What is the two-child benefit cap? Starmer under pressure over controversial policy

A children’s charity has called for the benefit cap to be scrapped as it marks the ‘unhappy’ 10-year anniversary  (Yui Mok / PA)
A children’s charity has called for the benefit cap to be scrapped as it marks the ‘unhappy’ 10-year anniversary (Yui Mok / PA)

Keir Starmer is facing his first Commons revolt as prime minister over the controversial two child benefit cap opposed by many Labour MPs.

Just a week after Labour’s landslide election victory, ex-shadow chancellor John McDonnell said he may seek to amend the Budget to scrap this welfare restriction if the Government does not take this step itself.

Mr McDonnell, MP for Hayes and Harlington in London, said: “Across the Labour party, across the parliamentary Labour party, I think there is a view that this should be done and it’s better done sooner rather than later.

“So, I think the argument has been won.

“Now we are in government, it’s just a matter of saying, ‘Look, how practically can we do this’.

“Most of us think this needs to be done sooner rather than later because the immense suffering our children are going through.

“In every constituency, we have hundreds of children living in poverty and this could lift them out of that poverty.”

Speaking to Times Radio, he added: “If it wasn’t in the Budget, I would seek to amend the Budget to make sure it was.

“On that basis, I think we most probably would have a majority view within parliament itself, across most political parties, including the Labour party.”

Pressure is building to scrap the policy, with new figures showing more than one-and-a-half million children across the UK are affected.

An independent thinktank has said that the majority of children in large families will fall below the poverty line by the end of this parliament five years from now, unless the policy is abolished.

Figures published on Thursday by the Department for Work and Pensions (DWP) showed there were 1.6 million children living in households affected by the policy as of April this year, up from 1.5 million to April 2023.

Of these, 52 per cent of children were in households with three children, 29 per cent in households with four children, and 19 per cent in households with five or more children.

Stats from June by the Institute for Fiscal Studies (IFS) also showed an extra 250,000 children will be impacted by the two-child benefit cap next year, increasing to an extra half-a-million by 2029.

Campaigners have long demanded its repeal, on the grounds it would help thousands of children escape poverty.

But what exactly is the two-child benefit limit, how has it affected British families, and how much is current child benefit?

Here is everything we know.

What is the two-child benefit limit?

The benefit cap first came into effect in 2013, limiting the amount of benefits a household could receive.

Then, later, in 2017, a two-child limit was brought in with the hopes of encouraging parents of larger families to get jobs and low-income families to have fewer children.

The policy prevents parents from claiming child tax credit or universal credit for their third or subsequent children born after April 2017.

How has the child benefit limit affected UK families?

A recent research conducted by the universities of York, Oxford, and London School of Economics revealed that the two-child limit and the benefit cap had failed to meet their own goals, having zero positive incentive impact on employment and failing to reduce fertility among poorer families.

Plus, it was found that the cap had been “poverty-producing”, causing thousands of low-income families anxiety and hardship.

Talking about their findings, Ruth Patrick from the University of York has shared: “Our research evidence makes clear that the two-child limit and benefit cap are poverty-producing policies, which fail to meet their stated aims. Both policies need to be removed urgently, as part of a broader commitment to addressing child poverty and investing in children and families.”

Who wants to see the Child Benefit limit abolished?

Suella Braverman, Nigel Farage, Justin Welby the Archbishop of Canterbury as well as former Labour prime minister Gordon Brown are just a few who want to see the Child Benefit limit scrapped.

Farage voiced his opinion on the subject when questioned on the cap during a general election debate. Farage said: ”I think we should encourage people to have families.

”I think we should encourage people to have children. I think we should also encourage people in marriage to have some tax benefits as well. We’ve got to help people.”

Braverman waded into the row by telling The Telegraph on May 11, “Let’s abolish the two-child limit, eradicate child poverty for good and make Frank Field proud.”

While the Most Rev Welby argued that scrapping the limit would “lift thousands of children out of poverty”.

One person that may help change Starmer’s mind is former prime minister Brown. Last month, he outlined how the two-child limit affects the entire family, not just the third or fourth child, and how the typical family loses £60 a week as a result.

"A struggling or low-income household cannot afford to lose £60 every week.” he said on BBC Radio 4’s Today programme on May 15.

However, Starmer has said he would abolish the cap when he had the resources.

How much is Child Benefit?

For the 2024-2025 financial year, Child Benefit will see a family’s eldest or only child given £25.60 per week. Any additional children will receive £16.95 from the Government.

Child Benefit is usually paid every four weeks on a Monday or Tuesday. However, you can have the money paid weekly if you’re a single parent or getting certain other benefits, such as Universal Credit.

If either of the parents’ adjusted net income is more than £50,000 a year, they may have to pay the High Income Child Benefit Charge.

More information about this can be found on the Government’s website.