What are the Two Child Limit and Benefit Cap, and how do they increase child poverty?
We are campaigning for Keir Starmer’s Labour government to abolish the Two Child Limit and Benefit Cap. Far from achieving their original goals, these policies have driven more children than ever into poverty.
Our research shows that abolishing the caps is the most cost-effective thing that the government could do to lift children and families out of poverty, and help them achieve safe and happy childhoods.
Our young campaigners are calling on the government to act
The Two Child Limit prevents parents from claiming universal credit payments for their third or any later children. It applies to children born after April 2017. Conservative Chancellor George Osborne introduced the limit as part of the former government’s drive to cut spending.
It was originally sold to discourage parents already receiving benefits from having more children. However, data shows that the limit has significantly increased the number of children in the UK living in poverty. One in four children are affected in some of the poorest areas of the country.
Families affected have been left at least £3,455 per year worse-off.
The Benefit Cap places a limit on the total amount in benefits a family can receive, no matter how big the family is or the cost of housing in their area. It mainly affects families with children, and mostly single parents with very young children.
Families affected by the Benefit Cap are also more likely to be living in deeper poverty.
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Child poverty rose by 700,000 between 2013 and 2023, and the Two-Child Limit is the single biggest cause of this. At the same time, the Benefit Cap pushes families deeper into hardship and makes it harder to escape poverty.
A lot of the conversation around the Two Child Limit focuses on the simplistic idea that people should not have more children than they can ‘afford’. This is both cruel and, in many cases, irrelevant.
We were working when we had our third child. We didn't expect to have a disabled child. We didn't expect her to need extra care and we would have worked and paid for it, but the situation changed. We weren't on benefits and then thought ‘We'll have three kids’ or whatever else. It actually changed for us and we were working up until that point. And then not to get the help, it doesn't seem fair.
Dad, interviewed for our ‘All Worked Out’ report
Family circumstances can change overnight. Parents might fall ill or might separate. A third child may have a disability, which affects a parent’s ability to work. In these cases, the Two Child Limit can make a difficult situation even worse.
We supported Tom and Kerry when the birth of their third child left Kerry in chronic pain, unable to work properly and experiencing seizures.
Tom had to give up work to care for Kerry and the children. Having to rely on benefits forced them to leave their privately rented house, and give up their car. Action for Children was able to support the family with £250 towards a new washing machine, energy vouchers, and referral to the local food bank.
"It’s been really hard. Our financial situation impacts our kids massively. The older two asked why we moved. It’s hard to explain that because of my disability Tom can’t work and that means we don’t have enough money."
"What has happened to Tom and myself can happen to anybody. I was no better or no worse than anyone else before this happened. I’m just an average person, who was working, my partner was working, and we fell onto hard times."
It’s important to remember that, for families, the Two Child Limit affects all the children, not just the youngest one or two. For children in a family whose parents are trying to make money for two children stretch to cover a third, that means a less happy childhood for all.
Fewer treats, toys, and trips out. Less money to keep the fridge full, or the bailiffs at bay. Poverty affects those who experience it in lots of ways – including their mental health.
What the government is basically saying is that especially in families who are living in poverty and are on the literal breadline, if they’ve had more than two children they’re expected to just stay in poverty, those children are expected to suffer. And at the end of the day, it’s nothing to do with the child, it’s not the child’s fault.
Mum supported by Action for Children
1.5 million
1 in 10
There are around 300,000 children in families affected by the Benefit Cap, and many families are affected by both.
It’s important to scrap both caps together to have the biggest impact for families. Without doing so, some of the very poorest families wouldn’t gain much from the end of the Two Child Limit, as they would just hit the overall cap instead.
Scrapping both caps would cut child poverty by around 600,000 by 2030, while also relieving the depth of poverty for many more families.
"I’m noticing that I’m trying to make money stretch further and it’s just not stretching. So it could make a huge difference, just having a little more money to account for. I have four children, I don’t get any money for two of them. It’s not that I necessarily expect it – I do not. But would it help? Yes, let’s be honest, we’re in a crisis."
-Mum supported by Action for Children
The Government didn’t take the chance to lift the two-child limit at its first Budget in Autumn 2024. We’re campaigning for them to do this as soon as possible, and you can help us by writing to your local MP to make it clear you support our efforts to do so.
Scrapping the caps would cost £2.7 billion per year in 2025, rising to £3.9 billion by 2030. That’s equivalent to just 2.3% of spending on social security for working-age people in 2030.
The potential value - for such a relatively small investment – is huge.
Our campaign, 'Paying the Price' is highlighting how children are paying the price for a lack of action on poverty. They're spending their childhoods feeling anxious, ashamed, and isolated by poverty. The government needs to step up to invest in real change.
Our young campaigners are calling on the government to act
