Plan to cap benefit at two children: New mothers with three children would lose £700 in £5bn welfare crackdown

Parents with three children would lose out on £696 a year in plan

Those earning less than £30k will also be denied credits worth £2,725

Proposed by Tory MP Nadhim Zahawi - recently appointed to No 10's policy board to come up with vote-winning policies



Controversial plans have been drawn up to slash up to £5 billion a year from the welfare bill by limiting child benefit to families’ first two children.

Under the proposal, revealed today, families would also lose their entitlement to child tax credit for any more than two children.

The change would mean parents with three children, who would currently be entitled to child benefit because their annual income is less than £50,000, would lose out on £696 a year.

On top of that, those earning less than £30,000 will also be denied child tax credits worth £2,725 a year – making them in total £65 a week worse off.

Controversial: Families are set to lose their entitlement to child tax credit for any more than two children under new plans revealed by Downing Street today (library image)

The initiative has been put forward by Tory MP Nadhim Zahawi, recently appointed by David Cameron to the No 10 policy board to come up with vote-winning policies for the Conservative Election manifesto. Mr Zahawi is a close ally of Chancellor George Osborne, who said last week he was determined to find billions of pounds of extra savings in the welfare budget.

Opinion polls show strong public support for welfare cuts and the Tories say it is vital to encourage greater responsibility. But the idea is likely to be criticised by Labour as an attack on hard-up families.

The Tories say it is ‘nonsense’ to call the idea ‘social engineering’ or compare it to China’s ‘one child policy’ to curb population growth.

Mr Zahawi wants the two-child cap included in the next Tory manifesto and introduced in 2015 if they win. It would apply to those who had a third child from then onwards, not to families with more than two children now.

The move is certain to be fiercely opposed by Mr Cameron’s Coalition partner, Lib Dem Deputy Prime Minister Nick Clegg.

Benefits reforms are vital to save taxpayers’ money, says Mr Zahawi in an article in today’s Mail on Sunday. The welfare state was set up in the 1940s as a ‘last resort, not a lifestyle choice’, he writes.

Proposals: Tory MP Nadhim Zahawi, right, who has recently been appointed by David Cameron to the No. 10 policy board, put forward the plans

But over the years, ‘the safety net became a straitjacket,’ trapping people into a life of dependency on the state – at someone’s else expense. ‘Many couples take the decision to delay having a third or a fourth child until they are sure they can afford it,’ he argues. ‘This should be case for every family, regardless of their income.’

People had to understand ‘welfare will always be there to help them take responsible decisions about work and family. In return, they can no longer assume the taxpayer has a bottomless purse.



'Capping welfare by family size would save billions and help the next generation think more carefully about their relationship with the welfare state. And it would restore the original bargain made between citizens and state: a safety net in return for personal responsibility.’

The Tories have already scrapped child benefit for higher rate taxpayers earning more than £50,000 a year. Two years ago, a similar Conservative plan to cap child benefit to families on the dole with two children was vetoed by Mr Clegg.

Mr Zahawi’s proposal goes much further, and would end all child benefits and child tax credits after the second child. With certain opposition from Labour and the Lib Dems, it will only have a realistic chance of becoming law if the Conservatives win an outright majority in the Election, due in May 2015.

Support for such welfare curbs grew after the scandal of unemployed Derby man Mick Philpott, who was convicted of killing six of his 17 children by five women in a house fire. He was accused of using his children as a ‘cashcow’ to generate £60,000 a year in benefits.



Mr Osborne provoked Labour anger by saying the ‘horrendous’ Philpott case justified a nationwide debate ‘about the welfare state and taxpayers who subsidise lifestyles like that.’

The Tories believe voters are on their side, though some Conservative MPs fear that radical welfare cuts run the risk of the party being caricatured as ‘the Nasty Party’ – an image Mr Cameron has worked hard to shrug off.

Uproar: Mr Zahawi's proposals are bound to be unpopular with Deputy Prime Minister Nick Clegg



Labour leader Ed Miliband has attacked Tory welfare cuts such as the ‘bedroom tax’ and is likely to seize on Mr Zahawi’s plan as further evidence that Mr Cameron and Mr Osborne are out of touch with ordinary people struggling to make ends meet. But private Labour polls show that Mr Miliband’s own supporters want him to take a tougher stance on welfare abuse.

Last night, senior Ministers said Mr Zahawi was speaking in a personal capacity.

We’ve fewer big families – but they could be hit hard



The trend for big families is already on the wane in Britain.



Ten years ago, a third of all families had three or more children. But now the proportion has slumped to just one in four.



The effect of the proposed benefits cap is most starkly illustrated by the example of a household with three children, in which the parents’ combined income is £30,000 a year.



Under the current system, the family are entitled to £2,447 a year in child benefit payments and £2,940 in child tax credits, deducted from the tax bill. But under the proposed plan, their child benefit payments would be slashed by £696 a year to £1,751. And their child tax credits would fall by £2,725 a year to just £220. The total annual loss for the family would be £3,421 – or £65 a week.



Currently, about 1.2 million families have more than two children. Of these, about a million qualify for child benefit.

