Scrapping the two-child benefit cap would lift 600,000 children out of poverty in the next five years, analysis has found.
Researchers at Action for Children have warned that separate plans to boost parents’ income by getting them into better or new employment would “barely shift the dial” on child poverty.
Instead, Labour should take the bold move of scrapping the two-child benefit limit, which is “the single most cost-effective policy option the government could implement”, the charity argued.
They calculated the move would improve the lives of 600,000 children by 2030 at a cost of £3.9bn per year, compared to 150,000 children under measures to increase parents’ income in other ways.
Labour is currently drawing up a child poverty strategy, which will set out plans to bring about an “enduring reduction in child poverty in this parliament”. The work is being led and pensions secretary Liz Kendall and education secretary Bridget Phillipson.
In order to lift a least a million children out of poverty in the next five years, Action for Children calculated that the two-child benefit cap would have to be removed and child-related elements of universal credit would have to rise above inflation.
The take-up of means-tested benefits would also have to rise, with these combined measures costing £10.4bn a year.
The two-child cap means parents don’t receive any extra money for their third or subsequent children born after April 2017. The Institute for Fiscal Studies estimated that a lone parent with three children, who is not working and living in social housing, would be £3,455 worse off a year due to the cap.
Jasmine, from Dorset, who has four children aged nine, seven, five and two, said she had been struggling to make ends meet since separating from her children’s father.
Jasmine, who did not want to share her last name, said: “It’s such a precarious existence now. My eldest has really picked up that we’re struggling more and asks: ‘Are we going to be OK? How are we going to do this?” and I’ll just have to say “We’ll be fine.’
“I’ve just about managed to cover electricity in the summer but now it’s cold in the evenings I try to save money on the gas by wrapping the kids up in double layers in bed, but I’m still just eating through the money on the meter.”
She said that her children’s shoes are another big expense, explaining: “I just don’t have the funds to buy them new shoes or buy them a few pieces of school uniform.”
The Department for Work and Pensions have been contacted for comment.
