Two-child limit and the benefit cap fail to meet their own aims, study shows

The benefit cap and the two-child limit have caused hardship to tens of thousands of families, with both policies failing to meet their original aims, according to a new study.

Funded by the Nuffield Foundation and led by the University of York, in partnership with the University of Oxford and the London School of Economics, the study details the results of interviews with families in London and Yorkshire over a three-year period and reveals how the benefit cap and the two-child limit impacts families with three or more children.

The study was published shortly after opposition leader Sir Keir Starmer sparked anger within his own party by saying he would keep the two-child limit in place under a future Labour government.

Authors of the report said the findings showed 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.

Policies have contributed to the rising levels of child poverty in the 2010s, which have predominantly hit larger families, the researchers said. 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.

Researchers said they found evidence that the policies had a negative impact on people’s mental health, increasing stress and anxiety, and harming their wellbeing, 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.

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

‘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 analysis found 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.

Alex Beer, welfare programme head at the Nuffield Foundation, said: ‘This report shows that the benefit system is failing many families. The two-child limit and the benefit cap are not incentivising families as the government intended and instead is leaving them unable to afford even basic necessities and affecting their mental health. These policies should be placed under review, and ideally removed.’

Alison Garnham, chief executive of Child Poverty Action Group, said: ‘The benefit cap and two-child limit just have to go. 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 concerns that have infected the two-child benefit limit have recently been dominating headlines. More on the story can be found here.

Image: Annie Spratt