Keir Starmer is widely expected to abolish or water down the Tory-era two child benefit limit – blamed for trapping kids in poverty – as part of a child poverty review
Scrapping the cruel two-child benefit limit in full would lift 630,000 kids out of poverty, experts have concluded.
The Institute for Fiscal Studies (IFS) says it would be one of the most cost-effective ways of reducing child poverty. Keir Starmer is widely expected to abolish or water down the Tory-era policy as part of an imminent child poverty review.
The government is said to be considering several options to replace the two-child limit, which restricts Child Tax Credits and Universal Credit to the first two children in a family. Options include a new tapered rate with parents receiving the most money for the first child and less for their other children.
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But some Labour MPs have called for it to be completely abolished. In a briefing published today the IFS lays out ways Chancellor Rachel Reeves could partially reverse the cap to avoid the cost of fully removing it.
Exempting working families from the limit would reduce the bill to £2.6 billion and reduce child poverty by 410,000. A payment for third and subsequent children at half the rate paid for the first two would cost around £1.8 billion and lift 310,000 out of poverty.
But authors note they wouldn’t “do as much to reduce poverty” compared to a full reversal. This would cost around £3.6 billion and lift some 630,000 children out of poverty in the long-term, the IFS estimates.
Tom Wernham, a senior research economist at IFS, said: “Reversing the two-child limit is one of the most cost-effective options the government has to achieve a quick reduction in child poverty. There are ways to partially undo the policy that would cost less than the full £3.6 billion needed for its full removal. Ultimately, the government needs to decide who it wants to help and what it wants the benefit system to do.
“It could target support on the youngest children, or strengthen work incentives by lifting the limit for families in work, or spread the extra cash more thinly but across a wider group. None of these options would be as costly as full reversal, but nor would they do as much to reduce poverty.”
A government spokesman said: “Every child, no matter their background, deserves the best start in life. That’s why our Child Poverty Taskforce will publish an ambitious strategy to tackle the structural and root causes of child poverty.
“We are investing £500million in children’s development through the rollout of Best Start Family Hubs, extending free school meals and ensuring the poorest don’t go hungry in the holidays through a new £1billion crisis support package.”
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