Labour could replace two-child limit with a tapered system. Is it enough to tackle child poverty?

Government ministers are reportedly planning to end the two-child limit on benefits, potentially replacing it with a tapered system which would mean that financial support for larger families remains capped.

The details are yet to be officially announced, but it is widely reported that chancellor Rachel Reeves will set out the plans in her Autumn Statement at the end of November.

Charities and experts have long called for an end to the two-child limit on benefits, which denies families extra universal credit or tax credits for their third child or any subsequent children born after April 2017.

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More than 1.6 million children live in households impacted by the two-child limit across the UK. That is one in 10 children whose families are missing out on around £3,500 per child affected by the policy each year.

It is believed that at least 350,000 children would be lifted out of poverty if the two-child limit on benefits was fully scrapped. Some estimates go further, with the Resolution Foundation suggesting that nearly half a million children could be lifted out of poverty.

Jen Clark, economic, cultural and social rights lead at Amnesty International UK, said: “The UK’s benefit system is consciously cruel and the two-child benefit cap is one of its grimmest aspects, playing a core role in driving over 4.5 million children into poverty.

“It should be removed in its entirety as part of a wider overhaul of our social security system so that everyone is provided for, and no one is forced to choose between heating and eating for themselves or their families.”

Experts say it is the most “cost-effective” way to lift large numbers of children out of poverty, eventually reaching £3.5 billion a year by 2030, according to the Resolution Foundation. But the cost of child poverty is believed to be far higher, at more than £39bn every year.

A tapered system will not have the same impact of lifting so many children out of poverty. The Treasury is believed to be considering options such as a three or four-child limit on benefits, or introducing a taper so parents get more for their first child and less for any subsequent.

The Resolution Foundation set out some of these “compromises” in its research. It found that moving to a three-child limit would lift 280,000 children out of poverty, for around two-thirds of the cost at £2.4bn a year by 2030. By the foundation’s estimates, that’s more than 200,000 less than expected if the two-child limit on benefits was fully scrapped.

Another example is introducing a lower child element in universal credit for third and subsequent children. If the government set it at two-thirds of the standard child element, it would lift 240,000 children out of poverty at a cost of £2.3bn by 2030.

The Labour government’s child poverty strategy, due to be published in autumn, will set out the plans to tackle child poverty in more detail – likely including the plans for the two-child limit on benefits.

Keir Starmer did not mention it during his speech at the Labour Party Conference on Tuesday (30 September), despite guarantees to tackle child poverty.

Lord John Bird, founder of the Big Issue, which has campaigned for the end of the two-child limit on benefits said: “The government has taken the initiative to end the two child benefit cap. They are watering it down, change by stealth. Half brave and half cautious. Let’s hope that it will have the desired effect of lifting children out of the crisis of inherited poverty.

“A situation where you are condemned because your parents were condemned into poverty is intolerable. We must congratulate the government for facing down the ignominy of punishing children. But one was hoping for a firm stand immediately, and not necessarily a phasing out.”

Big Issue is campaigning for the government to introduce legal targets to reduce poverty in the UK. A Poverty Zero law would require governments to set poverty reductions targets, and hold them legally accountable to those commitments.

Mark Rowland, chief executive at Mental Health Foundation, said: “The two-child benefit cap is an unfair policy which has done significant damage to the mental health of thousands of families across the UK by entrenching poverty and forcing them to struggle financially simply for having three or more children.

“Growing up in poverty damages your mental health, and for the past eight years the UK government has needlessly subjected thousands of children to that fate. The news that it is due to be removed is excellent.

“We are, however, concerned by reports that the UK government plans to replace the cap with a tapered system, rather than abolishing it altogether. While details of the tapering are yet to be confirmed, we would warn against any system which does not have the complete eradication of child poverty as its sole principle. Anything less will be a dereliction of duty.”

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