Scrapping two-child benefit cap ‘single most cost-effective policy’ to reduce child poverty

Scrapping the two-child benefit cap would be the “single most cost-effective way” to bring children out of poverty, according to a new report. 

The Institute for Fiscal Studies (IFS) has found that removing the two-child limit would lift over half a million children out of poverty.

Charities and experts have long called for an end to the policy, introduced by David Cameron’s Conservative government in 2015, which means families claiming benefits who have a third or subsequent child after April 2017 are denied more than £3,000 compared with families whose kids were born sooner. 

Around 1.5 million children live in families who have their benefits reduced by the two-child limit, with an estimated 4.3 million children living in poverty across the UK. 

Scrapping this policy, according to the IFS, would cost £2.5bn a year, equating to an annual cost of £4,500 per child.

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While the Labour government has been urged by activists and charities to scrap the two-child benefit cap, the party has so far refused, with deputy prime minister Angela Rayner claiming shortly after the election that “we can’t do everything at once”.

Campaigners criticised Labour for not ending the policy during the government’s first King’s Speech in July, with Maggie Chapman, the Green Party’s social security spokesperson, calling the move “beyond disappointing”.

The IFS went on to explain in its report that the child poverty rate in the UK is “highest among families with three or more children”, adding that “almost all of the rise in child poverty over the 2010s was concentrated in this group”.

“Children of lone parents, those in rented accommodation, and those in workless households are all also more likely to be in poverty,” the report continued.

It added that overall, the benefits system “provides less support for low-income households with children now than it did in 2010”. While the rates of support for families with children are higher than they were in 1997 in real terms, the below-inflation increases of many benefits from 2011 to 2019 made the system “less generous”.

The report cited issues such as “the two-child limit, removal of the family premium, the household benefit cap, and cuts to housing support” as some of the drivers of child poverty.

It explained that three specific issues, the two-child limit, the removal of the family premium, and the household benefit cap, meant that the “typical social renting out-of-work lone parent with three young children” had seen their disposable annual income cut by £4,000.

A government spokesman told The Independent: “No child should be in poverty, that’s why our new cross-government taskforce is developing an ambitious strategy to reduce child poverty and give children the best start in life.

“Alongside this, we have extended the household support fund to support the most vulnerable with essentials this winter, and committed to reviewing universal credit while we deliver on our plan to tackle inequality and make work pay.”

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