What is the UK’s two-child benefit cap and how has it affected families?

Keir Starmer has created alarm among anti-poverty campaigners and despair in his own party by ruling out scrapping the two-child benefit cap. Here we take a look at the policy, why it is so unpopular and why there is so much anger at the Labour leader’s decision to keep it.

What is the two-child benefit cap?

It prevents parents from claiming child tax credit or universal credit for any third or subsequent child born after April 2017. It was introduced by the former chancellor George Osborne in his austerity drive with the aim of encouraging parents of larger families to find a job or work more hours.

What impact has the cap had?

It has affected an estimated 1.5 million children, and research has shown that the policy has impoverished families rather than increasing employment. Last week a study found that as many as one in four children in some of England and Wales’s poorest constituencies are in families left at least £3,000 poorer by the policy. It also found that in the most ethnically diverse communities, 14% of children were hit by the cap.

Related: Labour would keep two-child benefit cap, says Keir Starmer

How much would it cost to scrap the cap?

Abolishing the cap would cost £1.3bn a year but would lift 250,000 children out of poverty, and a further 850,000 would be in less deep poverty, according to campaigners. The End Child Poverty coalition says removing the cap would be the most cost-effective way of reducing the number of children living in poverty.

How much opposition has there been to the cap?

More than 50 organisations have called for it to be abolished, including the Church of England, the TUC, the Children’s Society and the Joseph Rowntree Foundation. The prominent social policy academic Prof Jonathan Bradshaw called it “the worst ever social security policy” in a crowded field going back to the Poor Law Amendment Act of 1834. Even David Freud, a Conservative welfare minister at the time of the policy’s announcement, later called the policy “vicious”. He said it was foisted on reluctant ministers by Osborne’s Treasury as the price of introducing university credit and should be scrapped.

What has Labour previously said about the cap?

A number of Labour frontbenchers have roundly criticised the cap. Only last month, the shadow work and pensions secretary, Jonathan Ashworth, said: “We are very, very aware that this is one of the single most heinous elements of the system which is pushing children and families into poverty today.” Labour’s deputy leader, Angela Rayner, described it as “obscene and inhumane”, and in 2020 Starmer himself tweeted: “We must … scrap punitive sanctions, two-child limit and benefit caps.”

What has been the reaction to Starmer’s announcement?

Labour MPs have mostly been silent, but Labour members of the Scottish parliament criticised his comments and urged others to fight it. And the former shadow chancellor, John McDonnell, tweeted: “It’s pretty clear that we now need an honest and fundamental discussion in the Labour party about child poverty, its causes and the impact of the policies introduced by the Tories, including the two-child limit, because it’s obvious some in the party don’t fully appreciate its impact.” The Green party MP Caroline Lucas tweeted that it was “staggering that Starmer’s Labour wouldn’t even lift the 2 child cap on child benefit. Unspecified ‘reforms’ are no substitute for urgently needed public investment. And if he doesn’t want to borrow, he could levy wealth tax on super rich – there’s no hope here.”