Comment: A cap on child benefit is the sensible solution to the welfare problem

By Geoffrey Taunton-Collins

The benefits system obviously isn't to blame for Mick Philpott's decisions. His actions were horrendous, and were the responsibility of no one other than himself. We should not, however, refuse to talk about the failures of the UK's welfare system because of him. A mature debate about the function and effectiveness of a system that spends £214 billion a year is healthy and necessary; using Mick Philpott to demonise welfare claimants is not.

Couples who are in work and struggling to get by with two or fewer children should not be required to subsidise parents who choose to have even more. This is the basic principle behind the clamour from politicians and commentators to cap child benefits for a third or fourth child. The principle is sound, and the cap it implies sensible.

The first and most obvious objection to a cap concerns the effects it will have on poor, large families. No one, I hope, is suggesting that this cap should be introduced immediately on families who already have large numbers of children. This would for obvious reasons be damaging. The cap should be introduced publicly and gradually so that parents have plenty of time to prepare and calculate the affordability of having more children. Obviously it is essential that parents do not have children on the expectation of benefits which they do not then receive.

The second objection is that the money saved by such a cap would be too insignificant to be worthwhile. This argument is wheeled out far too often. It implies that reform should only happen all at once or not at all and obstructs progress, however piecemeal it might be.

If the Treasury had a few million extra pounds for every cut that has been side-stepped for being 'too small' (often for the resulting political fallout) it might even have met its deficit target. With regards to child benefit, while it is unclear how much money a cap would save – the Department for Work and Pensions hasn't released detailed figures – the figure, whatever it turns out to be, shouldn't be sniffed at. There are 115,890 families on out of work benefits with four children or more, and 310,110 with three or more. Currently these 310,110 families are costing the government over £330 million in child benefit, which suggests a future cap would certainly do no harm to the public finances.

An interesting adjunct to this debate is the claim made by Iain Duncan Smith that "where you see the clustering of the large families is really down at the very lowest incomes, those on significant levels of welfare, and those on the very top incomes." While it is obvious why families on with very high incomes have large families, namely, they can afford to, it is less obvious why the poorest families are more likely to make this choice.

The claim that families decide to have an extra child because of the additional child benefit (amounting to £696.80 a year) is dubious. What is clear, however, is that poverty can only ultimately be addressed by measures to help job creation and certainly not by subsidising families to have extra children. 

The difficult task of a benefits system is to create a safety net for the vulnerable while avoiding disincentives to self-fulfilment. As Daniel Hannan points out there will always be deserving losers, and undeserving winners, however carefully the system is designed.

A decade of cuts is the legacy of the ruinous finances left by Blair and Brown – and a carefully implemented cap on child benefit would be one sensible response to it.

Geoffrey Taunton-Collins is a research associate at the Adam Smith Institute.

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