Think Tank Urges Government to Abolish Two-Child Benefit Cap to Prevent Crisis
Prime Minister Keir Starmer is facing renewed calls to scrap the two-child benefit cap, as economic analysts warn that child poverty could reach historic levels if the policy remains in place.
The Resolution Foundation, a leading think tank, has stated that the government’s strategy to tackle child poverty lacks credibility unless the cap is removed. The policy, introduced under former Chancellor George Osborne, restricts benefits for families with more than two children born after April 2017.
Labour MPs have voiced their concerns, describing the cap as the primary factor driving child poverty. MP Kim Johnson stressed that lifting children out of hardship should be a priority, while Nadia Whittome highlighted longstanding warnings from researchers on the detrimental impact of the limit.
The think tank’s report suggests that raising the cap to three children could reduce child poverty by 320,000 by the next election, at a cost of £3.2bn per year by 2030. However, it argues that fully scrapping the policy—at an estimated £4.5bn annually—would be the most effective solution.
Other recommendations include expanding free school meals and adjusting housing benefits to reflect rental costs, which could help lift 740,000 children out of relative poverty by 2029-30.
Starmer has previously indicated his desire to abolish the cap, but maintains that current economic conditions do not allow for immediate action. Meanwhile, the Resolution Foundation has warned that, under existing policies, child poverty could rise to 33% by the decade’s end, leaving 4.6 million children below the poverty line.
Economist Adam Corlett urged the government to move beyond “warm words”, emphasising that the cost of inaction would be far greater than the cost of reform. Former Shadow Chancellor John McDonnell echoed this sentiment, stating that no Labour government has ever allowed child poverty to rise unchecked.
As the government prepares to outline its child poverty strategy, Labour MPs and policy experts continue to push for urgent action, arguing that the party’s credibility hinges on its commitment to tackling inequality.