Almost two-in-five large families are now affected by the two-child limit – and the majority are set to fall into poverty when the policy is fully rolled out

Around 38 per cent of all large families (with at least three children) were affected by the two-child limit on benefit support in April 2024, and the policy is set to push the majority of large families below the poverty line by the end of the parliament, the Resolution Foundation said today (Thursday) in response to new DWP data.

450,000 families were affected by the two-child limit in April 2024, up from just 70,000 in 2018. The Foundation notes that over a third (37.5 per cent) of the roll-out of the policy is still to come, with around 720,000 families due to be affected by the time it is fully rolled out in the mid-2030s. By that time, 61 per cent of large families will be affected. A total of 1.6 million children live in families affected by the policy, an increase from 1.5 million in April 2023.

The Foundation notes that families in London are most likely to be affected by the policy, with 69,000 households in London affected by the policy. And despite the common perception that the policy affects workless households, around three-in-five households affected by the policy actually have someone in work.

The impact of the policy on those affected is stark, with 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.

As a result, the policy is driving up rates of child poverty among large families. The Foundation notes that around two-in-five (41 per cent) large families were in poverty in 2016-17, before the policy was introduced, but that is set to rise to over half (51 per cent) by the end of the parliament (2028-29).

The Foundation’s analysis shows that if the policy were abolished today, it would lift around 490,000 children out of poverty.

Abolishing the two-child limit would cost around £2.5 billion today, rising to £3 billion if combined with the abolition of the Benefit Cap. The eventual cost of abolishing the two-child limit could rise to around £3.6 billion 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.

“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.”