Revealed: Scrapping two-child benefit limit will make ‘no difference at all’ to 140,000 children in poverty

Around 140,000 children living in deep poverty would miss out on any help from the scrapping of the two-child limit on benefits because of the impact of the household benefit cap, according to government figures. 

Labour has been under pressure from MPs across the party to axe the two-child limit, as doing so would lift around 350,000 children out of poverty. 

But recent government data shows that 141,290 children live in households affected by both the two-child limit and the benefit cap, meaning they would gain nothing if the two-child limit is scrapped unless the benefit cap is raised or ditched as well.  

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This is because under the benefit cap their families cannot receive any more in benefits than they already do. 

And London School of Economics (LSE) research seen by Big Issue has found that a further 100,000 children would only partly gain, because their families would hit the benefit cap if the two-child limit is axed. 

With more than one child in each affected household, the government figures show a total of 38,200 households are affected by both restrictions together – around 8% of the total households hit by the two-child limit. 

The government data provide more detail on the two-child limit caseload than previous statistics. Forty percent of all households affected by the two-child limit include either a claimant or a child who receives one of the main illness and disability benefits – that’s 189,480 households.  

Just under 60% of households hit by the two-child limit include someone who is in paid work, while 88% have either three or four children in the household, with 12% having five or more. 

The two-child limit restricts support through universal credit or child tax credits to the first two children in a family, while the benefit cap limits most working age households to around £2,000 a month in benefits if they have children. Both policies were introduced by the Conservatives in the 2010s. 

“The two-child limit has rightly commanded considerable attention, but these figures highlight the 140,000 children living in families affected by the benefit cap as well as the two-child limit,” said LSE social policy professor Kitty Stewart. “These children experience very significant levels of hardship. After paying rent and utilities their families often have very little left, forcing them to rely on charitable support or to build up debt to get by. It is important to understand that abolishing the two-chid limit would make no difference to these families at all if the benefit cap is not scrapped too.” 

Labour had reportedly been planning to scrap the two-child limit, having prevaricated for the first ten months of their time in office. But recent briefings have suggested the plans could be delayed after the partial unravelling of the government’s planned disability benefit cuts.  

The LSE researchers interviewed parents caught by both policies. One family was facing eviction as their landlord had raised the rent beyond their benefit entitlement. Other affected parents spoke about the impact the benefit restrictions were having on their mental health.  

“I’m always stressing about money, how am I supposed to pay this, how am I supposed to pay that,” one single mother affected by both policies told the researchers. “So I’m always stressed about that and I always wake up in the middle of the night with all that and it takes me ages to go to sleep on a night-time thinking about that.” 

Another single mother told the researchers that her family’s financial hardship and the process of claiming universal credit, including concern about sanctions, had caused her mental health to decline to the point of self-harming, and vomiting from anxiety. 

“Where families are affected by both the two child limit and the cap the shortfall is considerable – at least the £3,500 loss from the two-child limit and in many cases considerably more,” said professor Stewart. “These are families who for one reason or another need temporary support from the state – for example, some have experienced bereavement or have had to leave abusive relationships, others have very young children and/or children with additional care needs. The social security system should be there to provide a safety net at exactly these times – but both the two-child limit and the benefit cap create deliberate holes in that net. 

“Providing inadequate support for families at times when things go wrong for them is really shortsighted policy – it can actually exacerbate problems and make it harder for families to get back on their feet, costing more in the long-run.” 

The benefit cap does not apply if a single parent or couple earn more than £846.56 a month after tax – but the researchers spoke to parents affected by the benefit cap who are in paid work but unable to reach the earnings threshold, either due to lack of available hours or because of childcare commitments.  

Separate LSE research has also found that ethnic minority families are disproportionately likely to be affected by the two-child limit or benefit cap. Most affected families are white, but according to the research, ethnic minority families are three times more likely than white families to be affected by the two-child limit, and up to four times as likely to be hit by the benefit cap. 

“Our analysis of household survey data, which provides a more nuanced breakdown by ethnicity, tells us that one-in-five children from Pakistani families and one-in-four children from Bangladeshi families are now affected by the two-child limit,” the report from the LSE’s Centre for Analysis of Social Exclusion said. 

A government spokesperson said: “We will publish an ambitious child poverty strategy later this year to ensure we deliver fully-funded measures that tackle the structural and root causes of child poverty across the country.” 

The government is also investing £1 billion to reform crisis support, as well as expanding free breakfast clubs. 

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