The Resolution Foundation, which has close links to Labour’s front bench, says scrapping the triple lock would free up money to end the two-child cap on benefits
A leading think tank has suggested that families grappling with soaring living costs should receive more support through Universal Credit, while pensioners lose their triple lock state pension guarantee. The Resolution Foundation, closely associated with Labour’s front bench, proposed that scrapping the triple lock on state pensions should be part of a broader programme to free up funds to end the controversial two-child cap on benefits.
Ruth Curtice, its chief executive and a former senior Treasury official, stated that the Government must ‘think the unthinkable’ in Rachel Reeves’ Autumn budget. This includes abandoning Labour’s manifesto pledge not to increase key taxes, accepting widespread tax hikes, and revamping how families with children are supported.
She said: “Lifting the two-child cap is a rare example in public policy of an extremely well-targeted measure. “On our projections, child poverty reaches record highs by the end of this parliament. Children in large families – half of them will be in poverty. Our job is to produce remarkable statistics, but that one still slightly takes my breath away.”
The two-child rule, introduced by the Conservatives in 2017, prevents families from claiming child tax credit or Universal Credit for a third or subsequent child, saving the Treasury around £3.5 billion a year. Campaigners have claimed that child poverty has escalated to ‘almost Dickensian levels’.
Ms Curtice, daughter of election expert Sir John Curtice, suggested that the most effective way to assist struggling households would be to abolish this policy.
In contrast, she noted that pensioners have fared relatively well due to the triple lock – which ensures annual increases in line with inflation, earnings or 2.5%. Over the past two decades, living standards for pensioners have increased by 21%, compared to a mere 7% for the rest of the population.
“Resolution has long said it would be better to peg pensions to average earnings rather than having this ratchet,” she stated.
The think tank, celebrating its 20th anniversary this week, also dismissed calls for a new wealth tax. Instead, Ms Curtice proposed reforming capital gains tax so that unearned income is not treated more favourably than wages.
These recommendations come as Chancellor Reeves faces a tightening fiscal outlook ahead of November’s budget, with a likely downgrade from the Office for Budget Responsibility leaving her little wiggle room to fulfil her promises without additional tax hikes.