As of 2017 the poorest families could lose up to £2,780 a year in child tax credit. The measures come in as part of major cut backs that will affect up to 13 million families.
What is Child Tax Credit?
It is easy to get child tax credit and child benefit confused. Child benefit is non means tested and given to all parents, and it will continue unchanged. Child tax credit is means tested top up for families with low incomes, whether parents are on benefits or working.
So who will be affected?
At the moment you are eligible for child tax credits for all of your children. The more children you have the higher the minimum income needs to be meet the minimum threshhold e.g £26,000 for one child, £45,400 for 4 children. After April 2017 you will only be able to claim for your first two children no matter how many you have.
However it is not only those with more than 2 children who are being affected.
At the moment, any household earning up to £6,420 a year claims the full amount of whatever tax credits they’re allowed to claim. This threshold is now being almost halved to £3,850 a year.
The government has also scrapped an aspect of the benefit called the family element which is paid to all families eligible for child tax credit, and means the loss of a further £540.00
‘But it doesn’t come into effect until 2017 so it won’t affect me’
The government have said that the new rules would only affect new claims made after April 2017, so their current credits won’t be affected. However there is a loophole will count families as a ‘new claim’ if they’ve had a 6-month break in claiming tax credits.
And those who already have three children – but who claim for the first time after April 2017 – will also count as a ‘new claim’, meaning they only get paid for two children.
That means anyone who lifts themselves out of poverty for a long stretch but then loses their job again will lose thousands of pounds. Anyone who didn’t need to claim them but loses their job or becomes too ill to work will also be viewed as a new claim.
Given the Conservative repeating mottos of supporting working families and ‘making work pay’ this is more likely to discourage people to work.
Many people think that tax credits are for families on benefits, but most claimants have one or both working parents. In fact 2/3 of children living in poverty are in working households.
Will it work?
The ideology behind this move is clearly to discourage people from having large families if they are on low incomes, but there is no evidence to say this will happen – whether it is 1 or 2 or 6 children child poverty does nor present children being born. In fact the Blair government brought in the tax credit system because so many children were living in poverty, and the IFS says that “the substantial falls in child poverty were driven by very significant additional spending spending on benefits and tax credits”.
Are there any exceptions?
Yes. Disabled children will have their benefits protected, as will multiple births as well as other ‘exceptional circumstances’ but there is no detail on what those are or who would make the decisions. Women who have become pregnant through rape are also protected, but there is a fear that:
“Asking women to disclose very difficult information and expecting them to be able to prove it – in what is frankly a very hostile environment when the DWP is trying to take your money away – will have appalling consequences.” Lisa Longstaff Women Against Rape.
The idea behind these exceptions if clearly that some pregnancy’s are seen as not the women’s ‘fault’ prompting a worrying onus on the responsibility of women to not become pregnant, and the ‘punishment’ of not receiving tax credits if they do. But there are situations – due to culture or faith – such as catholics, where contraception is not an option for women. Unplanned pregnancies are also common, and not just because people don’t use contraception. Do we want women to be held responsible for one missed pill or have one burst condom? Do we want a society where unplanned pregnancies have to be aborted because someone is too poor to raise a third child without financial support?
Who will really suffer?
The conservatives call this reforms “not easy but fair”, but the true weight on them will not fall on society, or even the parents of these children, but on the children themselves. To whom we are born – rich, comfortably off, or very poor – is the ultimate wildcard. It seems deeply unfair that the ones most affected – the children – who are without choice at all. Child poverty affects the education, mental and physical health and even lifespan, and the effects of it are estimated to cost wider society up to £29 billion a year, more than the government is saving through these austerity measures. The least we can do as a compassionate nation is try to level the playing field for those born into poverty to give them a better life.
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