Reforming the two-child benefit cap could lift 230,000 under-fives out of poverty, Labour told

Reforming the controversial two-child benefit cap could lift more than 230,000 children under five out of poverty, a new report has found

Introduced in 2017 as part of Conservative austerity reforms, the policy restricts support through universal credit and child tax credit to the first two children in most families.

It has been widely condemned as a key driver of child poverty in the UK, particularly among the youngest children. Today (25 May) the Fabian Society has joined the chorus of condemnation, calling for a phased end to the policy.

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In its new report, the think tank calls for the two-child limit to be scrapped in stages – starting with exemptions for families in work and those raising disabled children. It also proposes new “baby” and “toddler” elements within universal credit to provide additional financial support for families with young children.

Together, the reforms would lift 20% of under-fives living in poverty out of it, and more than 500,000 children of all ages.

“While the public finances are incredibly tight, the government can act to transform the lives of babies and toddlers living in poverty – and do so with public support,” said Ben Cooper, the Fabian Society’s research manager and lead author of the report.

More than a third of under-fives in England and Wales now live in poverty – the highest rate of any age group.

The Big Issue has previously reported extensively on the toll the two-child benefit cap takes on families.

In March, the United Nations urged the UK government to scrap the policy, citing its disproportionate impact on women and children. That same month, the Child Poverty Action Group (CPAG) warned that unless the cap is removed, the government’s child poverty strategy – which has been delayed until at least the autumn – will fail. CPAG has calculated that the limit pushes an additional 109 children into poverty every single day.

Despite the mounting pressure, public support for immediate repeal remains limited.

YouGov polling conducted for the Fabian Society shows that only 25% of people back removing the two-child benefit cap outright, while 59% support keeping it. However, targeted changes are more popular: 46% support exemptions for families with disabled children and 45% for those in work.

A phased approach could build consensus for further reform, Cooper said, while delivering immediate benefits to the vast majority of children affected. Nearly 90% of under-fives currently hit by the two-child limit would benefit from the proposed exemptions, the report claims.

It’s also a savvy electoral strategy, he added.

“Public opposition to scrapping the two-child limit immediately is strong, but the public would support policies to exempt most children from the limit,” Cooper said. “This includes those who voted Labour in 2024, but who are looking to other political parties – including both the Greens and Reform. This measure can start to rebuild Labour’s fractured electoral coalition, while achieving the kind of change Labour was elected to deliver.”

Pressure is mounting on the government to scrap the rule. Labour’s general election manifesto promised an “ambitious strategy to reduce child poverty” alongside a commitment to end “mass dependence” on food banks and charity food handouts,

On Friday (23 May), it was reported that the government had delayed its long-awaited flagship child poverty strategy, which was expected to include a recommendation to scrap the two-child benefit cap altogether.

The strategy is now delayed until at least the autumn, if not longer, while key players at the top of government argue about the political and financial cost of keeping the benefit cap.

Big Issue founder Lord John Bird accused the government of kicking the issue of child poverty into the long grass. “The impact of their inaction will be grave,” he said. “It is shameful that child poverty is forecast to not fall, but rise significantly, to 31.5% of children under this Labour government.

“We need action now, not in six months or a year’s time. I will relentlessly pursue my intervention of adding child poverty targets to the Children’s Wellbeing and Schools Bill with the vigour that the 4.3 million children living in poverty in our country deserve.”

Promises are easy to break. Sign Big Issue’s petition for a Poverty Zero law and help us make tackling poverty a legal requirement, not just a policy priority.

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