New government statistics released today show the reach of the two-child limit. There are 1,665,540 children in England, Scotland and Wales living in households affected by the two-child limit, an increase of over 35,000 from the same time in 2024.

The two-child limit restricts means-tested child benefits to the first two children in a household, subject to some exceptions.

Its sister policy, the benefit cap, affects over 115,000 households, including 300,000 children. It routinely pushes families into deep poverty, far below the standard poverty line of 60% of median income.

The benefit cap places a limit on the total amount a household can receive if no-one in the household earns a minimum amount, again subject to some exceptions linked to receipt of disability benefits.

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Over the past five years, we have been part of a team of academic researchers investigating the impact of both policies on families with three or more children. We’ve found that these policies drive up poverty, creating deprivation and hardship. This in turn causes sustained and severe harm to children and their families.

The two-child limit and benefit cap leave many families living with extreme financial insecurity. They harm parental mental health, as mothers and fathers struggle to try and make an inadequate income stretch to meet the needs of their children.

Parents are struggling to make their income go far enough.
Odua Images/Shutterstock

In addition, these policies do not fall evenly across the population when looking at ethnicity. Overall, 70% of the families affected by the two-child limit are white, as are 66% affected by the benefit cap. But our new analysis shows that children from an ethnic minority are up to three times as likely as white children to be affected by the two-child limit. They are also up to four times as likely to be affected by the benefit cap.

Alongside administrative statistics, we have analysed household survey data, published today as a policy brief. We find that one in five children from Pakistani families and one in four children from Bangladeshi families are now affected by the two-child limit.

Rising poverty

Our analysis also indicates that these policies are contributing to very high and rising levels of poverty. We estimate that 66% of Bangladeshi children, 60% of Pakistani children, and nearly half (48%) of black children live in poverty. This compares to one in four (24%) white children living below the poverty line – still far too many.

This new analysis provides us with better understanding of where the damage done by both policies is falling. It’s an important reminder of how the two-child limit and benefit cap directly conflict with ambitions not only to act on child poverty, but also to reduce systematic inequalities linked to ethnicity.

Scrapping the two-child limit would give larger families access to benefits they currently miss out on – but it would not have any effect on smaller families living in poverty, so isn’t the only policy solution needed.

Nonetheless, analysis by the Resolution Foundation has shown that getting rid of the two-child limit – which would cost £1.4 billion – is by far the most cost-effective way to reduce the number of children living in poverty. Spending £1.4 billion in other ways – for example by increasing benefits for all families – would make less difference to child poverty than if the two-child limit were ended.

It’s also important to keep in mind the impact on the depth of poverty. Larger families tend to be living further below the poverty line. Scrapping the two-child limit will make a big difference in many households, even if they are not lifted out of poverty as a result.

Labour came into government on a manifesto of “change”, and Keir Starmer has promised to be “laser-focused” in his commitment to drive down poverty.

Labour have already said that they want to get rid of the two-child limit, arguing that they just need to find the money to do so. The government has established a child poverty taskforce, due to report in the autumn, and made a first concrete policy commitment with the extension of free school meals provision for families in England. But there is no alternative to serious action on social security benefits if significant progress is to be made.

Ruth Patrick receives funding from a range of funders including Nuffield Foundation, AFFT, Trust for London, The Robertson Trust and the Centre for Impact on Urban Health. She is a member of The Labour Party.

Kitty Stewart has received funding from the Nuffield Foundation and from LSE for the research reported in this article.