Scrapping the two-child limit on benefits could save the UK more than £3.2bn by reducing the cost of child poverty, new research has revealed.
Experts at the New Economics Foundation have suggested that Labour ministers are failing to account for the “wider economic benefits that would result from lifting children out of poverty”. The report found that if the two-child benefit limit was dropped, it would save £1.7bn a year for public services in the medium term.
- Over half of London working parents use food banks, study finds: ‘Is this the country we live in?’
- Scrapping two-child benefit cap ‘single most cost-effective policy’ to reduce child poverty
It would also result in annual net earnings increasing by £1bn over the longer term, with an additional £540m returned to the government through taxation and lower spending on social security.
The Labour government has resisted scrapping the two-child benefit limit, in spite of extensive research showing it could lift hundreds of thousands of children out of poverty.
It means that families with a third child or subsequent children born after April 2017 are denied extra universal credit or tax credits, equating to a loss of nearly £3,500 a year for each child.
Sam Tims, senior economist at the New Economics Foundation, said: “The two-child limit is a cruel policy that not only keeps families in poverty but holds back people and places from achieving their economic potential.”