David Willetts is President of the Resolution Foundation and is a member of the House of Lords.
The past week has seen ConservativeHome graced by a piece from Michael Ashcroft warning of ‘baby deserts’ and a column from Harry Phibbs backing the two child cap on benefits. Are the two issues linked? Should they be?
First, a gentle warning.
Any men of a certain age and political disposition telling women to have more babies doesn’t really work. Nigel Farage may not be sensitive to that but I’m sure Michael Ashcroft, one of the shrewdest observers of political trends, is. There is however a way into the debate and that is by focussing on whether people are able to fulfil their aspirations.
There is some evidence that people may not be having as many children as they wish to have. That opens up a debate about how public policy can be more family friendly.
First, the facts. The number of babies born in the UK surged from 670,000 in 2002 to reach a peak of over 810,000 in 2012. It is now down below 700,000 again. So we have just gone through a mini baby boom and then bust.
These figures for actual babies born are more useful than fertility rates which measure how many women of each age are having babies and can fail to capture a shift in the time when they do. Real birth rates matter for planning public services. This is why primary schools have spare places – and we are missing an opportunity to have a proper plan for deciding which ones to close. But there is also a surge in the number of teenagers leading to extra pressures on secondary schools, colleges and universities. Again, we are missing an opportunity to offer the best possible deal to this increasing number of young people, especially as they suffered so much through Covid.
A lot of angry young people is a high-risk prospect.
It is a legitimate to investigate if these changes in the number of babies are influenced by the level of welfare benefits. It looks as if there is some effect but a modest one. Gordon Brown’s tax credits were very generous to children and may have contributed a bit to the surge. George Osborne’s two child cap may have contributed to the fall but not much – one estimate is that it has reduced the number of births by about 5,600 a year.
George Osborne’s argument for the measure was that families on benefits should “face the same financial choices about having children as those supporting themselves solely through work.” That proposition is popular and polls well. However “solely” is carrying a lot of weight. More than half the families who are directly affected by the two child cap are in work. And the loss of the child element of universal credit is a big hit to the family finances – almost £300 a month.
Historically means-tested provisions have usually had an element for each child so the cap was a break with a long-standing feature of the system which previous Conservatives including Margaret Thatcher accepted so it is hard to see this as a matter of principle.
Instead it should be assessed by its effects.
The measure only applies to babies born after 2017: as it works its way through the system one estimate is that it is directly hitting about 50,000 babies a year but could be affecting up to about 150,000 extra children a year – if there is no benefit for child number three that means less for the first two children as their benefit is spread out across more kids. That is gradually increasing child poverty.
So the trade-off is 50,000- 150,000 extra poor children per year for an estimated effect of 5,600 fewer babies born every year.
Children brought up in poverty have worse life chances and educational opportunities. So these effects will be with us for decades to come. It is a high price to pay for deterring the birth of a few babies, especially when there is increasing concern the birth rate is too low.
The other argument is simply about cost.
I accept we have to save on the benefits bill.
But there is one group which clearly does very well out of benefits – pensioners. It is good news that pensioner incomes have surged over the past 20 years. They are now less likely to be in poverty than families with children. Their benefits have gone up by £900 a year since 2010 whilst benefits for working age families have been cut by £1,500 below inflation.
Pensioners are less likely to be in fuel poverty (spending more than 10 per cent of their incomes on energy bills) than working age families.
So the best way to save money is to look at the triple lock, the pension age and the winter fuel payment.
It is good news that pensioner poverty is falling but this news has not yet reached voters.
The Conservative Party currently wants to keep the winter fuel payment and the two child cap. That is probably where the polls are so it is an understandable position for a political party to take. But it also sends a clear message about political priorities – more for old people and less for young people.
That message may not be the right one for a party looking to the future.
