The two-child benefit cap must go

How many reasons do you need to abolish a senseless and damaging policy? Rather than making getting rid of the cap a centrepiece of their King’s Speech, Labour have kicked it down the road.

And that means more children and their families will suffer. Those born before April 5, 2017 are not affected, but as time rolls on more children are caught in the trap. The Institute for Fiscal Studies calculates that today 2 million children are denied benefits because of the cap, and by the end of this parliament this will rise by a further 670,000.

Before Osborne came up with this mad policy all children benefited and it is now worth £3,455 per year per child. That is a huge hit, especially to the poorest and to those from minority groups that tend to have larger families.

Once it is fully rolled out, the two-child limit will hit one in five of all children, and 38% of children in the poorest fifth of the population. The policy will cost the average family what might have been 10% of their income. Even the wealthy notice a 10% wage cut, for the poor it is devastating.

It is therefore hardly surprising that while in 2014–15, 35% of children in families with three or more children were in relative poverty, now the figure is 46%. This should be a figure that arouses national embarrassment and shame.

Any advanced country should be working night and day to reduce child poverty. Not just because that is the decent thing to do but because the long-term savings are huge. Poor, malnourished children do less well at school, earn less in adult life, pay less tax and place far larger demands on the NHS.

What made this even more damaging was that the policy was introduced over a period of high inflation, stagnant wages and the problems of Covid. Remember that the next time you see George Osborne joking on TV, and when he gets yet another job.

Abolishing the cap remains a Labour ambition, but the party says for the moment that it is too expensive to tackle without a growing economy. The Resolution Foundation, a think tank that focuses on improving standards of living for low- and middle-income families, calculates that it will cost between £2.5 and £3.6 billion, but then says that is “low compared with the harm the policy causes.”

So we will have to wait for Rachel Reeves’s first budget to find out if she can find that money.

She really must. As a way of pulling millions of children out of poverty it is hard to beat.

Also, it would send a signal to the country about the divide between our major parties: Abolishing the two-child limit would mean that while the Tories might have been happy to punish children for their own economic failings, Labour is not.