Two-child limit and the benefit cap “poverty-producing” policies, study says

Researchers are warning that the benefit cap and the two-child limit are worsening poverty conditions and disproportionately affecting larger families and renting households.

Researchers from the University of York, in partnership with the University of Oxford and the London School of Economics, conducted interviews with families in London and Yorkshire over a three-year period to reveal how the benefit cap and the two-child limit impacts families with three or more children.

The benefit cap was first implemented in 2013, placing a cap on the amount a household can receive in benefits if they have no, or low, earnings, meaning that some families do not receive their full benefit entitlement. Affected families are estimated to lose an average of £50 per week, however this can be much higher for some families.

The two-child limit was implemented in 2017 and prevents families from receiving additional means-tested support for their third or subsequent children, worth up to £3,235 a year per child in 2023/24. Official statistics out last week confirmed that one in 10 children live in households affected by the two-child limit (1.5 million children).

One in ten children now currently live in households affected by the two-child limit – more than 1.5 million children affected in total – and at least 110,000 children are estimated to live in households affected by both the two-child limit and benefit cap.

Authors of the report say the findings show that both policies disproportionately affect certain households: those with higher living costs which include larger families and renting households – which in turn means they disproportionately affect minority ethnic households, and those less able to increase their income through employment, including single parents and families with younger children.

They say the policies have contributed to the rising levels of child poverty in the 2010s, which have predominantly hit larger families. The study shows that larger families were at risk of poverty even before the introduction of the benefit cap and the two-child limit, due to wider cuts to social security benefits for families with children.

The researchers say they found evidence that the policies also had a negative impact on people’s mental health, increasing stress and anxiety, and harming their well-being, with knock-on effects on children's opportunities and wellbeing.

Parents struggle to afford a wide variety of essential items for their children, including food, clothes and heating, affecting children's emotional and physical development, according to the study.

“Our research evidence makes clear that the two-child limit and benefit cap are poverty-producing policies, which fail to meet their stated aims,” Dr Ruth Patrick from the School for Business and Society at the University of York said.

“Both policies need to be removed urgently, as part of a broader commitment to addressing child poverty and investing in children and families. We urge the government and policymakers to engage with and act upon this new, timely and powerful evidence base.”

The two-child limit was presented by the government as a policy that would encourage parents to make decisions about whether to have children based on what they could afford. But the researchers say the analysis found that the two-child limit has had only a very small effect on fertility, meaning its main effect is to push families with three or more children further into poverty.

The research found that of the families interviewed, many did not know the two-child limit existed until after their child was born, often because they were not receiving benefits at the time of birth, only needing support later after circumstances changed.

Alison Garnham, Chief Executive of policy partner on the project, Child Poverty Action Group, said the benefit cap and two-child limit policies should be scrapped.

“They are the single most poverty-producing policies in the social security system and look set to continue pushing up child poverty until they are finally abolished.

“The social security system is our main defence against family poverty and yet these policies are causing enormous hardship and as such are the least rational social policies.”

The British Association of Social Workers (BASW) has previously written to both the government and Leader of the Opposition as part of its anti-poverty campaign outlining why the benefit cap must be immediately scrapped, saying that removing the two-child limit would also lift 250,000 children out of poverty across the UK.

“Increasingly, social workers in the UK are working exclusively with people whose problems are rooted in or exacerbated by worsening poverty and its consequences – poor housing, nutrition, mental and physical health, social exclusion and downward spirals of experiences that blight the potential of adults and children. This includes in-work poverty and unfeasibly low and often punitive disability benefits,” the letter read.

“We, on behalf of the 22,000 members of the British Association of Social Workers, urge you to put people first and give people need the financial security they need. We are fearful that without investment in benefits, it will be those on the lowest incomes paying the price.”