DWP warning as more than 600,000 set to be hit by benefit cap

The number of children hit by the two-child benefit cap will rise by a third over the next five years, a think tank has warned. Two million children are currently affected by the limit, with more impacted each year because it applies to anyone born after April 5, 2017.

The Institute for Fiscal Studies has warned that next year, 250,000 more children will be affected, rising to 670,000 before the end of the next parliament if the policy is not reformed. No General Election manifesto promise has been made by either Labour or the Conservatives to scrap the Tory policy.

The cap, which campaigners have described as "cruel", was introduced back in 2017, and restricts Child Tax Credit and Universal Credit to the first two children in most households. The policy will affect one in five children when fully rolled out, rising to 38% of those in the poorest fifth of households, the IFS research found.

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The research said 43% of children in households with at least one person of Bangladeshi or Pakistani origin will be affected. On average, affected households will lose £4,300 per year, representing 10% of their income, according to the analysis.

The introduction of the cap has helped drive up the share of children in large families who are in relative poverty from 35% in 2014-15 to 46% in 2022–23, a period when poverty for families with one or two children fell, the IFS said. The IFS said removing the limit would cost the UK Government about £3.4 billion a year.

This is roughly 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 funded the research, said: “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.”

Child Poverty Action Group chief executive Alison Garnham 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.”

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