Policy in Practice gives evidence to Scottish Parliament on two child limit for tax credits

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Last Thursday the Scottish Parliament took evidence from Deven Ghelani on the impact of the two-child limit for child tax credits.

Policy in Practice director Deven Ghelani giving evidence to Scottish Parliament Social Security Committee on 25 May 2017
Source: BBC News

Policy in Practice welcomed the opportunity to provide evidence to the Scottish Parliament, who will soon have control over £2.8bn of social security spending that will be devolved to Scotland.

Evidence to Scottish Parliament

Policy in Practice carried out independent analysis on the impact of limiting child tax credit to two children, evaluating the likely impact of the policy against the governments own objectives.

Our analysis assesses both the specific and cumulative impact of welfare reforms on individual households. This allows our clients to…

  • track the impact of interventions on households over time
  • take a proactive and preventative approach to providing support
  • simulate the impact of planned policies prior to their implementation

We found the the policy would impact 1m+ children by 2020, both the children who would lose out on tax credit support, and their siblings.

Around a quarter of a million children already in poverty would be pushed deeper into poverty.

70% of households affected are in work, the original aim of tax credits was to support these households.

The evidence suggests the the policy is unlikely to change behaviour: the government has put limited effort to raising awareness of the policy (9 months?) prior to its implementation.

We were asked to evaluate the cost of policy. We used the Outcome-based government methodology of fiscal, economic and social impacts. While the policy does save money in the short run, it is likely to increase the cost of anti-poverty efforts, such as Free School Meals and the Pupil Premium, later on in life. The economic cost of growing up in a family that struggles to provide basic necessities can limit opportunities to develop skills and increase earnings. The policy is likely to have social consequences well into the future.

You can read Policy in Practice’s and others’ submissions to the Commission here.

Next steps for Holyrood

The Social Security Committee wanted to learn more about how to use data to make better policy and operational decisions within Holyrood, and to influence policy in Westminster.

Policy in Practice analysis has used local authority data across 16 London Boroughs to look at the impact of policy on individual households, pinpointing to the household level. This household level data combined with Policy in Practice policy simulation engine and data visualisation tools can have real power.

Policy in Practice director Deven Ghelani giving evidence to Scottish Parliament Social Security Committee on 25 May 2017
Source: BBC News

With new welfare powers and responsibility over £2.8bn coming to Scotland, this kind of in-depth, real time information can bring a whole new perspective to policy makers, and practitioners.

For example, if Scotland were to consider shifting from fully funding local council tax support, they may want to consider who will be most impacted by a range of alternative policies.

Policy in Practice’s analytical approach is based on local authority data. The Scottish Parliament would need to bring together data across all Scottish local authorities.

Policy in Practice have shown that this is possible by bring together anonymised records for over 450,000 low income households, across 14 London Boroughs, on a monthly basis over two years.

Some relevant highlights from this project funded by the Trust for London are that:

  • 80% of households in temporary accommodation had been there for at least 12 months. We are tracking the other 20% to learn about the drivers of the increase in TA costs.
  • 9 in 10 households that apply for a DHP are awarded one, however only 1 in 5 of households most in need actually apply.
  • This level of granular analysis, based on the governments own data, is a powerful tool when trying to shift the opinions and decisions of Ministers and officials in Westminster.

When considering how to mitigate the impact of the limiting Child Tax Credits to two children the Committee could target discretionary support to affected households through this analysis, or use it at a strategic level to provide evidence about the knock on costs that encourages Westminster to reconsider the policy.

Policy in Practice director Deven Ghelani giving evidence to Scottish Parliament Social Security Committee on 25 May 2017
Source: BBC News

The Government wants to restore fairness to the benefit system. This is a worthy aim, but the cost of this policy will ultimately fall on children in the families affected.

If the two child limit to tax credits policy remains in place, the Scottish Parliament will need to develop alternative strategies to improve the outcomes of children. The impact of growing up in a family that struggles to provide basic necessities will mean this policy is likely to have financial and social consequences well into the future.

Further reading

 

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