Mary Reader and Megan Curran explain how the situation in COVID-19 has prompted the U.S. government to rethink its approach to child poverty and large families. They claim that the time has come for the UK to do the same thing, especially when it comes to the two-child restrictions policy.
April 2021 marks the fourth anniversary of the introduction of the two-child limit in the UK, a policy that limits financial aid through the benefit system to the first two children in the family. This policy marked a historic moment in the development of the welfare state. Until then, it was taken into account when assessing all children’s needs and eligibility for benefits. In fact, family allowances, introduced after World War II, provided more support for children in the third and subsequent years. The two-child restriction also represented a clear starting point in the European social security model for large families. Many European countries (France, Germany, etc.) pay higher child allowances or allowances for their third and subsequent children. Nevertheless, the premise that the family must internalize the financial risks and responsibility for the decision to have a larger family is by no means limited to the UK. Since the 1990s, the United States has limited family cash aid and family tax credit programs by family size to varying degrees at the state and federal levels.
However, as we enter the second year of the COVID-19 pandemic, the UK’s approach to financial aid for large families not only lags behind its European neighbors, but is now at risk of lagging behind the US. In recent years, eligibility for financial aid in the UK has become increasingly a condition depending on employment status, family size, and the number of children in the family birth order. According to an LSE study, child contingent benefits, which doubled according to the Labor government in 1997, have declined by 19% over the actual period since 2010. These developments have led to the culmination of overall child poverty. Large family since 2012-13.
Meanwhile, much has been made about the recent US rescue plan, President Bidens’ 1.4 trillion economic relief package, and its potential impact on child poverty. For families with children, the most notable factor in the package is the newly transformed U.S. Child Tax Credit. Researchers from Columbia University and Urban Institute predict that this could cut US child poverty in half by 2021. The United States has long been a peculiarity among high-income countries because there is no dedicated national child benefit or child allowance. Instead, the U.S. welfare state has been marked as a resistance to providing universal financial aid to families with children and to tightly regulate support for low-income families based on parents’ employment status and income. Large families faced higher exclusion rates. Half of the children in large families in the United States did not receive the full child tax credit compared to a third of children in small families because their family income fell below the income threshold for their family size.
The Bidens Relief Package applies three important changes to the U.S. Child Tax Credit. The level of benefits increases (up to $2000 to $3600 for children under 6 years old and $3000 for children 6-17 years old). It creates an almost universal eligibility, providing full benefits to the lowest-income child. From July, the salary is paid in regular installments rather than once a year. These reforms will have serious poverty-fighting effects for children in large families who are at least 1.5 times more likely to fall into poverty than small families in the United States.
How does the UK evaluate Bidens’ new policy? The short answer is not good for three main reasons related to family size, adequacy, and the extent of child-related financial aid.
First, the New Child Tax Credit in the United States is paid on a per-child basis, regardless of family size and birth order. Meanwhile, children’s allowances in the UK are related to the order of birth. The value of the child’s allowance for the second and subsequent children is only two-thirds of the first child. This is a rare case in international standards. In addition, the two-child limit means that starting in 2017, the third and subsequent children in the family are not eligible for assistance through the sub-element of the child tax credit and the equivalent Universal Credit. This means that the income that a large family can receive is significantly reduced, up to 2830 pieces per child per year. At a time when the U.S. is taking significant steps to correct discrimination against large families within the social security system, the UK’s two-child limit seems increasingly anachronistic.
Second, these reforms have made major child support in the United States far more generous than the child allowance, which is the closest comparison to the UK. After the four-year real period is frozen, the first child in the UK receives a 1000 child allowance and all other children receive 725 per year. Of course, low-income families may qualify for up to 2830 per child through the child tax credit, but this does not apply to third and subsequent children, as explained above. In contrast, Bidens’ new child tax credit is worth about 2600 per child under 6 years old and 2200 per child 6-17 years old. At a time when child poverty among children under 5 is growing particularly rapidly, the UK can learn lessons from Bidens with higher payout rates for younger children.
Third, child benefits in the UK have been tested Sudan since 2013, but the new child tax credit in the US will be almost universal. In the UK, the income threshold for children’s benefits did not rise according to income. In April 2021, base rate taxpayers are expected to withdraw their child’s allowance. Some of these will be bigger families and will be particularly hit hard because they have more child benefits to lose.
Pandemic and Bidens’ recent relief package is a complete reminder of the flaws in the structural design, as well as the UK safety net becoming inadequate. In the UK, the right to benefits was not linked to social needs, but instead linked to behavior, including the most personal decisions, such as having children. The mission statement of the 2 child limit implicitly states that families receiving benefits should face the same financial choices as those who support them only through work, and should have a third or subsequent child only if the family can guarantee their income. I assume. 18 years is an option only available to people with special personal savings or job security.
The plague highlighted the fallacy of its claim. Many families who had not previously requested benefits were newly affected due to two-child restrictions and the impact of the epidemic could not be reasonably predicted. This policy will force many families to make impossible decisions, such as whether to feed their children, pay their bills, or, according to recent findings, whether to have an abortion. Current polls show that most UK adults (61%) and conservative voters (54%) believe the two-child restrictions should be suspended during COVID-19, many of which should be completely abolished. However, the government has been silent on this issue and has repeated the belief that supporting up to two children is fair and proportionate.
The situation of COVID-19 has forced the U.S. government and even social conservatives to rethink their approach to child poverty and large families. It’s time to do the same in England.
Note: Although this project was funded by the Nuffield Foundation, the views expressed are those of the authors and may not necessarily be foundations.
Mary Reader is the Research Director at the Center for Social Exclusion Analysis at the London School of Economics. She is currently working on a welfare reform and extended family research project funded by Nuffield.
Megan Curran is a Postdoctoral Fellow at Columbia University’s Center for Poverty and Social Policy.
Photograph by Ben Wicks of Unsplash.
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