Press Story

70 per cent of the cash from abolishing the two-child limit goes to kids whose parents are in work
Economic benefits from scrapping two child limit can outweigh initial costs
Policy accounts for less than 1 per cent of social security bill

New analysis by the Institute for Public Policy Research reveals that scrapping the two-child limit will disproportionately benefit working households, contrary to the ‘Budget for Benefit Street’ narrative pursued by some in the last 24 hours.

IPPR analysis shows that 70 per cent of the additional spending from removing the two-child limit will go to families who are in work. This is targeting support for low-income working households who are being priced out of a decent standard of living despite doing everything asked of them.

Additionally, the long-term benefits of lifting the two-child limit are likely to outweigh the costs. Some estimate the wider economic burden of child poverty at £39bn a year – lifting 10 per cent of children out of poverty will help alleviate this, reducing pressures on public services and boosting long-term economic participation. Evidence consistently shows that reducing child poverty leads to better educational and health outcomes and higher earnings in adulthood, which in turn benefits the wider economy and the public finances.

The policy’s removal also represents exceptional value for money. For less than a 1 per cent increase in welfare spending, 450,000 children will be lifted out of poverty. It is the most cost-effective lever available to reduce child poverty, and without this change, child poverty would have been higher at the end of this parliament than at its start.

Since its introduction in 2017, the two-child benefit cap has punished the children of larger families. IPPR analysis shows that today almost one in three large families report food insecurity, compared to just 17 per cent of families with fewer children. At the same time, 44 per cent of larger families live in relative poverty – far higher than households with one or two children. The two-child limit has entrenched this inequality by penalising children for circumstances beyond their control.

Beyond the two-child limit, IPPR also insists that the evidence does not show that yesterday’s fiscal statement was a ‘Budget for Benefits Street’, as:

Overall spending on welfare as a per of GDP will remain flat between 2024-2031.
Claims that the Budget spent £10bn on welfare policies are incorrect, as only £3bn was spent on new policies. The further £7bn cited by critics is the cost of existing policies that the government considered changing but decided against.
Uprating benefits by inflation, standard practice in every year, is not comparative with extra spending.

Professor Ashwin Kumar, director of research and policy at IPPR, and former advisor to Gordon Brown, said:

“This is not a Budget for ‘benefits street’ – it is a Budget for working parents who are doing their best in increasingly tough circumstances. Abolishing the two-child limit is targeted, sensible and fair. It supports families who need it most, reduces child poverty, and saves the public money in the long run.

“For too long, children have been punished for the so-called sins of their parents. The policy was both ineffective and unjust. Ending the two-child limit is a serious step towards restoring fairness, opportunity and dignity for families across the country.”

ENDS

Professor Ashwin Kumar is available for interview

CONTACT

Rosie Okumbe, digital and media officer: 07825 185421 r.okumbe@ippr.org

Liam Evans, head of news and media: 07419 365 334 l.evans@ippr.org

David Wastell, director of news and communications: 07921 403651 d.wastell@ippr.org

NOTES TO EDITORS

Methodology: 70% calculated using IPPR Tax and Benefit Model. Of the additional benefit received by families in 2030/31 due to removing the two child limit, 70% is received by families in which at least one adult is working.
IPPR (the Institute for Public Policy Research) is the UK’s most influential think tank, with alumni in Downing Street, the cabinet and parliament. We are the practical ideas factory behind many of the current government’s flagship policies, including changes to fiscal rules, the creation of a National Wealth Fund, GB Energy, devolution, and reforms to the NHS. As an independent charity working towards a fairer, greener, and more prosperous society, we have spent almost 40 years creating tangible progressive change - turning bold ideas into common sense realities. www.ippr.org