The Universal Credit two-child limit: all cost, no benefit

Picture of piggy bank being held by different ages of hands - Photo by from Pexels Andy McClenaghan is the Northern Ireland public affairs and communications officer for the British Association of Social Workers, an organisation which has been championing social work alongside its members for almost 50 years.

Since 6 April 2017, welfare support for families, provided in the form of the child element of Universal Credit, has been severely restricted. Changes introduced by the UK Government now limit Universal Credit to the first two children in a household.

As Universal Credit is phased in, the child element (worth £2,780 per year) is replacing Child Tax Credits, which prior to April 2017 was available for all children in low income families. Despite Government rhetoric that Universal Credit is designed to support people into work, according to the Child Poverty Action Group (CPAG), the largest group affected by the two-child limit will be working families with three children.

Under the policy, third (or additional) children born after 6 April 2017 only qualify for support in instances of multiple birth, adoption, kinship care, and cases where a child was conceived as a result of rape. To access Universal Credit under the “rape-clause” exemption, an applicant is required to have her claim verified by a third-party professional (social workers are included on the Government’s list of approved third parties).

It is callous and degrading to subject a woman to disclose an incident of rape to access benefits and the rape clause underscores the crass austerity of the two-child limit.

This policy is unbefitting of a modern, just society.

In terms of extending the reach and deepening the impact of poverty across the UK, the impacts of the two-child limit have been widely highlighted, notably in valuable research conducted by CPAG, and by Philip Alston (the UN Special Rapporteur on extreme poverty and human rights). However, little attention has been paid to the consequences for social work services resulting from the growth in poverty.

Rising poverty will exacerbate the social problems which increase demand for social work services. There is an established link between a family’s socio-economic circumstances and the chances that their children will experience neglect or abuse, with the likelihood and severity of neglect or abuse increasing as poverty worsens.

Research published in 2017, funded by the Nuffield Foundation, notes that children living in the most deprived areas in Northern Ireland are six times more likely to be placed on the Child Protection Register and are four times more likely to become looked after by social services than those in the least deprived areas.

CPAG, in partnership with the Church of England (CoE), lead a coalition whose All Kids Count report published in June 2019 indicates that limiting Universal Credit to the first two children in a family will result in 300,000 more children being in poverty by the time the benefit is fully rolled out in 2023-2024. The report predicts by then, over half of children in families with three or more children will live in poverty.

The All Kids Count report does not categorise the number of additional children pushed into poverty for each part of the UK. However, a speculative estimate based on Government figures detailing Northern Ireland’s 3% share of the total number of UK households affected by the two-child cap (although not necessarily driven into poverty because of it), suggests that 9,000 more children in Northern Ireland will be in poverty as a result of Universal Credit (although this estimate does not account for larger household sizes in Northern Ireland compared with Great Britain).

However, the impacts of the two-child limit will not just be restricted to children who fall foul of the two-child limit. Where a household is affected, the impacts will be felt by all the children living there. This means fewer than 9,000 households will have to be denied Universal Credit to result in this number of children being pushed into poverty.

The Government’s figures show that for every household impacted by the two-child limit, 3.8 children are affected. On the basis of this ratio, 2,380 households would need to be prevented access to Universal Credit because of the two-child cap in order for 9,000 children to fall into poverty. The direct saving to Government resulting from not paying Universal Credit for these 2,380 households would be approximately £6.6 million per year.

Significant resources go into safeguarding children in Northern Ireland. In 2017/18 £244 million was spent on children’s social work services by the five Health and Social Care (HSC) Trusts and as of March 2018, 2,125 social workers worked in HSC children’s services, accounting for more than half of all social workers employed in the statutory sector.

Figures provided by the Office of Social Services indicate that in March 2016 the annual average cost per placement of keeping a child in residential care in Northern Ireland ranged from £163,846 to £298,700 per annum depending on the type of residential facility. The average yearly cost for a foster care placement is £27,832.

In March 2018, there were 3,109 ‘Looked After Children’ in Northern Ireland (0.7% of all children). Of these children, 2,451 (79%) were placed in foster care and 166 (5%) were in residential care. This is roughly equivalent to 15 children in foster care for every one child in residential care. The remaining children were placed at home with their parents under social work supervision and with support, or in other care settings.

BASW NI estimates that as few as 176 extra children would need to be looked after by social services as a direct result of the two-child limit – equal to 2% of the number pushed into poverty as a result of the limit – before additional spending on care exceeds the amount saved by preventing access to Universal Credit for those cases which result in children being pushed into poverty. This calculation is based on the ratio of children in foster care compared to residential care, and uses the mean average in the range of costs of residential childcare (£231,273).

However, as poverty increases, growing demand for social work services is unlikely to be restricted to services for Looked After Children. It would be expected that the number of children known to social work services as ‘Children in Need’ as well as the number of children on the Child Protection Register will also rise, along with associated costs.

Furthermore, these direct costs to social work services do not reflect other impacts resulting from Adverse Childhood Experiences (ACEs) associated with poverty. Research conducted by the UCL Institute of Health Equity and published by the UK Department of Health in 2015 highlights that children growing up in poverty are disproportionately likely to be exposed to ACEs.

The research notes that while it is not always the case that children will be harmed by exposure to ACEs, children and young people who are exposed to ACEs are at a greater risk of death or injury before reaching adulthood and are also more likely to experience a range of serious illnesses, therefore increasing costs, in the long-term, for the health service.

It is also the case that neglect and abuse are associated with a higher risk of young people becoming involved in antisocial behaviour and crime, creating additional costs for the criminal justice system. While the vast majority of young people living in a care setting do not get into trouble with the law, children in care are significantly over-represented in the criminal justice system and in custody, as highlighted by the Prison Reform Trust’s 2016 review In Care, Out of Trouble. Worryingly, the HM Inspectorate of Prisons report, Children in Custody 2017–18, found that 39% of boys in Young Offenders Institutions in England and Wales had spent time in local authority care.

The Department of Work and Pensions (DWP) does not appear to have conducted an analysis of the costs to social services, or the additional costs for the health and criminal justice sectors that will result from the introduction of the Universal Credit two-child limit. This is particularly cynical given that DWP recognises the significant savings to be accrued by keeping children out of the care system, as evidenced by the inclusion of exemptions to the two-child limit for children adopted through a Health and Social Care Trust or local authority, or where an individual has taken on kinship care responsibility for a child.

The Government’s decision to implement the two-child limit, despite the likely increase in demand for public services associated with the policy, bolsters BASW NI in the assertion that introduction of the limit was driven by ideology rather than fiscal responsibility, a roll-back of welfare provision pursued regardless of the impacts on hard-up families and vulnerable children.

If Government is to credibly counter this claim it must conduct a rigorous and impartial analysis of all costs associated with the two-child limit, an undertaking it is yet to make.

Photo by from Pexels

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