A new report from the Resolution Foundation warns that 4.8 million children – representing 34 per cent of all children – will be living in poverty by 2029-30 if the Government fails to scrap the two-child benefit cap.
The "Limited ambition?" report, authored by economists Alex Clegg and Adam Corlett, projects that half of all children in large families will be in poverty by the end of the decade under current policies.
This analysis comes amid speculation that the government is considering compromise measures that would reduce the impact of the two-child limit without fully abolishing it.
The economists argue that abolishing the policy would be "the most cost-effective way to reduce child poverty" and should be "step one" of the Government's forthcoming Child Poverty Strategy.
Think tanks are calling for the two-child benefit cap to be scrapped GETTY The two-child benefit cap restricts the amount of Universal Credit or Child Tax Credit families can receive for their children. Introduced in April 2017, the policy limits financial support for third and subsequent children born after that date.
Families with more than two children born after April 2017 are not able to receive the additional support typically provided for each child, regardless of their financial circumstances.
According to the Resolution Foundation, this policy "breaks the link between need and benefit entitlement for families with some of the highest needs, and is thus uniquely effective in pushing children below the poverty line".
Based on the think tank's research, the Labour Government could "lift half a million children out of poverty almost overnight" by removing this limit.
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Universal Credit claimants are impacted by the two-child benefit cap
PARecent reports suggest the government is considering several compromise options rather than fully scrapping the two-child limit.
These include moving to a three-child limit, paying lower amounts for third and subsequent children, exempting children under five, exempting families where adults are in paid work, or exempting families with disabled children.
The Resolution Foundation report warns that these partial measures would be inadequate, stating: "None of the options that are rumoured to be on the table is an acceptable long-term solution".
The economists calculate that such compromises would leave between 120,000 and 350,000 more children in poverty compared to fully scrapping the policy, while saving between £0.9billion and £2.3billion per year.
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DWP minister Liz Kendall is making drastic changes to her department PA Under any of these compromise options, the report concludes that "child poverty would likely be at or above its current rate of 31 per cent by the end of the Parliament"
The Resolution Foundation estimates that fully abolishing the two-child limit would cost the government £3.5 billion by 2029-30, rising to £4.5 billion if the benefit cap is also scrapped.
"An ambitious Child Poverty Strategy should not make such compromises," the economists write, highlighting that all partial measures "are less cost-effective in lifting children out of poverty than full abolition."
Without this change, the economists project that half of children in large families could fall below the poverty line by the end of the decade.
