Since April 2017, the ‘two-child limit' has meant that families
on universal credit (or, previously, child tax credit) no longer
receive an uplift to their benefits for their third and
subsequent children. This substantially lowers the incomes of
larger families with children and increases child poverty. The
government has pointed to the risk that child poverty has effects
on children's life chances.
However, new research by the IFS, funded by Nesta, finds
that the introduction of the two-child limit has had
no significant effect on the proportion of third and subsequent
children in England achieving a good level of
development1 at age 5. This is the
measure of ‘school readiness' assessed at the end of the
reception year, and is the focus of the government's ‘Opportunity
Mission' target.
The research compares the outcomes of third and subsequent
children born shortly before April 2017 (who are not affected by
the policy) with those born shortly after (who are affected),
using data covering all children attending reception in state
schools in England2. The scale of the data means that
researchers can rule out even relatively small effects on school
readiness. Outcomes such as child health, educational performance
at older ages, well-being and parental stress were not studied.
This means that these findings do not rule out other
effects of the policy on children, or indeed on their
parents.
The research also finds:
- The introduction of the two-child limit made the benefits
system significantly less generous to larger
families. At any given time, the benefit entitlements of
around 60% of families with a third or subsequent child aged
under 5 were reduced by the two-child limit. Families entitled to
means-tested benefits in all the first five years of the child's
life would typically have seen an £18,300 fall in their
entitlements for that child in total over those five years. Those
entitled in only some years would have seen a lower fall in
entitlements.
- There is no evidence of adverse effects on
school readiness even for children whose families were most
likely to have seen the largest income losses – for
example, those born in the most deprived areas, or those in
families already eligible for free school meals.
-
Reversing the two-child limit would cost around £3
billion a year, and previous IFS research suggests
this could lift 500,000 children out of absolute poverty. This
may therefore be a useful tool for a government focused on
reducing child poverty itself. But today's research suggests
that scrapping the two-child limit would not be a
cost-effective policy specifically for improving children's
early educational performance, compared with
other policies that have proven cost-effective positive
effects.
Tom Waters, an Associate Director at IFS and an author of
the report, said:
‘The government has set the dual objectives of raising children's
school readiness levels and reducing child poverty. Reversing the
two-child limit, at a cost of £3 billion a year, would be one of
the most effective ways to target the latter goal. However, our
research shows that the two-child limit has had no adverse impact
on children's development as measured by their teachers at the
end of the reception year. This suggests that it might be hard
for the government to “kill two birds with one stone” –
simultaneously reducing child poverty and raising school
readiness – through scrapping the two-child limit.'
ENDS
Notes to Editor
1. Whether a child has attained a good level of development is
assessed by teachers at the end of reception, when most children
are aged 5. The assessment is based on a statutory framework, and
means children must be deemed to have achieved all of a list of
early learning goals across five areas of learning:
- communication and language;
- personal, social and emotional development;
- physical development;
- literacy;
- mathematics.
2. This research, rather than relying on a sample survey, mainly
uses data from a new administrative dataset called ‘Education and
Child Health Insights from Linked Data' (ECHILD). These data
cover almost all children using the state health or education
system in England, and link their NHS records with records held
by schools. This means our analysis is based on large number of
children (over 90,000).
About the report
What is the effect of the two-child limit on children's
school readiness? is an IFS report by Sarah
Cattan, Tom Waters and Tom Wernham.
