After a long political tug-of-war, a draft law for basic child welfare is now available. The goals were set high. The Federal Ministry for Family Affairs promises that the new basic child security will open up new opportunities and bring more children and young people out of poverty. The fragmented child support should be bundled into a single service “that makes life easier for families”. Bureaucratic processes should be streamlined and more families should be reached than before. In 2025, after the citizens’ benefit and housing benefit reforms, the traffic light coalition also wants to implement the last of the three major social policy projects announced in the coalition agreement.
Family Minister Paus will probably have to settle for a modest 2.4 billion euros instead of the 12 billion euros per year initially demanded. But which families really benefit from this financial injection? Instead of the standard requirement and benefits for housing needs, children from citizen benefit households should now receive the basic child benefit, which consists of an additional child allowance, a child guarantee amount and a flat-rate child housing allowance. As of today, apart from the new benefits for education and participation, that would be 120 euros more per child per month. Sounds good, but only until you read the fine print. The child housing allowance of 120 euros is fully offset against the parents’ housing cost support. The bottom line is that these families don’t get a cent more. In the future, they will not only have to contact the job center, but also the newly created family service as an additional contact person in order to apply for the new priority benefit for their children.
And what about the households that have previously received housing benefit and additional child allowance and child benefit? You are allowed to keep part of the child housing allowance anchored in the additional child allowance, so that the children’s housing needs are subsidized twice. This was also common practice with child allowances. Since the calculation rules with which one’s own income is offset against the subsidy benefits also remain almost unchanged, on average almost nothing changes for these benefit recipients. However, there is one innovation: While the child allowance is granted regardless of age, the additional child allowance should be age-dependent. As a rule, there is less money for younger children and more money for older children. Only for single parents who receive citizens’ benefit do more benefit. Maintenance payments should only be partially offset against child support. But this would not have required any new basic child security. It could also have been implemented in the existing system.
The Family Ministry’s draft law apparently does not concern itself with the interfaces to the other basic security benefits, citizen’s benefit and housing benefit. Basic child security continues the existing practice of not coordinating the various funding instruments. This perpetuates the weaknesses of the existing system. This becomes clear when you compare the benefits after the introduction of basic child support with the support in the status quo. Such a comparison reveals that the Family Ministry is only planning a perfect mimicry of the existing inconsistent and non-transparent basic security system with the basic child security system. The system remains as opaque as before. It does not create any new incentives for households with children to work more, because the parallel offsetting of earned income against housing benefit and basic child support will continue to deduct up to 100 percent of the additional earnings from families in the middle income range.
There is no sign of the promised “system change” in the bill. This would have required basic child security to be embedded in a larger reform that also includes the other two pillars of basic security, housing benefit and citizen’s benefit. The Scientific Advisory Board at the Federal Ministry of Finance has shown in a report how this is possible without having to intervene too deeply in the existing system. Specifically, he advocates removing the child housing allowance from the basic child benefit and integrating it into a newly designed housing benefit. The result would be a basic security from a single source in which parents’ everyday needs are covered by citizen’s benefit, basic child security serves to support children and the family’s housing needs are covered by holistic housing benefit.
Basic child security can and should be an important part of basic security. However, this requires a willingness to rethink the outdated structures of our current social security system. This bill does not meet this requirement.
A notice: The article appeared as an editorial in issue 12 (2023) of the journal Knew.
FU Berlin
FU Berlin
FU Berlin
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