Fully scrapping the two-child limit on benefits is an essential
step towards achieving lower child poverty rates in 2029-30 than
in 2024-25. No partial repeal of the policy is sufficient to keep
child poverty rates from rising, according to new analysis from
the Resolution Foundation today (Thursday).
No half measures uses the latest economic data to model
the impact of recently floated reforms, ahead of the expected
publication of the Government's Child Poverty Strategy next
month.
Without further policy action, the authors estimate that child
poverty rates will hit a historic high of 34 per cent (4.8
million children) in 2029-30 after housing costs, up from 31 per
cent in 2024-25. This is despite the welcome commitment the
Government made in July to extend free-school meals to all
children in families receiving Universal Credit (UC) in England.
The report maintains that fully scrapping the two-child limit
remains the most cost-effective way of driving down rates of
child poverty. This bold move could lift 330,000 children out of
poverty today and prevent a further 150,000 from falling into
poverty by 2029-30, at a cost of £3.5 billion (or £7,280 per
child lifted from poverty).
The research reveals that any option which only partially reforms
the two-child limit – including moving to a three-child limit,
lower child elements for third and subsequent children, and
lifting it for working families – would still leave child poverty
rates higher at the end of the forecast (just under 32 per cent)
than in 2024-25. This would be inconsistent with the Government's
election promise to deliver an “ambitious child poverty
strategy.”
Each of the potential partial options comes with additional
problems. Lifting the two-child limit for working households only
creates sharp cliff edges, while a three-child limit would still
fail to restore the link between need and entitlement for
children's benefits.
The economies of scale argument put forward to justify paying the
child element at a lower level for third and subsequent children
is contestable, and even less persuasive when the already low
level of children's benefits is taken into account.
Repealing the two-child limit at the Budget would unequivocally
be a step in the right direction. However, even then, the
Government's ‘child poverty headroom' – the gap between the
Foundation's projection for 2029-30 and the 2024-25 baseline –
would be worryingly slight (0.4 percentage points), leaving it at
risk of still seeing child poverty rise over the Parliament if
economic conditions were to deteriorate.
Scrapping the two-child limit is therefore the bare minimum
needed to achieve falling child poverty rates, say the authors.
Re-linking housing support to local rents, as part of wider
efforts to reduce the poverty impacts of housing, would help
further reduce child poverty rates.
Alex Clegg, Economist at the Resolution Foundation,
said:
“If the Government doesn't act this Parliament, child poverty
will reach a new historic high, with more than one in three
children growing up in poverty by 2029-30.
“The most effective way to lift children out of poverty is to
fully scrap the two-child limit on benefits. None of the partial
options for repeal floated in recent months would be enough to
keep child poverty from increasing over the course of this
Parliament.
“If the Government wants to meet its manifesto promise of
developing an ambitious child poverty strategy, they should do
the right thing and scrap the two-child limit in its entirety.
This bold action alone would save nearly half a million children
from growing up in poverty by the end of the decade.”
