Universal Credit - mitigation of the two-child limit: consultation analysis

Use of s79 Powers to Top-Up Universal Credit

Introduction

The consultation paper set out the different options for how the mitigation payments could be made.

While the Scottish Government considered the possible introduction of a new, bespoke, means-tested benefit which could include tapered payments, this was ultimately discounted. It was decided that this would require significant time and costs to create and would require additional data from sources other than DWP (such as income data from HMRC, and other information direct from applicants) making the system more complex.

The Scottish Government’s intention is, therefore, that the payments will be made using the powers at section 79 (s79) of the Social Security (Scotland) Act 2018, which allows top-up of a UK qualifying benefit. It was argued that this offers the quickest operational route to delivery. However, limitations were also identified, for example some people will not receive Universal Credit simply due to the way the system is designed and the way DWP applies the two-child cap in relation to income thresholds. Where the ‘qualifying benefit’ is not received, the mitigation payment cannot be made.

Other issues that will need to be considered relate to the current exceptions on the Universal Credit two-child limit and how the mitigation payments will interact with these. Exceptions are currently provided for multiple births, for people responsible for a child via adoption or kinship care, and where a third or later child has been conceived non-consensually (typically referred to as the ‘rape clause’).

Q2. Do you agree or disagree that to mitigate the two-child cap the Scottish Government should use the powers at s79 to top-up Universal Credit?

¹ Eight respondents did not answer this question, all were organisations.

Just under three quarters (71%, n=185) of the respondents who answered the question disagreed that to mitigate the two-child cap the Scottish Government should use the powers at s79 to top-up Universal Credit. In comparison, 22%, (n=56) of respondents agreed. Again, however, the results were very different between individuals and organisations, with 82% (n=184) of individuals opposing this proposal, and 88% (n=30) of organisations in favour of it.

Reasons for Disagreeing

As with Q1, most of the opposition to this proposal came from individuals - of the 185 respondents who disagreed, 184 were individuals while only one organisation disagreed (although again this organisation provided wider and more mixed feedback).

Disagreement at this question was almost entirely driven by a general opposition to the introduction of mitigation payments themselves rather than any specific views about how the payments should be made. Again, many individuals felt that the two-child limit was appropriate and should be retained, with the arguments made against the introduction of mitigation payments provided at Q1 being reiterated.

Only a few individuals provided new feedback at this question. One individual felt it was not for the Scottish Government to top-up underfunding from the UK Government, particularly when it has limited revenue raising and borrowing powers. Some were also concerned about how the cost of the mitigation payments would be met, being unconvinced that the scheme was affordable:

“There is insufficient funding available to justify this.” (Individual)

Several individuals also appeared to be anti-Scottish Government or anti-SNP, suggesting that the policy would be a “misuse of funds by [the] ruling SNP party”, or that the policy to introduce mitigation payments was not about helping children, but was “about the SNP helping themselves in next year's election”:

“Scottish Government are addicted to benefits being the solution to all problems and no doubt some MSPs see it as a great vote booster. Start empowering and enabling people to provide for their families and raise both their income and self-esteem.” (Individual)

The single organisation that disagreed at this question had again conducted a wider survey, with the results indicating that 61% of their respondents disagreed with this proposal. This was mainly because the survey respondents believed the payments would not be effective in addressing child poverty in the long-term and they questioned whether mitigation payments were the best way to tackle poverty in Scotland. These respondents also expressed uncertainty over the costs of the scheme and how it would be funded, noting that full costings had not been provided. Consistent with views from individuals above, some felt that it was not the Scottish Government’s responsibility to fund larger families, they noted that significant additional support is already provided to families in Scotland through a range of payments and policies, and they argued that any available funds could be better spent on other initiatives.

Reasons for Agreeing

As outlined above, around one in five respondents (22%, n=56) agreed that to mitigate the two-child limit the Scottish Government should use the powers at s79 to top-up Universal Credit. Again, in keeping with the results at Q1, the majority of organisations that answered the question (88%, n=30 out of 34) agreed with this proposal, while a minority of individuals (12%, n=26) agreed, although both groups agreed in similar numbers.

The main reasons for agreement focused on this being the fastest and most straightforward way to set up and administer the payments, ensuring money reached the families as quickly as possible.

Fastest way to administer the payments

Individuals who agreed with the proposal considered it to be the best, quickest, most straightforward and pragmatic way to administer the payments.

Similarly, most of the organisations who agreed that the s79 powers should be used to make the mitigation payments felt this was the quickest, most straightforward and most practical solution. Organisations suggested that this would provide an integrated Scottish social security system, clear entitlement, and a more straightforward system for families and those in the advice sector to navigate/ understand.

Encourage uptake of benefits

One aspect welcomed and supported by a few organisations (and one individual) was the suggestion that the provision of the mitigation payments could encourage greater uptake of benefit entitlements. This was seen as a positive step.

Factors which could support success

Respondents who supported the approach also outlined a series of factors which they felt would be necessary or beneficial in ensuring success. This included making sure the application process was as easy and streamlined as possible; for clear and accessible communication to be undertaken around the payments; and to develop effective data sharing arrangements with DWP.

