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Scrapping the two-child limit is the most cost-effective way of reducing child poverty

Every new parent should be able to look forward to the birth of their child, it's an exciting and life-changing time. Most parents will be thinking about if they have enough food, clothing, space in their home for the new arrival, and how older siblings will react to a new baby in their lives.  But for those on Universal Credit expecting a third baby and any subsequent babies, there's a whole additional set of worries and anxieties because of the welfare system's two-child limit. Child poverty is estimated to cost the UK government £39 billion a year. Scrapping the two-child limit could lift 250,000 children out of poverty directly, improve the financial circumstances of 1 million children and crucially, bring a return on investment that will save the public money in the long-term.

What is the two-child-limit?

The two-child-limit restricts the support provided through Tax Credits and Universal Credit to two children per household. It is applied whether or not the parents are in work, and 60% of households affected by the policy have at least one adult in paid employment. Of the remaining non-working households, many include a parent with a disability or health issues, or a parent who acts as a full-time carer. 

The two-child limit came into force in 2017 as part of a series of welfare cuts. Every year since, more and more children are born without the state support offered to their siblings. 1.5 million children – one in every ten children growing up in the UK – is now affected by this policy.

Scrapping the two-child-limit is the top priority of the End Child Poverty Coalition, an alliance of over one hundred children’s and anti-poverty charities.

What does this actually mean for families? 

Younger siblings are missing out on the £62 per week that their older siblings receive from the state. This reduction makes a significant difference to families on Universal Credit or legacy benefits. 

The policy has a huge impact on children’s lives but has limited effects in terms of moving parents into work, or reducing fertility among lower-income families.  

Mum-of-two Megan*, whose third baby is due this summer, says the system makes her feel judged.  Knowing she has to get in touch with the DWP to change the medical part of her Universal Credit form to say she is pregnant is leaving her fraught with anxiety. Megan receives Universal Credit as a top-up benefit, to make up her income from working part time as a support worker in a sixth form college. She won’t receive any extra support for her third baby. 

"A lot of parents do not expect to be solo parents. No one can see into the future to know what could happen and lead them to needing some government support. The two child limit pushes more children and families into poverty. There are stereotyped views, even that of the government and benefit officers is that people on Universal Credit are lazy or just sitting on their bums claiming and not wanting to be successful - which isn't true."

"I'm filled with dread when I have to speak to DWP, I feel so small and so misunderstood. There's no compassion or humanity within Universal Credit. There is an assumption that by capping the support it should force a parent to make up the difference by working more or taking on more jobs and therefore not having to claim social security. But in reality there are so many issues with getting into work - childcare, employment opportunities and fair pay – and  that needs to be addressed too."

How much would it cost to scrap it?

Like every other government policy issue, removing the two-child limit requires spending. And when it comes to what a government chooses to spend money on, it’s all about priorities.  

The End Child Poverty Coalition has estimated that removing the two-child limit would cost around £1.3 billion 2023/24  – less than 1% of the welfare bill.

Labour have already pledged to raise at least £2.5bn in taxes on private schools and non-doms. If they wanted to do so, they could make the choice to prioritise using this money to scrap the two-child limit and stick within their fiscal rules. 

Why should the two-child limit be scrapped?

There’s never been a clearer case for removing the two-child limit. In fact, only last year former Conservative DWP Minister, Lord Freud called it “vicious” and said it should be scrapped. 

This is a policy change with huge potential impact, and even cautious estimates suggest that the cost of child poverty is £39 billion a year. It’s possible to bring down this bill with the £1.3 billion investment required to scrap it.

Not only is scrapping the two-child limit the most cost-effective way to reduce child poverty but it would lift 250,000 children out of poverty – something we should want to strive for as a society. 

We urge the Labour Party to make scrapping the two-child limit one of their first priorities if they were to get into government, to reduce child poverty, and improve the lives of over a million children, and their families.


*Name has been changed.