Experts have determined that completely removing the restrictive two-child benefit limit would help 630,000 children rise above the poverty line, according to the Institute for Fiscal Studies (IFS). This move is highlighted as a highly efficient method to combat child poverty. There are strong indications that Keir Starmer may soon revise or eliminate the policy that was implemented during the Conservative government.
Various alternatives are being contemplated by the government to replace the existing two-child limit, which currently impacts the eligibility for Child Tax Credits and Universal Credit for families with more than two children. One proposed option involves implementing a new tiered payment structure where parents would receive more financial support for their first child and reduced support for subsequent children.
Despite some Labour MPs advocating for a complete abolition of the limit, the IFS suggests that Chancellor Rachel Reeves could opt for a partial reversal to lessen the financial burden. For instance, exempting working families from the limit could result in a cost reduction to £2.6 billion and a decrease in child poverty by 410,000. Another proposal involves providing half the payment rate for the third and subsequent children compared to the first two children, costing approximately £1.8 billion and aiding 310,000 children out of poverty.
However, it is noted that these partial measures would not be as effective in reducing poverty as a complete reversal of the policy. The IFS estimates that a full reversal would require around £3.6 billion but could elevate approximately 630,000 children out of poverty in the long run.
Tom Wernham, a senior research economist at IFS, emphasized the cost-effectiveness of reversing the two-child limit to combat child poverty swiftly. He highlighted that there are alternative approaches that could be less expensive than a complete removal of the policy. Wernham stressed the importance of government decisions in determining the beneficiaries of the benefit system.
A government representative stated, “Ensuring every child, irrespective of their background, has a promising start in life is our priority. Our Child Poverty Taskforce is set to unveil a comprehensive strategy aimed at addressing the underlying causes of child poverty.
“We are committed to investing £500 million in children’s development through initiatives such as the Best Start Family Hubs, extending free school meal programs, and providing a £1 billion support package to prevent underprivileged children from facing food insecurity during school holidays.”
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