Ease of the application process

Some organisations argued that eligibility assessments and payments needed to be undertaken automatically and pro-actively by SSS rather than requiring an application (with one suggesting this may be possible by comparing or combining information from DWP and the Scottish Child Payment database). This was considered important to ensure the process is as accessible and streamlined as possible, does not introduce delays and barriers for families, and maximises uptake. It was stressed, however, that if automated systems are not possible then the application process needs to be as straightforward and easy as possible. Suggestions included existing recipients of the Scottish Child Payment being actively invited to claim the mitigation payment, and for the application for the Scottish Child Payment to be adapted to cover both this and the mitigation payments. Several organisations also suggested that, rather than introducing a new standalone mitigation payment, the Scottish Child Payment could be amended to incorporate the mitigation payments. It was felt this would reduce confusion among families and maximise uptake. It was suggested that the benefits landscape was already busy and confusing for families, with different payments available from a range of different bodies, including HMRC, DWP, SSS, and local authorities. Respondents also highlighted that families also often think the two-child limit applies across all benefits and support payments. Therefore, it was considered important to ensure the introduction of mitigation payments was clear, easy to understand and straightforward to apply/receive.

Communications plan

Several organisations (from across different sectors) also felt that the Scottish Government needed to provide clear and effective communications about the mitigation payments. This should include an awareness raising campaign, clear guidance both to support understanding and promotion of the new system, and partnership working to ensure families can access support regardless of which organisation they initially contact:

“Processes must be designed to ensure eligible families automatically receive the correct entitlement and additional resources must be provided to ensure support is available for families who are unclear about their entitlement and require further support to access their full entitlement. This is particularly the case for young families, families who are digitally excluded, and families from Black and Minority Ethnic communities.” (Third Sector Organisation, includem)

“We recommend that the Scottish Government develops clear and accessible guidance to support advisers and clients in understanding eligibility, especially where [exceptions] may apply or where clients may fall outside the scope of the s79 mechanism. Ensuring that advisers are equipped with up-to-date information will be key to promoting take-up and preventing confusion or delays in access to support.” (Membership Body)

Effective data sharing with DWP

Similarly, a few organisations stressed that the success of this approach would rely on high quality, effective and timely data sharing between DWP and SSS. This would be necessary to identify all Universal Credit claimants who are eligible for the mitigation payments, to identify any families already receiving payments for more than two children due to exceptions, and to identify any families who experience a change in circumstances (such as increased income) that mean they are no longer eligible for or receiving Universal Credit payments (in order to avoid overpayment of the mitigation payments).

Caveats to Support

While generally supporting the proposal, a number of respondents expressed concerns about potential gaps and limitations.

Concerns over gaps in the system and other limitations

The main concern raised related to gaps in eligibility which could lead to large families in need missing out on the mitigation payments. Indeed, most organisations and a few individuals were concerned about this issue. Respondents identified a range of cohorts which may be affected, including:

• those who would be eligible for Universal Credit if the two-child cap was not in place, but who currently have no award of Universal Credit;
• those with inconsistent entitlement to Universal Credit (e.g. who lose their Universal Credit entitlement temporarily due to fluctuations in income or the frequency of earnings);
• kinship carers who do not qualify for the child element of Universal Credit;
• those in receipt of Housing Benefit but not Universal Credit, for example, those in specified accommodation such as homelessness tenancies;
• mothers in receipt of Maternity Allowance and who do not have housing costs, are in temporary or supported accommodation, and have more than two children; and
• those with no entitlement to UK social security.

One third sector organisation was also concerned that these gaps and exclusions could disproportionately affect particular groups, including those from ethnic minority backgrounds.

It was also acknowledged, however, that addressing these gaps would be time consuming and challenging, and therefore, using s79 was preferrable to lengthy delays in getting support to families:

“While we acknowledge the limitations of using s79 - particularly that it can only provide payments to people currently in receipt of a qualifying UK benefit - we believe that the urgency of the issue justifies using the most immediate and workable route. Many of the families impacted by the two-child cap are experiencing financial hardship, and any delay in delivering support risks deepening that hardship.” (Organisation, Membership Body)

Some organisations suggested that additional work needed to be undertaken to investigate alternative powers that could be used to ensure all families can be considered for support, to identify and capture these additional families to ensure they are not excluded, and/or to develop alternative mechanisms (such as a standalone benefit) or to facilitate applications via the proposed scheme:

“…it is noted that there would be a cohort of families who should qualify for the top-up, who are not in receipt of the initial payment [due to the impact of the two-child limit on income thresholds]. Due to the nature of this means tested system, it is possible that the people at the threshold are living in in-work poverty…This brings the potential to exclude a significant proportion of children at risk and penalises those parents who are opting to work. Consideration should be given to an investigation into the families who would qualify for the benefit if the two-child cap were not in play, and the families identified should be compensated in line with the top-up provided to those families in receipt of benefits.” (Health/Mental Health Body)

“Consideration must be made for low-income families who do not receive UC and have three plus children (through qualifying criteria such as income threshold, these applicants could apply direct).” (Local Authority)

More specifically, several organisations suggested using Childhood Assistance^[7] powers in the longer-term as this could cover the gaps in s79 coverage. However, one thought that the limitations with this for adoption and kinship families meant it might not be suitable.

