DWP benefits warning as 670,000 more children to be hit by 'cruel' cap

The number of children affected by the two-child benefit cap will rise by a third over the next five years, the Institute for Fiscal Studies (IFS) has warned. The limit currently impacts two million children, with more affected each year as the cap applies to those born after April 5, 2017.

The IFS said an additional 250,000 children will be affected next year, rising to 670,000 before the end of the next parliament if the policy remains unchanged. The cap limits Child Tax Credit and Universal Credit to the first two children in most households.

Campaigners have long accused the policy of perpetuating child poverty and have labelled it 'cruel'. The IFS said that the cap will impact one in five children, rising to 38 per cent of those in the poorest fifth of households when fully implemented.

It added that 43 per cent of children in households with at least one person of Bangladeshi or Pakistani origin will be affected. On average, households impacted by the cap will lose £4,300 per year – around 10 per cent of their income.

The IFS stated that the cap has contributed to the increase in the proportion of children in large families living in relative poverty, from 35 per cent in 2014-15 to 46 per cent in 2022-23. This was during a period when poverty levels for families with one or two children fell, reports Birmingham Live.

It would cost the Government around £3.4 billion per year to abolish the two-child limit – about the same as freezing fuel duties for the next parliament. IFS research economist Eduin Latimer said: "The two-child limit is one of the most significant welfare cuts since 2010 and, unlike many of those cuts, it becomes more important each year as it is rolled out to more families."

Mubin Haq, chief executive of the abrdn Financial Fairness Trust which sponsored the study, remarked: "The limit has been a significant contributor to child poverty amongst large families during a period when poverty for families with one or two children fell. If the next government is serious about tackling child poverty, it will need to review the two-child limit.

"There is an inherent unfairness in the policy as it affects only those children born after April 5, 2017. The majority of families affected are in work or have caring responsibilities for disabled relatives or young children."

Alison Garnham, Child Poverty Action Group's chief executive, said: "Child poverty in the UK is a national disgrace and the biggest driver of it is the two-child limit. It makes life worse for kids up and down the country and limits their future chances. Children affected by child poverty don't have a voice in this election but politicians from all parties have a responsibility to them to show leadership.

"Any government serious about making things better for the next generation will have to scrap the two-child limit, and do so quickly."

Paul Carberry, chief executive at Action for Children, said: "Here is yet more shocking evidence of the huge scale of the damage being caused to children and families by the cruel two-child limit, which is well known to push families into poverty and, which if scrapped, would lift 300,000 children out of hardship. The election presents an opportunity for bold and ambitious action to be taken and for all political parties to commit to ending child poverty once and for all. That must include an increase to the child element of Universal Credit and scrapping the two-child limit and benefit cap."