Scrapping two-child benefit cap ‘not a silver bullet’, think tank says

Scrapping the two-child benefit cap would not be a “silver bullet” to reducing child poverty in Britain, a leading think tank has warned.

Research from the Institute for Fiscal Studies (IFS) has shown that scrapping the cap would be a short term and cost-effective means of bringing thousands of children above the poverty line, the gains for many of the poorest household would be wiped out by the household benefit cap.

The government has come under great pressure from campaigners and some of its own backbenchers to abolish the two-child benefit cap, which critics point to as a barrier to many families escaping poverty.

However, Rachel Reeves has previously said there would be no “unfunded” move to scrap it.

Recap on all of the news and debate from party conference 2024 by LabourList here.

Anna Henry, a Research Economist at the Institute for Fiscal Studies and an author of the IFS report, said: “The recent rise in measured child poverty is entirely driven by higher rates of poverty among families with three or more children.

“Scrapping the two-child limit would be a cost-effective way of reducing child poverty, at a lower cost per child lifted out of poverty than all the other obvious changes to the benefits system, but it is not a silver bullet.

“Scrapping the two-child limit would eventually cost the government a significant sum, around £2.5 billion a year. It would do nothing for households affected by the household benefit cap, who are among the poorest.

“In fact, removing the two-child limit would lead to 70,000 more households being affected by the household benefit cap, wiping out some or all of its effect for those households.”

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