Interactions with current exceptions

A few organisations also stressed the need for careful consideration of the current exceptions, and how the mitigation payments would interact with these. One third sector respondent flagged issues with the ‘rape clause’ in particular and stressed the inappropriate and retraumatising nature of this provision. It was suggested that the mitigation payments could provide an alternative option to Scottish families to access payments that they are entitled to without the need to disclose sensitive and traumatic information. Communication around this would also need to be sensitive while raising awareness and encouraging uptake.

Similarly, one individual sought greater information and clarity about how the mitigation payments would operate and interact with each of the two-child limit exceptions, with particular concern around the ‘rape clause’, but also ensuring equality in how each exception group would be treated. This respondent was keen to ensure an inclusive approach was taken (e.g. when considering evidence for exception and eligibility of informal kinship care), while also avoiding and removing any elements which risk being invasive or retraumatising for people. They also expressed wider concern around how data related to the ‘rape clause’ was stored and used more generally.

Understanding ‘cliff-edges’

A few third sector organisations highlighted the potential trade-offs and more severe cliff-edges that may face parents who will need to juggle working hours/ income against the impact any increases may have on their benefit payments. On balance, however, they agreed that the current proposals were the most suitable options to ensure money could be paid to eligible children and families as quickly as possible, which was the most important issue overall:

“Using top-up powers and increasing the support available to families with children in receipt of UC and legacy benefits creates even larger cliff-edges in numeric terms - where small increases in earned income can take you out of eligibility of Universal Credit and thus also out of eligibility for Scottish Child payments, payments to mitigate two child limit and the additional ‘passported’ help to which you become eligible.” (Third Sector Organisation, Joseph Rowntree Foundation)

Other Issues

Of the 18 respondents who selected ‘don’t know’ at the closed element of this question, 12 provided comments and feedback, including 10 individuals and two organisations. These respondents were either typically against the mitigation payments in principle but noted there was not an option for this at the closed question, or they were concerned about the gaps in provision for certain families not receiving Universal Credit and wished to see an alternative mechanism for including them. A few were also concerned about the effectiveness of the proposals and whether they would be sufficient to lift children and families out of poverty.

Consistent with the feedback from others at Q1, one third sector organisation also sought to discredit the concern that mitigation payments may result in disincentivising work. They indicated that the two-child limit had no real impact on incentivising work, but that it had been responsible for driving many larger families into poverty. Further, they noted that they had been unable to identify any credible evidence that the proposal to introduce mitigation payments would result in disincentives to work.

Lived Experience Workshop

While lived experience workshop attendees supported the introduction of mitigation payments, there were mixed views about whether s79 should be used to set this up as quickly as possible, or whether a bespoke and more inclusive system should be developed, thus taking longer to implement.

A few attendees supported the use of s79 in order to get payments to families in need as quickly as possible:

“I think the quicker the better.” (Lived Experience Workshop Attendee)

It was noted that many families could miss out due to the time that would be required to set up an entirely new system, i.e. children would have aged out of eligibility for support by the time it was introduced:

“The longer that it takes to get it out there then a lot of people would miss out of it. It could be the case that teenagers just now won’t benefit from those payments because it would be years after they are adults it would come into place.” (Lived Experience Workshop Attendee)

Consistent with the concerns above, however, most attendees were concerned about the potential for gaps in the proposed system. Attendees noted certain exclusions, such as families who do not currently qualify for Universal Credit due to income thresholds but who would if the two-child limit did not apply, as well as those in work who do not receive benefits but still experience poverty:

“Top up sounds really good but how many children are going to miss out. Working payments and not receiving a benefit doesn’t mean that you aren’t in poverty and it’s a shame that these people would be missing out.” (Lived Experience Workshop Attendee)

It was also highlighted that this exclusion extended to the Scottish Child Payment as well as Universal Credit and any mitigation payments. Attendees argued that every child should be entitled:

“A top up would be the most easiest way but then would cause a divide as every child should be entitled.” (Lived Experience Workshop Attendee)

“Created a divide between people who work and don’t work. It’s bad enough just now. Is there anything that can be done with paying lower national insurance etc. to make it easier for them, and not be mothers against mothers. It’s not fair for people who are ineligible for benefits who are missing out, and get everyone on a level footing for all children who are living in poverty.” (Lived Experience Workshop Attendee)

As a result, a few supported the development of a bespoke and inclusive system rather than the proposed mitigation payments in order to ensure every child would benefit, despite the fact this would take longer to set up:

“What I understand is if we start from scratch it is better. I think better to start afresh and take time. I think we make the rules clear. If there is going to be changes it is going to be for the good.” (Lived Experience Workshop Attendee)

“It would be better to start from scratch. Less people would benefit from topping up UC.” (Lived Experience Workshop Attendee)

Others did not specify a preference, other than to suggest that alternative mechanisms should be explored to support those that would otherwise miss out:

“…could you do both? Introduce an interim payment and then deliver a more fully developed solution.” (Participant Supporter)