Like every cut conducted under the Coalition Government’s austerity programme, the main point of introducing the two-child welfare cap was saving money. But there were a couple of other motivators too.
One, sotto voce, was the idea that the previous welfare system was baking long-term costs into the system by boosting fertility rates amongst households with various problematic traits which would be passed to their children. This drew from The Welfare Trait, by Dr Adam Perkins. From the blurb:
“In support of his theory, Dr Perkins presents data showing that the welfare state can boost the number of children born into disadvantaged households, and that childhood disadvantage promotes the development of an employment-resistant personality profile, characterised by aggressive, antisocial and rule-breaking tendencies.”
One of the book’s key recommendations was that “policy should be altered so that the welfare state no longer increases the number of children born into disadvantaged households”.
The other, proclaimed by George Osborne, was “to ensure that families in receipt of benefits faced the same financial choices about having children as those supporting themselves solely in work”.
This latter is important because it’s about a principle, rather than an outcome. The iniquity of working households facing serious financial decisions about having children, starting families later, and having fewer children than they would like, whilst households on welfare appeared not to, seemed self-evidently unfair.
Couple this with a surprisingly prevalent mindset that children are a sort of luxury good, which people should only have if they can afford them, and you have a recipe for the cap being persistently popular despite, as Jonathan Portes and Mary Reader have demonstrated, the policy having scant impact on its headline objective of reducing fertility amongst welfare recipients.
That it is popular might strike people familiar mostly with the online and think-tank debate on the subject surprising. But Labour haven’t u-turned on their opposition to it for nothing.
Perhaps it would be less so if more voters made the connection, which ought to be obvious, between low birth rates and immigration. Despite the popular misconception that older voters have already paid for the entitlements, society needs working-age, tax-paying people to keep public services and old-age entitlements afloat. If British people aren’t having children, we will get them from elsewhere, effectively import-substituting future generations of Britons.
Low birth rates are by no means a problem confined to the UK. But the problem is rendered particularly acute here by our failure to build anything. Notwithstanding broader public attitudes towards immigration, bringing in 600,000 people in a year when we built fewer than 300,000 new homes, and when we are already about four million homes short, is a recipe for disaster.
Yet there is an unholy alliance between the attitudes of many voters and the Treasury.
As I’ve written before, the latter sees taxpayers rather than citizens; it sees little sense in wasting time and money gestating future taxpayers when it can, in the blunt words of one former spad, “just import people”. This is the mindset which has prevented the Conservatives making any serious effort to wean the economy off imported labour, and will almost certainly derail the NHS Long Term Workforce Plan.
And if home-grown children are a luxury good, that supports the Government’s strangely Stakhanovite attitude towards many of the “economically inactive”. If you don’t value families as families, a parent who stops working or cuts their hours is just a stuck cog in the GDP machine.
The problem embodied by the two-child cap is thus actually much bigger than the individual policy: it is the attitude society and government has towards families and children as a whole.
Although Portes argues that people’s preferences for children are “sticky”, the evidence for this in his own article seems patchy. He concedes, after all, that “previous research showed that benefit increases during the 2000s had substantial positive effects on fertility (approximately three times larger than our estimates).”
It also seems difficult to argue that the cost of raising children is impacting the decisions of working households, perhaps because other factors, such as the extraordinary cost of childcare, are more likely to weigh on them. And Osborne was right about it being unfair that such households faced, or acted as if they faced, very difficult decisions on this front which those supported by the state did not.
But a just solution would have been the opposite of the one settled on by the Treasury: reworking the tax system to support families across the income scale, rather than trying to drive fertility at the lower end downwards.
One can make the case for this from all sorts of different angles. First, there is the Portes/Reader argument that cutting benefits increases child poverty if, as seems to have been the case, it doesn’t significantly reduce the number of children born into affected families.
Another progressive angle is that it is ethically problematic to maintain a social order which depends on there always being poorer countries whose best and brightest we can import to plug gaps in our own labour market; a high female workforce participation rate is a deceptive measure of progress if it relies upon merely shifting the opportunity costs of having children onto women overseas.
On the Conservative side, if we recognise that children are a public good, even on so impoverished a basis that they grow up into taxpayers, then it follows that the state should recognise parents as making huge investments of time and money on society’s behalf. The Tories ought, surely, also to recognise family life as a valuable thing in itself, and reject a mindset which assesses a citizen’s value by their productivity alone.
No free society can ever shoulder that burden in full, nor should it. But it can at least go some way towards recognising or at least not penalising it. Reforming taxation so it is levied on households rather than individuals would be an obvious starting point; deregulating childcare another. A more ambitious programme could go further still.
But would the electorate stand for it? As recent Tory experience has demonstrated, key sections of the electorate might tell pollsters that they’re angry about immigration – but they will punish fiercely and swiftly any attempt to make them pay for something to which they feel entitled.
It suits older voters who had fewer or no children to think of them as a luxury good, because it justifies them privately banking the wealth they would have forgone raising a family whilst socialising the costs of replenishing the tax base which they insist must pay for their social care, in the same way it suits people who have paid off their mortgages to bank soaring house prices privately whilst vetoing new developments and inflicting sky-high rents and mortgages on other people.
And it suits the Treasury to indulge this thinking because the Treasury has no conception of the long term and thinks in tax receipts. The justness or otherwise of the arrangement is beside the point, as is any non-fiscal conception of the common good.
So yes, we need to do away with the two-child benefit cap, as part of a much broader re-orientation of the tax and benefit system in an explicitly pro-family direction. But like immigration, like housing, and so much else, that will require much deeper thinking about the structures of the British state than the Conservatives have done in a long time.