The ‘two-child limit' policy caps at two the number of children
low-income families can claim additional universal credit for
(worth £3,455 per year per child).
Neither the Labour nor the Conservative manifesto referenced the
limit, while the Liberal Democrats and the Green Party have
pledged to remove it. The policy only applies to children born
after 5 April 2017, so more children are affected with each year
that passes. Currently, it affects around 2 million children;
this will rise by 250,000 next year and by 670,000 before the end
of the next parliament.
These are findings from new IFS research released today, funded
by the abrdn Financial Fairness Trust, which explores the impact
of the two-child limit and recent trends in child poverty:
-
When fully rolled out, the two-child limit will affect
one in five children. It will affect 38% of
children in the poorest fifth of households and 43% of children
in households with at least one person of Bangladeshi or
Pakistani origin.
-
The two-child limit represents a significant income cut
for affected families. When fully rolled out, the
average affected household will lose £4,300 a year (10% of
their income). 57% of households currently affected by the
limit have at least one person in work.
-
The share of children in large families who are in
relative poverty has risen dramatically in the last
decade. In 2014–15, 35% of children in families
with three or more children were in relative poverty. By
2022–23, this had risen to 46%. The introduction of the
two-child limit in 2017 is one of the key drivers of this
trend; when fully rolled out, we expect it to have raised
relative poverty among large families by around 500,000
children (4% of all children). Notably, over the same period,
child poverty among families with one or two children fell from
26% to 22%.
-
Removing the two-child limit would cost £3.4 billion a
year in the long run. For a sense of scale, this
is equal to roughly 3% of the total working-age benefit budget,
or the cost of freezing fuel duties for the next parliament.
Eduin Latimer, a Research Economist at IFS,
said:
‘The two-child limit is one of the most significant welfare cuts
since 2010 and, unlike many of those cuts, it becomes more
important each year as it is rolled out to more families. It has
a particularly big impact on the number of children in poverty
for two reasons: it mostly affects poorer households and, by
definition, its effects are entirely concentrated in families
with at least three children.'
Mubin Haq, Chief Executive of abrdn Financial Fairness
Trust, said:
‘The number of children affected by the two-child limit is set to
increase by a third over the next five years. The limit has been
a significant contributor to child poverty amongst large families
during a period when poverty for families with one or two
children fell. If the next government is serious about tackling
child poverty, it will need to review the two-child limit. There
is an inherent unfairness in the policy as it affects only those
children born after 5 April 2017. The majority of families
affected are in work or have caring responsibilities for disabled
relatives or young children.'
ENDS
Notes to Editor
Without reform, the two-child limit will affect an additional
670,000 children by the end of next parliament is an
IFS comment by Eduin Latimer and Waters. It is embargoed to 00.01 on
Monday 17th June.
You can read it under embargo
here. It will be published on the IFS website
here: https://ifs.org.uk/articles/without-reform-two-child-limit-will-affect-additional-670000-children-end-next-parliament
To speak to the authors please contact the IFS press
office press@ifs.org.uk |
07730 667013
This briefing is part of the IFS' analysis of the 2024 General
Election and more information can be found on the IFS 2024 election website.
The authors are grateful for funding from abrdn Financial
Fairness Trust (grant 202309-GR000090).
