Newborn babies with at least two siblings will no longer be supported by vital tax credits, under changes which come into force from 6 April 2017.
Child Tax Credits, and the equivalent under Universal Credit, is to be limited to no more than two children per family, meaning any additional child born into a household will miss out on the same support their siblings received.
The draconian policy is not only limited to workless households because working parents will also be affected by the changes. Current tax credit claimants will not be affected.
If this isn’t bad enough, the first child born into a family will also receive less support from government. First children born on or after 6 April will no longer see the extra £545 of entitlement (the ‘family-element’) seen by those born prior to this date.
Third and subsequent children will see nothing at all!
From 2018, this cruel policy will be extended to parents who make a new claim for Universal Credit, although they will continue to receive child benefit alongside tax credits or universal credit, at around £1,100 per year for the first child and £700 per year for each subsequent child.
While these changes only affect families with new births, those who make new claims for Universal Credit, perhaps due to a drop in income, will also see less support than they had received previously.
Changes to tax credits are forecast to save the treasury around £5 billion a year in the long-term, with £3bn of this coming from the two-child limit. The remaining £2bn comes from the removal of the ‘family element’, which is expected to affect around 4 million families.
Around two-thirds of households affected by these changes will have at least one person in work, meaning that “doing the right thing”, as the government like to put it, could still have a detrimental affect on family finances.
Eventually, about 600,000 three child families will see the support they could have received slashed by £2,500 a year on average, while a further 300,000 families with four or more children will get £7,000 a year less.
Of the 900,000 families affected by the changes, 52% are couples with at least one adult in work and 14% are working lone parents.
The Institute for Fiscal Studies (IFS) says that whilst reducing the “generosity” of tax credits “will tend to strengthen the financial work incentives of the parents”, it warns that “the decision to reduce support for new (but not existing) claimants from November 2018 could actually create strong disincentives to work”.
The IFS says: “For example, a parent on tax credits offered a one-year fixed term contract after November 2017 would want to take into account that, if they lost tax credit eligibility for that year and then became eligible again after that, they would be treated under the much less generous rules for new claimants.”
It’s also unknown as to whether these changes will influence parent’s decision to have additional children. Let’s face it, how many pregnancies are actually planned?
Once again, children are being made to pay for the decisions of their parents. In all likelihood, these draconian cuts will lead to a rise in child poverty, especially considering slow wage growth.
It’s also possible that it could result in an increase in abortions.