Two-child benefits cap will 'tip' 300,000 more children into poverty

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New research reveals the two-child limit under universal credit and tax credits will result in hundreds of thousands more children in poverty, once universal credit is fully rolled out in 2023-2024.

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The Child Poverty Action Group warns that under the two-child benefits cap, 300,000 more children will be in poverty

Since April 2017, third or subsequent children born into low-incomes families are no longer eligible for the child element of child tax credits and universal credit, worth £2,780 per year. Children born before the introduction of the policy are still able to claim the benefits.

The research by Child Poverty Action Group (CPAG) is based on calculations by the Institute for Public Policy Research (IPPR), which, in March, modelled the impact of the two-child policy on child poverty rates using its tax-benefit model from the 2016/17 Family Resources Survey.

CPAG says the two-child restriction has so far hit an estimated 150,000 families with children under the age of two.

According to the charity, 43 per cent of children in families with three or more children already live below the poverty line, compared to a 30 per cent child poverty rate overall. It claims that many of these children will be pushed into deeper hardship by the policy.

It says that the largest group affected by the policy once it is fully rolled out will be working families with three children.

Currently 66 per cent of tax credit recipients with three or more children are in work. A similar proportion are expected to claim universal credit.

The charity also warns that many families who were not claiming tax credits or universal credit when they decided to have their third child will be affected by the two-child limit if they fall on difficult times, such as becoming unable to work due to illness or losing their partner.

A single parent with three children working 16 hours a week on the National Living Wage of £8.21 per hour would have to more than double their hours to 37 per week – more if they have to pay for children to compensate for the effect of the two-child limit, CPAG finds. It says this is ‘clearly unrealistic for many families with young children’.

The charity argues that the policy breaches the UN Convention on the Rights of the Child and unlawfully discriminates against children as, uniquely, it no longer treats them as worthy of individual consideration for entitlement to subsistence benefits.

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Chief executive Alison Garnham said, ‘As a country we believe that every child deserves support especially in the earliest years of life but the two-child policy denies support for some children on the basis of how many older siblings they have. That isn’t right. 

‘The Government recognises that investment in the early years is crucial for children’s development.  Yet the result of current policies is that the face of poverty is getting younger – with the latest figures showing that 53 per cent of poor children are aged under five. 

‘It’s right that the work and pensions secretary decided not to apply the policy to children born before it was introduced but the policy is harming infants now – if it’s wrong for older children, it’s wrong for the babies and toddlers it’s affecting now.

‘The two-child policy is out of step with our national commitment to children and to family life. It is foisting misery on families, with parents telling us they can’t afford basics like baby milk, nappies, clothes for their children or transport to take sick children to medical appointments. It should be abolished in line with our shared belief that every child matters.’

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