In dodging calls from his party to remove the two-child cap, Sir Keir Starmer is making one of his first noteworthy mistakes as Prime Minister. Both John McDonnell, the far-left former shadow chancellor, and Anas Sarwar, the soft-left Scottish Labour leader, have called for the Coalition-era policy to go. The cap limits the payment of Universal Credit to a family’s first two children, with subsequent offspring meriting no additional payment. According to the Institute for Fiscal Studies, keeping the cap will mean an extra 670,000 children worse off by the end of this Parliament while scrapping it would reduce relative child poverty by half a million. The annual cost of abolishing the cap would be around £3.5 billion, roughly half the cost of Rishi Sunak’s £20 Universal Credit uplift during Covid.
The cap will mean an extra 670,000 children worse off by the end of this Parliament
However, the Prime Minister will say only that: ‘There is no silver bullet. If there was a silver bullet it would have been shot a very long time ago.’ The government points to the parlous financial situation in which the Conservatives left the country and the need for fiscal discipline of the sort being applied by Chancellor Rachel Reeves.
These are reasonable points, but they do not answer the charges against a policy that increases hardship for the poorest families and discourages child-bearing in a country with an ageing population. The two-child cap is not only cruel, it embodies the myopic worst of Treasuryism.
The Treasury isn’t the only institution to be in thrall to this exercise in penny-pinching social sadism. Following a general election, the losing party can become so fixed on fighting the last battle that it is ill-prepared for the next one. The same can sometimes be true of governments. Labour won its 4 July landslide in part by being achingly centrist on economic and social policy. Sir Keir Starmer and those around him were determined not only to leave behind the ideological self-indulgence of the Corbyn years but to be seen to have done so. Labour had to show the voting public that it was ready to govern in accordance with their instincts about tax and spending, rather than the party’s.
It’s hard to criticise this as electoral strategy given the outcome of the poll but there is a danger that Labour is over-correcting. Today’s generation of frontbenchers are children of Blair. Their adult political consciousness was shaped by Labour’s fifth prime minister. Whether they revered or reviled him, or simply resigned themselves to the awesome electoral logic of the New Labour project, the rules they and their party play by were largely shaped by him. One of those rules is that the British public doesn’t like benefit scroungers. This is reflected in the polls and in the front pages of the mass-circulation newspapers.
This was true in the mid-nineties and for most of New Labour’s time in government but times change and so do attitudes. The British public is still alert to issues like benefit fraud and immigrant access to the welfare system, but it has shifted in important ways when it comes to certain expenditures. In 2005, 40 per cent said that many welfare recipients didn’t deserve any help, but that figure has since fallen to 19 per cent. Those wanting to see more spent on benefits for single mums and dads has jumped from 29 per cent in 2011 to 42 per cent in 2021, while support for extra money for low-income working parents has increased from 58 to 63 per cent over the same period. In 2009, near the end of New Labour’s time in office, just over a quarter said welfare benefits should be more generous even if it meant higher taxes. Today, the figure is almost four in ten.
Now, you might say: yes, but polling shows popular backing for the cap. Indeed it does: 60 per cent of voters and 50 per cent of Labour voters want to retain it. Public attitudes on welfare fluctuate, are often specific to certain benefits or claimants, and aren’t always consistent. But there is a trend away from the welfare brutalism of the early 2000s and an opportunity for a new government in the middle of its honeymoon to move the dial. Britons are more sympathetic towards welfare recipients than a decade ago. Asked by YouGov in June, 46 per cent said benefits for low-income families with children were too low. Only 22 per cent thought them the right amount while just 12 per cent considered them too high. That is not a country poised to revolt against a modest tweak in Universal Credit policy. It is a country practically offering an opening to a Labour government to expend a little political capital.
This is the country Labour governs and the country it must answer to, not the attitudes of yesteryear and the political assumptions formed in response to them. Britain’s views on benefits may be complex and sometimes contradictory but they have softened sufficiently to lower the risk involved in undoing some of the harm wrought by George Osborne and his colleagues. Yet Labour is still offering a pre-austerity welfare policy to a post-austerity Britain. We might expect the Tories not to grasp how Osborneism (slash the state, hammer the poor, buy off the pensioners) nudged the public moderately leftwards on social security spending, but it would be perverse if Labour could not recognise this shift. A party so attuned to the need for ‘change’ should have noticed that, on welfare, public opinion is changing.
That doesn’t give the government licence to crank up the fiscal firehose and direct it at the Department for Work and Pensions, but it does allow for some rollbacks of Tory policy, including the two-child cap. There are many ways to reduce child poverty but scrapping the cap would make a fast, meaningful difference in exchange for a modest investment. It is the kind of moderate social policy a Starmer Labour government should be pursuing.
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