Chances are Mr Osborne won't find the £10bn he needs from Iain Duncan Smith's changes

The savings will take a long time to be realised: only about 35,000 workless families have a third child each year

Share
Related Topics

Iain Duncan Smith, the Secretary of State for Work and Pensions, has again proposed cutting benefits for families with three or more children where no parent is in paid work.

Of the 7.9 million families with children in the UK, about 1.2 million currently have more than two. Of these, 320,000 have no parent in paid work. If all the child benefit and child tax credits that those 320,000 families are currently receiving in respect of third and subsequent children were withdrawn immediately, this would save the Exchequer £1.4bn per year, and would of course represent a significant reduction in welfare entitlement for these families, worth £85 per week on average.

However, since the Government seems to be suggesting that changes would not affect existing claimants unless they have more children, that saving would take a long time to be fully realised: each year, only about 35,000 workless families who already have at least two children have an additional child.

Before introducing such a policy, the Government would need to consider carefully how it would be rolled out. For example, would an in-work family with three or more children who subsequently lost their job be protected? Would protection apply if a family that is out-of-work at the time of the reform finds and subsequently loses a job?

Unless careful thought is given to such issues, such a policy could have unintended consequences for the work incentives of precisely those families that the Secretary of State is seeking to encourage into employment. Any exemptions would reduce or delay the Exchequer savings even further.

Overall it seems these changes could not deliver much of the £10bn per year of welfare savings that the Chancellor wishes to find in the next Spending Review period.

James Browne is a senior research economist at the Institute for Fiscal Studies. Additional analysis by Andrew Hood.

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Data Analyst

£30000 per annum: Ashdown Group: A highly reputable software house is looking ...

Application Support Analyst / Junior SQL Server DBA

£40000 - £45000 per annum: Ashdown Group: An established professional services...

Commercial Litigation

Highly Attractive Salary: Austen Lloyd: CITY - SENIOR COMMERCIAL LITIGATION SO...

BI Developer - Sheffield - £35,000 ~ £40,000 DOE

£35000 - £40000 per annum + competitive: Progressive Recruitment: My client is...

Day In a Page

Read Next
 

Letter from the Assistant Editor: Domestic violence is no petty matter

Siobhan Norton
 

There’s nothing wrong with GM

Steve Connor
A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on
It's the best of British art... but not all is on display

It's the best of British art... but not all is on display

Voted for by the British public, the artworks on Art Everywhere posters may be the only place where they can be seen
Critic claims 'I was the inspiration for Blanche DuBois'

Critic claims 'I was the inspiration for Blanche DuBois'

Blanche Marvin reveals how Tennessee Williams used her name and an off-the-cuff remark to create an iconic character
Sometimes it's hard to be a literary novelist

Sometimes it's hard to be a literary novelist

Websites offering your ebooks for nothing is only the latest disrespect the modern writer is subjected to, says DJ Taylor
Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

Edinburgh Fringe 2014

The comedy highlights, from Bridget Christie to Jack Dee
Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

The woman stepping down as chair of the Heritage Lottery Fund is worried