GUY ADAMS: Facts that show the two-child profit cap has not plunged half one million children into ‘destitution’

When George Osborne unveiled the two-child benefit cap in 2015, he claimed it would mean ‘families in benefit face the same financial choice about having children as those supporting themselves solely in work’.

It was quite unfair to taxpayers, the then Chancellor added, that the UK was responsible for seven per cent of the entire world’s welfare spending, despite being home to a mere one per cent of its population and generating four per cent of its income.

Osborne’s remarks were met with a predictably hysterical response – not just from the Labour benches, but among a shouty coalition of non-governmental organisations and liberal pressure groups that have spent the past 30 years opposing efforts to trim Britain’s spiralling welfare budget.

The charity Barnardo’s claimed the cap would leave families ‘struggling to cover even the cost of basics such as school uniforms’. 

The Church of England declared that mothers would ‘face an invidious choice between poverty and terminating an unplanned pregnancy’. 

An organisation named the Child Poverty Action Group, which is highly influential on the Left wing of the Labour Party, denounced ‘the human cost of this nasty policy’. And so on.

Ten years later, and despite little evidence that it has caused spiralling abortion rates (or led to falling compliance with school uniform policies), the two-child benefit cap is once more squarely in the political firing line.

This time, Sir Keir Starmer and Labour’s waning popularity are to blame. It has left the Prime Minister desperately needing to shore up support on the Left wing of the party, where this legacy of Tory austerity has lately assumed totemic status.

Rivals such as Andy Burnham, the mayor of Greater Manchester, who says it ‘can’t be defended, because it’s arbitrary’, complain that the cap has condemned the headline-grabbing figure of 470,000 children to lives of grinding poverty.

The Guardian newspaper recently went so far as to describe it as ‘both discriminatory and racist’, seemingly on the grounds that Pakistani and Bangladeshi voters are more than twice as likely as their white counterparts to produce three or more children.

So it goes that, just a year after claiming it couldn’t possibly afford to get rid of the benefit cap (seven rebel MPs who voted to scrap it lost the whip), Starmer’s government appears to be on the verge of executing another shuddering volte-face.

Rachel Reeves has therefore been handed the poisoned chalice of paying for a policy change that will add £3.5 billion per year to Britain’s spiralling deficit.

On Tuesday, she gamely attempted to make the best of this U-turn by claiming that it would somehow make everyone richer, arguing: ‘I don’t think we can lose sight of the costs to our economy in allowing child poverty to go unchecked.’

Dame Meg Hillier, the Labour chair of the Treasury select committee, was also looking on the bright side. 

She said it would end up increasing prosperity by encouraging women to have babies, and then improving their performance in school, saying: ‘We have a birth rate of only 1.41 in England and Wales and need to invest in our young people.’

Time, of course, will tell. But central to almost every criticism of the policy, which limits families on Universal Credit to claiming two ‘child elements’ worth £3,500 a year per infant, is a single, contested contention: that it’s somehow forcing huge numbers of children into poverty.

The 470,000 figure, which comes from Labour’s pet think-tank the Resolution Foundation (whose former CEO Torsten Bell is now one of Reeves’s Treasury Ministers), is endlessly cited in support of this argument, as are other heady statistics about child poverty.

Perhaps the most eye-catching was recently aired by the BBC, which went so far as to claim that ‘the number of children living in comparative poverty has reached its highest level since comparative records began’ at something like 4.3 million.

The truth of the matter, however, is that every single claim made about child poverty actually hinges on a single, highly contested question: how exactly should we measure poverty?

A few decades back, it was relatively simple: people who lived below the poverty line could not afford proper food, clothes and housing. Children were sent off to work, rather than going to school, and entire communities suffered Dickensian levels of deprivation.

Lord Bird, the crossbench peer who founded the Big Issue, once wrote of growing up in post-war Notting Hill: ‘Money was scarce; rats, mice, fleas, bedbugs, rattling windows and freezing cold neglect were in abundance.’ Ninety per cent of working-class households were categorised as substandard, with ‘little or no bathrooms, small kitchens, shared toilets and grime and dirt on every horizon’.

By the 1960s, when reliable data on poverty came into existence, three million families still lived in slums and roughly half a million homes still lacked an indoor toilet.

Today, by comparison, even many poor Britons own smartphones and flatscreen TVs, and rightly expect to live in homes with refrigerators and central heating. Basic foodstuffs and warm clothes are cheaper than at any time in human history.

Against this backdrop, the idea that destitution is worse than ever hinges on a highly controversial concept introduced during the Blair era known as ‘relative poverty’.

This defines a household as ‘poor’ if they have less than 60 per cent of the medium UK income in a particular year for their family size, once housing costs and taxes are deducted. 

Under such rules, a couple with two children was in 2023 defined as being in poverty if they earned less than £39,000 before tax. For a couple without children, the figure was around £17,000.

Yet critics have long pointed out that the numbers bear no relation to what that money will actually buy. Instead, they represent a sort of moving target, which changes depending on how much other people are earning in any given year.

This has, in turn, created the bizarre situation that when the economy booms, and the wages of some people rise dramatically, people whose earnings only increase by a small amount can be officially cast into poverty, despite being wealthier than before.

Conversely, when the economy contracts, people can be magically cast out of poverty, despite having only slightly more money, or buying power, than before.

All of which creates some curious anomalies.

For example, the number of children in ‘relative poverty’ today, at just over 30 per cent, is three times the rate it was in the 1970s, when millions of them lived in actual slums. Yet no one with half a brain would argue that Britain is somehow poorer.

Meanwhile, when the 2008 financial crash made wages contract, the number of people categorised as being ‘in poverty’ miraculously fell.

To put things another way, critics argue ‘relative poverty’ is junk science: a measure of how poor you feel compared to other people, rather than whether or not you are truly poor.

A more reliable way to gauge destitution is ‘absolute poverty’ which is based on what you can – and cannot – afford. 

The Government does this by fixing the line at 60 per cent of the median income in 2010. This finds that child poverty has actually fallen by roughly 38 per cent since 2000, even when accounting for inflation.

And poverty rates for everyone have fallen dramatically since the 1990s, even during the period when the two-child benefit cap has been in force.

The Organisation for Economic Co-operation and Development, which uses a different measure to both the UK government and Left-wing pressure groups, says around 14 per cent of British children live in poverty. 

That places the UK in the middle of developed nations: worse than Scandinavia and Germany, but better than Spain, Italy and the United States.

That is not to say that scrapping the child benefit cap won’t improve both ‘relative’ and ‘absolute’ poverty rates: some families will instantly be thousands of pounds a year better off.

But it’s pure nonsense to claim that this policy has condemned huge numbers of innocent children to lives of destitution. 

And for every welfare bribe Starmer throws to the Labour backbenchers, working Britons must end up footing another tax bill.