Government must reverse poverty crisis by boosting child benefit and scrapping cap – report

The Government must “begin reversing the family poverty crisis” by increasing child benefit and making changes to ensure children in larger families are not penalised, a new report warns.

Even if benefits are uprated in line with inflation, more families will fall into debt as costs rise over the winter, according to a joint warning by three groups.

The Institute for Public Policy Research (IPPR), the Trades Union Congress (TUC) and Child Poverty Action Group (CPAG) are calling for three changes to the social security system ahead of Thursday’s budget.

These are boosting child benefit by £20 per week per child, removing the two-child limit on universal credit and legacy benefits, which restricts the amount of financial support families with at least three children can receive, and ending the total family benefit cap.

They say the Government has a choice between inflicting a winter of “deepening hardship” on families or offering a “lifeline to millions” of economic security and wellbeing.

The joint briefing, A lifeline for families, says that these changes would bring 900,000 children and 300,000 adults out of poverty.

It estimates this would cost £12.9 billion, and should be paid for by taxes on the “financial winners” of the last few years, such as through extending the windfall tax on oil and gas companies or an annual wealth tax on assets over £10 million.

Raising child benefit would help increasingly squeezed middle-income families, while abolishing the two-child limit and overall cap would target those with the least, it says.

Due to the benefit cap, even if benefits were uprated by inflation an estimated 130,000 households would not receive a penny more, researchers calculate.

Rachel Statham (pictured), IPPR associate director for work and the welfare state, said: “The Government faces a choice between inflicting a winter of deepening hardship on the UK, or offering a winter lifeline – investing in the economic security and wellbeing of families who are fraught with worry about the months ahead.

“Even with normal benefit uprating confirmed, we can expect to see ever-longer queues at foodbanks and more families falling into debt and arrears this winter as rising living costs pull more families with children under water.

“This package of reforms would offer a lifeline to millions and deliver a long-term return on investment in children’s futures.”

Kate Bell, head of economics at the TUC, said ministers have “no excuse” for inaction.

She said: “Child poverty is a political choice. The Government can watch from the sidelines as foodbanks run out of supplies and kids go hungry.

“Or it can step in and act.”

CPAG chief executive Alison Garnham added: “Unless families actually have enough money to live on, the price to be paid is more children with compromised health and stunted life chances.

“That’s a recipe for disaster for a future generation and for our wider economy.”

A Government spokeswoman said: “Our priority will always be to support the most vulnerable and we recognise that people are struggling with rising prices which is why we are protecting millions of those most in need with at least £1,200 of direct payments, and providing all households with £400 towards energy costs.

“Latest figures show that there were 200,000 fewer children in absolute poverty after housing costs compared to 2019/20.

“The two-child limit policy means families on benefits are asked to make the same financial decisions as families supporting themselves solely through work, including considering our comprehensive childcare offer for working parents and child benefit for all children.”

Copyright (c) PA Media Ltd. 2022, All Rights Reserved. Picture (c) IPPR.