The two-child benefit cap in the UK is unfair and doesn’t work | Bishop of Leicester

In Leicester, where I live and work as bishop, two in five children now live in poverty. That’s 12 pupils in every classroom struggling to focus. Some haven’t eaten breakfast. Others are no doubt worried about arguments they have overheard at home about money, and how to afford next year’s school uniform. When I visit our local schools, I hear of teachers bringing in food for pupils who would otherwise go hungry and schools covering the costs of trips to protect children from the shame of being left out. I’m hugely proud of all that our churches do to support those in need, whether it’s with holiday clubs or food hubs. But we cannot by ourselves reverse the trend of growing child poverty seen across the country. One policy change, however, could: ending the two-child benefit cap.

The limit restricts the child element of universal credit to two children per household, so that families lose about £3,200 a year for any third or subsequent child born after April 2017. This is a huge amount for any family trying to make ends meet: of the 1.5 million children affected in 2023, 1.1 million were living in poverty.

One might expect the government to be intently assessing and evaluating its effects. After all, growing up in poverty has been shown to have wide-ranging consequences for mental and physical health, development, education, and later job opportunities and income. There are also few international examples to draw on: only three EU countries restrict their benefits by family size (Cyprus, Romania and Spain) but at three or four children; no other OECD country limits benefits to two children. So surely a government would be interested in assessing whether it was storing up for itself costs (in NHS spending, reduced productivity and lower tax income) that far outweigh current savings?

Based on answers I have received to recent parliamentary questions, it would seem not. Before passing the policy, the government suggested the two-child limit would help move parents into employment and provide incentives to have fewer children. But, when I asked if it had succeeded, I was told it “is not possible to produce a robust assessment of the impact of the two-child limit” and the government has “no such plans to collect data to evaluate the success of the two-child benefit cap”.

Charities, thinktanks and universities, however, have done just that, and shown the two-child limit is failing on both counts. More than half of the families affected by the limit already have at least one adult in paid employment (it is low pay rather than unemployment that is driving poverty), and a study by the LSE found no evidence that it increased employment rates – probably because high childcare costs make it hard for both parents in larger families to afford to work full-time.

Nor is it affecting fertility rates: the probability of having a third or subsequent child among families affected by the two-child limit declined by just 0.36 percentage points after 2017. Partly this is because not all pregnancies are planned, economically rational decisions informed by government policy. But it is also due to the fact that many parents may be in a good financial position when they decide to have another child and it is only when their circumstances or the economic climate changes that they find they aren’t entitled to support. Ultimately, it is estimated that each year, the two-child limit may have led to 5,600 fewer births. But every year, 200,000 children are pushed, or driven deeper, into poverty.

This is a policy which, if the government, and indeed the Labour party which has avoided committing to reversing it, dared (or cared) to look, is as shortsighted as it is unfair. Ending it, and so immediately lifting half a million children above the breadline, should be a priority for any party wanting to be recognised for its reasonableness as well as its compassion in the upcoming election.

Martyn Snow is the bishop of Leicester