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15 February 2015

Duncan Smith hints at cap on child benefit for large families

Work and Pensions Secretary says "if we do go down that road we will announce that" on policy to limit payment to two children. 

By George Eaton

Iain Duncan Smith is across the papers and the broadcasters this morning hailing the national roll-out of his master project, Universal Credit. The move is less impressive than it sounds. The new system, which merges six benefits into a single payment, will be introduced at a rate of 15 job centres a week, initially for single people alone. 

By now, Duncan Smith promised there would be more than one million people claimants. At the last count there were just 50,000. And even if Universal Credit does eventually become universal, its likely effects will be less transformative than implied. As this chart from Jonathan Portes shows, the effect on employment has been positive but marginal. Whether the project’s benefits will ever be great enough to justify its tortuous birth (with the government forecast to write off £663m of IT assets) is an open question. 

But it was on another subject, that of welfare cuts, that Duncan Smith was notably pinned down when he appeared on The Andrew Marr Show this morning. The Tories have promised to make £12bn of new reductions in the next parliament but have so far announced just £3bn (through a two-year freeze on benefit levels). When challenged on where the remaining £9bn would come from, the Work and Pensions Secretary replied that he was “not going to start discussing exact specifics”. But he did drop a significant hint when asked if the Tories would pledge to cap child benefit for large families. “This is not a policy of the present government but if we do go down that road we will announce that,” he said, an answer that suggests it’s a matter of when, not if. He added: “All I would say is this: people out there who are working, they make decisions about the size of their house, about how many children they have in accordance with what they can afford, we all do that, that’s how we work”.

The policy would likely involve restricting child benefit to two children per family, a move that Duncan Smith has previously said could “help behavioural change”. To some, this will appear entirely sensible but the hint of Chinese-style social engineering is one the Tories would be wise to avoid if they ever want to shed their “nasty party” reputation. 

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