Child poverty is on the rise, with 700,000 more children living in poverty today compared to 2010. The Labour government has set up a Child Poverty Taskforce in response — but will they consider removing the 2 child limit?

This cap, introduced in 2017, means that a family on Universal Credit (UC) or Child Tax Credits (CTC) only receives the child element, extra money to help with the cost of raising a child, for up to 2 children. It applies to all children born after April 2017, with some exceptions like for twins or non-consensual conception.

In April 2024 there were 440,000 households not receiving support for a third or additional child and 1.6 million children living in affected households. And as more children are born, more and more families are being affected.

The impact

We see the impact of the 2 child limit via the thousands of families coming to us for help with the cost of living, benefits, and debt. Households affected by the limit lose out on £3,455 a year for each additional child — a huge sum for the people we help.

Our advisers tell us that affected families struggle to afford essentials and balance their household budget. Costs for their children, such as childcare, school uniforms, and lunches during the school holidays are difficult to afford without additional financial support.

“It’s a daily occurrence that we see people who come for a food bank referral or crisis support who are receiving the child element for less children than they are looking after. It’s not difficult to understand the impact of this policy. Children cost money, they need feeding, they’re constantly growing and have interests that need to be nurtured. To limit the help simply pushes families into poverty.” — Local Adviser

As a result of the limit, families often become dependent on crisis support and are more likely to build up debt. This can create a vicious spiral, as people who are unable to afford essentials struggle to repay their debts.

This is the case for Carla, who‘s a single parent of 4 young children. Because of the 2 child limit she only receives financial support for 2 of her children, which has left her struggling to cope. Carla often has to choose between paying for food for her family and paying for other essential costs such as council tax. Her local housing allowance also doesn’t fully cover her rent, and she’s built up rent arrears. This has delayed her ability to apply for council housing, leading to a spiral of debt. The family have needed 7 foodbank vouchers in the past 6 months and are now at risk of being turned away from further support.

The policy was introduced with the stated aim of ensuring families receiving benefits face the same financial choices when family planning as others. But the reality is that the proportion of households on UC and CTC with 3 or more children hasn’t changed since the policy was introduced. In addition, many thousands of families who already had 3 or more children before they started claiming UC have been affected by the limit.

For these families, the 2 child limit means they receive less than what they need.

Dan and his wife have 3 children. After their second son developed a life threatening illness which left him paraplegic, they both had to stop work to care for him full time. This was a huge shock for the family, and meant they had to apply for Universal Credit to support them. However, because of the 2 child limit they won’t receive financial support for 1 of their children. As a result they’ll be short of money each month, putting extra stress and pressure on them at a very difficult time.

The policy has reduced the incomes of larger families and increased child poverty, while family size has remained steady.

What needs to change?

There are about 550,000 children currently not receiving support under UC or CTC due to the 2 child limit*. If every child received the child element (worth £3,455 this year), it would cost £1.9 billion in 2024/2025. However, this is likely an overestimate, because some households will see payments reduced by the benefit cap and UC taper.

Removing the 2 child limit would help families afford the extra costs associated with having children, lifting many out of poverty. It would mean people like Carla could afford to pay for essentials without getting into debt. And it would help people like Dan, who are forced to claim UC after unexpectedly difficult life circumstances.

However, whilst the scale of detriment caused by the 2 child limit is well understood, and removing it would be the most targeted approach to reduce child poverty, families are struggling for many reasons. We shouldn’t fall into the trap of thinking there’s just one policy lever to reduce poverty — the problem is wide reaching and complex. Local Housing Allowance rates haven’t kept pace with rising rents, costs on essentials are rising, UC deductions take families’ incomes below their calculated need, and the benefit cap limits the support that out-of-work, larger families can receive.

We welcome the government’s creation of the Child Poverty Taskforce, and understand the scale of the challenge facing politicians and policy makers. Importantly: a long term plan is needed to ensure people and households aren’t trapped in negative budgets, living on empty and lurching from one crisis to another.

*Based on the number of children in households affected by the 2 child limit. DWP & HMRC (2024) Universal Credit and Child Tax Credit claimants: statistics related to the policy to provide support for a maximum of 2 children, April 2024.