Child tax credits

George Osborne’s cut to child benefit has triggered a bit of a debate over welfare handouts and procreation.

This is usually a bit of a no-go-area for politicians. But Jeremy Hunt has been brave enough to suggest that long-term benefit claimants should “take responsibility” for the number of children they have. Fraser Nelson, meanwhile, has dug up some numbers on the 2,500 incapacity benefit claimants with 6 or more kids.

This all reminded me of one of my favourite Gordon Brown stories. There were about 45,000 extra children born as a result of Brown’s largesse with benefits, according to economic research. It is a whole generation of “Brown babies” identified by the Institute of Fiscal Studies.

People appear to have taken his fiscal stimulus literally. Big increases in tax credits and income support payments pushed the birth rate to its highest level since 1974. The “price” of an extra child fell for many low income families along with the financial penalty of staying at home as a mother. Working class had more confidence to have children — or at least have them earlier. Read more