Two-child limit on UK welfare benefits ‘has failed to push parents into jobs’

The UK’s controversial two-child benefit limit, which restricts welfare payments to larger families in an attempt to force parents to find work, has failed to increase employment levels – but it has left hundreds of thousands of households in poverty, according to the first study of its kind.

The government introduced the two-child limit in 2017, arguing that removing eligibility for benefits worth £3,000 a year per child for a family’s third and subsequent children would “incentivise” parents to move into work, or work more hours to make up the difference.

However, the study says the policy’s impoverishment of larger low-income households has helped few parents get a job – instead, its “main function” has been to push families further into poverty and damage their mental health.

“We found that, rather than increasing employment, the two-child limit increases poverty and hardship – and that this can actually make it harder for parents to take up work,” said Kitty Stewart, a co-author of the study and an associate professor of social policy at the London School of Economics.

The policy – called the “worst social security policy ever” by one academic expert shortly after its introduction – is now estimated to affect about 1.5 million children, with more than a million of them growing up in poverty. More than half the households affected are working families.

The study says the two-child policy fails to understand how and why parents in larger low-income families prioritise caring roles over work. It underplays many of the costs and complications of moving into work while bringing up young children, such as finding accessible and affordable childcare.

Impoverishing larger families because the parents actively choose to look after their youngest children “appears to be ineffective at best and discriminatory and harmful at worst”, the study says.

It is scathing about the design of the policy, suggesting it relies on theoretical economic models that assume reductions in benefits would automatically increase labour supply through an “income effect” incentive – an effect evidence shows to be weak or non-existent.

In practice, many parents hit by the limit said they found it harder to enter paid work, because they could no longer afford skills training or to buy equipment for fledgling businesses. Financial difficulties caused by the policy also led to a deterioration in their mental health.

A key lesson, the study says, is that “policymakers need to understand the everyday lives of those in receipt of social security before designing and predicting the effects of welfare reforms. A failure to do so can, in cases like this, preclude the main aims of the policy from being realised, while creating significant harms to affected families.”

The architect of the policy, one of many austerity-era benefit reforms, is the former chancellor George Osborne. He announced it in 2015 amid media hysteria surrounding “benefits broods” – large families supposedly having several children to exploit an allegedly overgenerous welfare system.

The policy was later savaged by Tory former welfare reform minister David Freud, who called it “vicious” and an “excrescence”, and said it should be scrapped. He claimed the policy was forced on a reluctant Department for Work and Pensions (DWP) by the Treasury as the price of introducing universal credit.

Research published last year found the two-child limit – hailed by one minister as a way of teaching low-income families that “children cost money” – has had little impact on restricting family size. Since the policy’s introduction, the fertility rate for third and subsequent children born to poorer families has barely fallen.

A DWP spokesperson said: “We want to help more parents to re-enter and progress in work, and encourage them to consider our childcare offers, which we are boosting to help low-income families.

“The two-child policy asks families on benefits to make the same financial decisions as families supporting themselves solely through work, and there continues to be careful exemptions and safeguards in place within the policy to protect people in the most vulnerable circumstances.”