There are currently 4.5 million British children living in poverty, 3.0 million children living in material deprivation and 800,000 children using foodbanks to eat. Child poverty in 2027/28 is forecast to be the highest since 1998/99, meaning 170,000 more children will be in poverty than in 2021/22. This rise is disproportionately driven by large families: child poverty for families with three or more children is set to hit 55% in 2027/28. The UK child poverty crisis demands a redesign of government policy to end the cycle of poverty for future generations, starting with the scrapping of the failed two-child benefit cap. The Government's upcoming Child Poverty Strategy, set to be published this autumn, provides an invaluable opportunity to craft policy that can act as a long-term commitment to protecting the childhoods and life chances of British children growing up on a low income.

The two-child limit affects families entitled to benefits who have had a third or subsequent child after 6 April 2017, who are denied £3,235 per year per child. In international comparative terms, the two-child benefit cap is highly unusual. The vast majority of European democracies either pay benefits equally for all children or are more generous per child as family size increases. From 2012 to 2019, general prosperity presented European countries with a golden opportunity to address child poverty. Poland, for example, reduced child poverty by 38%. In contrast, the United Kingdom saw an increase of 20%.

58% of families affected by the policy are already in work and 69% of children living in poverty are from working families. London School of Economics found the cap has had no impact on employment rates or on work hours since its introduction in 2017. The financial impact of children on parents is substantial at around £270 per month per child, and increasing working hours seems the obvious strategy to make up the shortfall. However, parents’ labour market participation is constrained for several reasons, such as childcare costs, health problems of parents or child/ren and living costs. 

The cap's principal failure is that it has not ensured fairness by preventing benefit awards from increasing with family size nor has it incentivised parents taking advantage of the social security system to find employment. Instead, it has blown a hole in the UK’s safety net affecting families with three or more children. Many families were financially stable when they had their additional child. However, since a lack of economic growth and consequent wage stagnation over the past decade, an increase in insecure work, and the impacts of COVID and the cost-of-living crisis, several families have found themselves unable to cover rising costs and simultaneously unable to access government aid, resulting in soaring rates of child poverty. The level of support available to families that fall on hard times is explicitly designed to be inadequate.

The principal concern with scrapping the cap is, of course, cost. It is estimated that removing the two-child limit would cost £3.4-3.5 billion a year, equal to roughly 3% of the total working-age benefit budget when scaled to all families on Universal Credit or Child Tax Credit with three children (Resolution Foundation). Set against this heavy price tag, however, is the estimated £39 billion that child poverty current costs the UK economy each year. Assorted costs accumulate schools are forced to step in at a time when school budgets are tighter than ever and health, social care and local authority budgets are stretched to breaking point. The £3.5 billion investment could save the Government tens of billions of pounds while simultaneously lifting 250,000 children out of poverty overnight, and significantly reducing the level of poverty that a further 850,000 children live in. The immediate payment is upfront, but the payback is long term. The indirect fiscal impacts of lifting the cap could be higher, as investing in the development of our children can pay for itself by creating better outcomes for them later in life, in health, education, employment and civic participation. This shift in policy also demonstrates strong monitoring mechanisms to track outcomes, such as educational attainment rates and child poverty statistics.

Removing the cap would also improve overall equality across regional divides in England. In the Northeast 12% of children, or 65,460 children, are affected by the two-child benefit cap in a region where 35% of children live in poverty. Economic disadvantage is one of the most damaging challenges to educational development for children in the Northeast. Studies show that despite the fact the quality of schooling in the Northeast demands improvement, improving the quality of schools themselves does not affect attainment gaps between advantaged and disadvantaged students. Extending the two-child benefit cap could lift tens of thousands of Northeastern children out of poverty, significantly improving educational attainment as well as long term investment in the social wellbeing of Northeastern youth. 

We all pay the price of child poverty. Removing the two-child benefit cap is one step towards reducing the human cost. 

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