Why Cameron has rejected Nadhim Zahawai's child benefit plan

The Tory MP's plan to limit all child-related benefits to two children would undermine the 'striver'/'scrounger' divide by hitting all families, regardless of their employment status.

Earlier this week, George Osborne vowed to cut "billions" more from welfare if the Tories win the next election. In an op-ed in today's Mail on Sunday, Conservative MP Nadhim Zahawi suggests one way he could do so. The No. 10 policy board member calls for the government to limit all "child-related welfare" to "the first two children". Here's the key passage:

This would include Child Benefit and Child Tax Credit but would exclude disability payments.

It would apply to all households, both in and out of work, and only to new births after the change became law. Capping welfare at two children may seem tough, but setting the cap at three simply wouldn’t deliver the savings we need.

At first sight, this might merely appear to be a restatement of the proposal previously floated by Iain Duncan Smith. The Work and Pensions Secretary said in September 2012: "My view is that if you did this you would start it for those who begin to have more than say two children. Essentially it's about the amount of money that you pay to support how many children, and what is clear to the general public, that they make decisions based on what they can afford for the number of children they have. That is the nature of what we all do."

But there are several key differences with the Duncan Smith plan, which was vetoed by the Lib Dems before the 2012 Autumn Statement. The first is that Zahawi's cap would apply to all child-related benefits, rather than child benefit alone. The second is that it would apply to all families, rather than just those claiming out-of-work benefits. It's the latter point that explains why No. 10 has been quick to stamp on the idea, with a source commenting: "this is not government policy and is not supported by the prime minister."

Were the Tories to limit child-related benefits for all families, regardless of their employment status, it would undermine the 'striver'/'scrounger' divide they have worked so hard to create. As Grant Shapps said of the Duncan Smith plan earlier this year: "A lot of people worry that the way welfare operated under the last government meant claimants were free from taking the difficult decisions you would take if you are in work – none more starkly obvious than when you have children.

"If you are a working family and you have another child, you know it’s going to mean quite a severe impact on your living costs. Yet in the welfare system, it’s almost turned on its head, so additional children are actually recognised, with no limit. We need to create a choice for people on welfare which mirrors that which millions of people in work who aren’t receiving state support have to make. It’s only fair to the taxpayer."

This, of course, is nonsense. There is no evidence that significant numbers of families have more children merely to claim benefits and nor is it clear why it would be a less "difficult decision" for them to do so (unlike in-work families, they cannot draw on private salaries as well as social security). But Shapps rightly believes there is a ready audience for his rhetoric.

While the Duncan Smith proposal would help to reinforce the artificial divide created between "working" and "workless" families (owing to the insecure labour market, many cycle in and out of work), the Zahawi plan would undermine it. For that reason, while the former idea will almost certainly appear in the next Tory manifesto, the latter will not.

David Cameron talks during a PM Direct event at the Tetley Tea factory in Darlington on December 13, 2013. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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How Theresa May laid a trap for herself on the immigration target

When Home Secretary, she insisted on keeping foreign students in the figures – causing a headache for herself today.

When Home Secretary, Theresa May insisted that foreign students should continue to be counted in the overall immigration figures. Some cabinet colleagues, including then Business Secretary Vince Cable and Chancellor George Osborne wanted to reverse this. It was economically illiterate. Current ministers, like the Foreign Secretary Boris Johnson, Chancellor Philip Hammond and Home Secretary Amber Rudd, also want foreign students exempted from the total.

David Cameron’s government aimed to cut immigration figures – including overseas students in that aim meant trying to limit one of the UK’s crucial financial resources. They are worth £25bn to the UK economy, and their fees make up 14 per cent of total university income. And the impact is not just financial – welcoming foreign students is diplomatically and culturally key to Britain’s reputation and its relationship with the rest of the world too. Even more important now Brexit is on its way.

But they stayed in the figures – a situation that, along with counterproductive visa restrictions also introduced by May’s old department, put a lot of foreign students off studying here. For example, there has been a 44 per cent decrease in the number of Indian students coming to Britain to study in the last five years.

Now May’s stubbornness on the migration figures appears to have caught up with her. The Times has revealed that the Prime Minister is ready to “soften her longstanding opposition to taking foreign students out of immigration totals”. It reports that she will offer to change the way the numbers are calculated.

Why the u-turn? No 10 says the concession is to ensure the Higher and Research Bill, key university legislation, can pass due to a Lords amendment urging the government not to count students as “long-term migrants” for “public policy purposes”.

But it will also be a factor in May’s manifesto pledge (and continuation of Cameron’s promise) to cut immigration to the “tens of thousands”. Until today, ministers had been unclear about whether this would be in the manifesto.

Now her u-turn on student figures is being seized upon by opposition parties as “massaging” the migration figures to meet her target. An accusation for which May only has herself, and her steadfast politicising of immigration, to blame.

Anoosh Chakelian is senior writer at the New Statesman.

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