare? | Left Foot Forward

    […] also: • Why child benefit must be removed from the benefit cap – Dr Sam Royston, January 23rd […]

  5. Children's Society

    RT @lawpoduk: Child benefit must be removed from the benefit cap: //t.co/HRR5LtjM @childrensociety's Sam Royston explains

  6. LawPodUK

    RT @lawpoduk: Child benefit must be removed from the benefit cap: //t.co/HRR5LtjM @childrensociety's Sam Royston explains

  7. Walthamfrank

    RT @lawpoduk: Child benefit must be removed from the benefit cap: //t.co/HRR5LtjM @childrensociety's Sam Royston explains

  8. Anna Stuttard

    “@childrensociety: RT @leftfootfwd: At the very least, child benefit must be removed from the benefit cap: //t.co/GLUa4CuH

  9. Nigel Varndell

    RT @lawpoduk: Child benefit must be removed from the benefit cap: //t.co/HRR5LtjM @childrensociety's Sam Royston explains

  10. Janet Graham

    At the very least, child benefit must be removed from the benefit cap: //t.co/2T1tDRtb @childrensociety's Sam Royston explains

  11. Chris Salter

    Why child benefit must be removed from the benefit cap | Left Foot Forward //t.co/6ybwKy1B #ppnews #wrb #spartacusreport

  12. Angus Carruthers

    Why child benefit must be removed from the benefit cap | Left Foot Forward //t.co/6ybwKy1B #ppnews #wrb #spartacusreport

  13. Janet Graham

    Why child benefit must be removed from the benefit cap | Left Foot Forward //t.co/6ybwKy1B #ppnews #wrb #spartacusreport

  14. Rosena McKeown

    Why child benefit must be removed from the benefit cap | Left Foot Forward //t.co/6ybwKy1B #ppnews #wrb #spartacusreport

  15. BevR

    RT @leftfootfwd: Why child benefit must be removed from the benefit cap //t.co/M8RHYAa4 #spartacusreport

  16. Jim

    RT @leftfootfwd: Why child benefit must be removed from the benefit cap //t.co/M8RHYAa4 #spartacusreport

  17. Thomas Hemingford

    RT @leftfootfwd: Why child benefit must be removed from the benefit cap //t.co/M8RHYAa4 #spartacusreport

  18. All Thats Left

    Hurrah – the Lords amended the Welfare Reform Bill. Boo – the Tories are just going to overturn the amendments in the Commons.
    It’s now clear that the legacy of the Coalition will be poverty and increased gap between those at the top and those at the bottom.
    Perhaps most depressing however, is that despite this, the Tories are ahead in the opinion polls.
    Read on for our analysis of the Welfare Reform Bill and Vince Cable’s toothless proposals to curb Executive Pay.
    //www.allthatsleft.co.uk/2012/01/the-coalition-bringing-poverty-and-inequality-to-a-town-near-you/

  19. Foxy_cocknose

    family’s receiving jsa and other benefits should only be allowed to have so many kids, i have a brother who has 7 kids and they spend all there benefits on skunk and booze. we need to be like Australia non English residents should have to buy visas to live here, how are we meant to get jobs when foreigners are taking them all. soon this country will be 30% English 70% non English, century’s this country has thought to keep it English, seems like we’ve given up. someone needs to take action!

  20. Children's Society

    Our @sam_royston on child benefit's importance on @leftfootfwd: //t.co/HRR5LtjM #welfarereform #wrb

  21. Nigel Varndell

    Our @sam_royston on child benefit's importance on @leftfootfwd: //t.co/HRR5LtjM #welfarereform #wrb

  22. Newsbot9

    Ah yes, good old eugenics. Such a great historical record.

    Someone needs to speak to you about your racism, yes.

  23. Newsbot9

    A lot of the affected people work.

  24. My Notesbook

    Why child benefit must be removed from the benefit cap | Left Foot Forward //t.co/6ybwKy1B #ppnews #wrb #spartacusreport

  25. Ed's Talking Balls

    Well of course they don’t get to keep the cash. That’s an utterly fatuous observation. If I choose to spend my wages on rent, mortgage payments, food, clothes, football tickets, etc, I don’t get to keep the cash too!

    You can’t have your cake and eat it too. Actually, scratch that. According to the bishops and Labour, you can.

  26. Ed's Talking Balls

    Well of course they don’t get to keep the cash. That’s an utterly fatuous observation. If I choose to spend my wages on rent, mortgage payments, food, clothes, football tickets, etc, I don’t get to keep the cash too!

    You can’t have your cake and eat it too. Actually, scratch that. According to the bishops and Labour, you can.

  27. Ed's Talking Balls

    Hurrah – the elected government is going to overturn the wrecking amendments tabled by unelected, unaccountable Lords. At least that’s what most of us hope. Perhaps that’s why the Tories are ahead in the opinion polls. Opponents of welfare reform are so far out of step with public opinion it’s almost beyond belief.

  28. NE CP Commission

    RT @leftfootfwd: Why child benefit must be removed from the benefit cap //t.co/UdXwvtCX #ukpoverty

  29. Marzia Gitto

    RT @leftfootfwd: Why child benefit must be removed from the benefit cap //t.co/UdXwvtCX #ukpoverty

  30. Tax credit changes will discourage work and have other disastrous effects | Left Foot Forward

    […] Why child benefit must be removed from the benefit cap – Dr Sam Royston, January 23rd […]

  31. Watching You

    How changes to tax/benefits not only disincentive work, but also incentives family breakup //t.co/KoEFSSuK #pmqs

  32. Andrea

    "@leftfootfwd: How changes to tax/benefits not only disincentive work, but also incentives family breakup //t.co/QJeVNB8W #pmqs"

  33. Foxy52

    How changes to tax/benefits not only disincentive work, but also incentives family breakup //t.co/KoEFSSuK #pmqs

  34. Martin Steel

    How changes to tax/benefits not only disincentive work, but also incentives family breakup //t.co/KoEFSSuK #pmqs

  35. Nick H.

    How changes to tax/benefits not only disincentive work, but also incentives family breakup //t.co/KoEFSSuK #pmqs

  36. Janet Graham

    How changes to tax/benefits not only disincentive work, but also incentives family breakup //t.co/KoEFSSuK #pmqs

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