Labour under pressure to 'abolish' DWP two-child benefit cap as millions plunged into poverty

Based on new DWP data, the think tank discovered 38 per cent of household with three children were affected by the imposed cap in April 2024.

Under the two-child benefit cap, households are unable to claim mean-tested benefits, including Universal Credit, for a third child unless they qualify for exceptions.

Some 450,000 families were affected by the two-child limit in April 2024 which is a significant jump from just 70,000 in 2018.

The Resolution Foundation notes that over a third of the policy has yet to be rolled out, with around 720,000 families due to be affected by the time in the mid-2030s.

Do you have a money story you’d like to share? Get in touch by emailing money@gbnews.uk.

By this time, 61 per cent of large families will be affected by the DWP's two-child benefit cap on Universal Credit and tax credits.

Around 1.6 million children in the UK live in families affected by the restriction, which is an increase from 1.5 million in April 2023.

Families living in London are most likely to be affected by the policy with 69,000 households impacted.

Nearly three-in-five households impacted by the two-child benefit cap include at least one adult in work despite the misconception the policy only affects the jobless.

According to the Foundation, families capped by the two-child limit losing up to around £3,500 a year in benefit support for their third and each subsequent child.

This is further plunging younger people into child poverty with around two-in-five large families trapped in poverty during 2016-27 with this expected to rise to over half by end of parliament.

If the policy were abolished today, some 490,000 children would be lifted out of poverty, the Resolution Foundation claims.

However, this would eventually cost to around £3.6billion a year, as more families are affected.

Lalitha Try, economist at the Resolution Foundation, said: "The two-child limit on benefit support now affects almost two-in-five large families in Britain.

"There isn’t much evidence to show that the policy has achieved its stated aims of boosting employment and reducing the number of children families have. But there is clear evidence of the financial losses that affected families are facing, and rising rates of poverty.

LATEST DEVELOPMENTS:

• Energy bills alert: UK named 'Sick Man of Europe' as Brits pay more than anywhere in EU
• Labour and Tories urged to 'abolish' DWP Universal Credit benefit cap
• Council tax bills to rise by £600 as communities to be 'pushed into financial brink'

“Unless the policy is abolished, the majority of children in large families will fall below the poverty line by the end of the parliament. Any new child poverty strategy should find the funds to remove it.”

Work and Pensions Secretary Liz Kendall said: "Too many children are growing up in poverty and this is a stain on our society.

"We will work to give every child the best start in life by delivering our manifesto commitment to implement an ambitious strategy to reduce child poverty.

"I will hold critical meetings with charities and experts next week to get this urgent work underway."