Starmer faces further calls for Labour to axe two-child benefit cap
The IFS said the policy, when fully rolled out, would affect one in five children. Photograph: Linda Nylind/The Guardian
Keir Starmer is facing renewed pressure to scrap the two-child benefit limit, as research reveals that 250,000 more children will be hit by the policy over the next year alone.
Labour’s manifesto for government, published last week, included the promise of an “ambitious strategy to reduce child poverty”, but no mention of the two-child limit.
The policy, which was introduced by George Osborne when he was chancellor, means low-income parents are denied key benefits, including universal credit, for their third and any subsequent children born from April 2017.
Research by the Institute for Fiscal Studies (IFS) finds that when fully rolled out, the policy will affect one in five children, costing families an average of £4,300 a year, or 10% of their income. Among the poorest fifth of households, 38% will be affected.
The policy already applies to about 2 million children, but by the end of the next parliament it will affect an additional 670,000, the IFS figures show.
Eduin Latimer, a research economist at the IFS, said the two-child limit had “a particularly big impact on the number of children in poverty for two reasons: it mostly affects poorer households and, by definition, its effects are entirely concentrated in families with at least three children”.
Labour’s decision not to include scrapping the policy in its manifesto has frustrated charities and anti-poverty campaigners, and become symbolic of what some see as the party’s excessive caution on tax and spend.
Pressed on the policy last week, Starmer said it had been a “difficult choice” not to promise to scrap it, but insisted his party could not make “unfunded promises”.
The IFS calculates that ending the two-child limit would cost £3.4bn a year in the long run – equivalent, it says, to freezing fuel duty for the duration of the next parliament.
“I think it’s a shame: Labour has a long history of tackling child poverty,” said Mary-Ann Stephenson, the director of the Women’s Budget Group, who described scrapping the two-child limit as “one of the most effective ways of lifting children out of poverty”.
“There are voices from across the political spectrum, the churches, anti-poverty organisations, women’s organisations, all making the same point,” she added.
Alison Garnham, the chief executive of the Child Poverty Action Group, said child poverty in the UK was “a national disgrace and the biggest driver of it is the two-child limit. It makes life worse for kids up and down the country and limits their future chances. Any government serious about making things better for the next generation will have to scrap the two-child limit, and do so quickly.”
Tom Pollard, the head of social policy at the New Economics Foundation thinktank, said: “You can’t really have a serious child poverty strategy that doesn’t involve getting rid of the two-child limit, because it just puts a ceiling on what you can do.”
“There is such a wide consensus now that it’s the most direct way you could reduce child poverty,” he added.
The former Labour prime minister Gordon Brown has called for the limit to be scrapped, as has the archbishop of Canterbury, who said it was “cruel”.
Justin Welby told the Observer last month: “The two-child limit falls short of our values as a society. It denies the truth that all children are of equal and immeasurable worth, and will have an impact on their long-term health, wellbeing and educational outcomes.”
A Labour spokesperson said: “The number of children growing up in poverty in our country is a damning indictment of the last 14 years of the Tories.
“The last Labour government lifted more than half a million children out of poverty and we are determined to build on this record, which is why we’ve committed to an ambitious new cross-government strategy to tackle child poverty.”
Campaign groups are gearing up to continue pressing the party on the issue beyond the general election, in the run-up to the budget that Rachel Reeves has promised for September, if the polls are correct and she becomes the next chancellor.
Labour’s manifesto included £8.5bn in targeted tax increases, earmarked to fund investment in green technologies, and measures such as providing free breakfast clubs in primary schools.
Studies have shown that the two-child limit has had little impact either on family size, or on parents’ propensity to work. HMRC data showed that in 2023, half of the families affected were single parents, and more than half – 57% – had at least one parent in work.
The Liberal Democrats have promised to scrap the two-child limit as part of a package of anti-poverty measures.
The Lib Dem work and pensions spokesperson, Wendy Chamberlain, said: “It would be a devastating blow to some of the poorest families in the country if this limit remains in place. The next government must heed these fresh warnings and ensure no child is cut off from support they so desperately need.”
While Starmer is being urged to repair the welfare safety net for the UK’s poorest families, however, Rishi Sunak’s Conservatives are promising further cuts to benefits, to fund the promise of tax giveaways.
“The very clear difference in savings between us and the Labour party is, I think you can make savings from constraining the growth in the welfare bill,” Sunak told journalists travelling with him for the G7 summit in Puglia, Italy.
“The Labour party do not think that you can save a penny in the welfare bill – a welfare bill where Pip [personal independence payment] alone is forecast to go up by 50% in the next few years. The welfare bill has already gone up by something like two-thirds.
“We now spend more on working-age welfare for people with ill health, disability conditions than we do on schooling, transport, policing – I could go on – and we’ve seen a massive increase since the pandemic.”
Sunak has promised to cut £12bn from the benefits bill, echoing a pledge made by Osborne in the run-up to the 2015 general election.