Scrapping two-child cap could be ‘good for economy’

Scrapping the two-child benefit cap could save the UK £3.2bn a year by the end of the current parliament, new research from a thinktank reveals.

The New Economics Foundation says that lifting this limit would not only help families, but also support the economy.

By 2025/26, they estimate the poorest families’ incomes could increase by £1.9bn, rising to £2.6bn by 2029/30. This would be a significant boost for those struggling to make ends meet.

What’s the two-child cap?

The two-child cap means parents can only claim child tax credit or universal credit for a maximum of two kids per household.

It currently impacts about 1.5 million children and if it were to be scrapped, 250,000 youngsters would be lifted out of poverty, according to the End Child Poverty Coalition.

Wider economic benefits

As well as directly benefitting families, scrapping the cap could also bring:

• lower demand for public services by £1.7bn a year
• £1bn increase in annual earnings

Households in the north and Midlands would benefit the most.

The impact of the two-child cap

Right now, families lose out on nearly £3,500 for every kid they have after the two-child limit.

This cap hits larger families hard. Nearly half (49%) will face poverty by the end of this parliament if it stays in place.

And scrapping the wider cap on benefits too would bring the savings to £4bn a year. The benefits cap limits the total amount of benefits a household can receive.

But keeping both caps could push 49% of kids in bigger families below the breadline.

Scrap the cap

We’re urging the government to get rid of the two-child cap to immediately lift 250,000 children out of poverty.

Even with pressure from different groups and MPs, the Labour government has no plans to end the limit. Instead, they’ve said they will address the problem with a new child poverty strategy.

Do you need money help?

If you're struggling to make ends meet because of this limit, it might be time to ask for help.

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