The government's two-child benefit cap is set to affect an additional 670,000 children by 2029, according to new analysis from the Institute for Fiscal Studies (IFS). This would bring the total number of children impacted to 2.4 million, or one in every six across the UK.
Introduced in April 2017, the cap restricts the child element of Universal Credit and tax credits to a maximum of two children per household, with exemptions applying only under specific circumstances. The IFS report highlights how the cumulative effect of this policy means its reach continues to expand as more children are born into families already claiming benefits.
The analysis reveals that the policy disproportionately affects larger families and those on low incomes. While initially impacting a smaller cohort, the long-term nature of the cap means its influence on household finances for an increasingly large number of families is significant – a reduction of around £3,235 per year in support for each additional child beyond the second.
The implications for child poverty rates are substantial, with critics arguing that the policy pushes more children into poverty and exacerbates hardship for struggling families. The government's stated aim was to ensure that families on benefits faced similar financial choices regarding family size as those in employment, but opposition parties and charities frequently call for its abolition due to its detrimental effect.
Labour Shadow Work and Pensions Secretary Liz Kendall has stated that while the party acknowledges issues with the policy, reversing it would be challenging in the current economic climate. This stance contrasts with calls from within the party and external organisations for an immediate repeal of the cap.
The ongoing expansion of the two-child cap's reach will undoubtedly continue to dominate discussions around welfare policy and child poverty in the UK. As a general election approaches, the future of this and other welfare policies remains a key area of debate among political parties.