Large families to gain £20,000 if two-child benefit cap scrapped

Times

7 hours ago

Tens of thousands of large families stand to gain thousands of pounds a year if ministers press ahead with abolishing the two-child benefit cap, official figures show.
More than 70,000 families will receive more than £18,000 a year in child benefits if ministers take a step that Labour MPs insist is essential to fighting poverty. Some of the biggest families would be more than £20,000 better off than under the current system.
The two-child cap on benefits was introduced by the Conservatives. It means that parents cannot claim universal credit payments worth about £300 a month for more than two of their children.
Sir Keir Starmer is attempting to focus his government on 'fairness', and many of his backbenchers believe the cap is deeply unfair to children growing up in poverty.
But in a battle to define the idea, Conservatives say it is unfair to hand packages to families on benefits that are worth more than the minimum wage when other taxpayers cannot afford to have more children.
The prime minister is looking for ways to find the £3.5 billion needed to abolish the two-child benefit cap, a move which is backed by the vast majority of Labour MPs and most of the cabinet.
Rachel Reeves, the chancellor, is considering pleas from Gordon Brown to increase gambling levies in order to fund a move that would lift about half a million children out of poverty.
Nigel Farage has also said that Reform UK would lift the cap to encourage British families to have more children, leaving the Conservatives isolated in their insistence that the policy is essential to control the welfare bill and to ensure the benefits system is fair to taxpayers.
The two-child benefit cap bars families from claiming the £292.81-a-month child element of Universal Credit for third or subsequent children born after April 6, 2017.
Official figures show there are 71,580 families with five or more children on Universal Credit that stand to benefit significantly from abolishing the cap, each becoming eligible for at least £18,122.88 a year.
This includes 14,899 families with six children, 4,812 with seven children, 1,822 with eight children and 668 with nine children, according to data released in answer to a parliamentary question.
There are also 424 families with ten or more children who without the cap would be eligible for child Universal Credit payments worth more than £35,000, in addition to other benefits. Exactly how much each family stands to gain depends on when their children were born.
Helen Whately, the shadow work and pensions secretary, said: 'Without a cap, Labour will end up giving households thousands of pounds in extra benefits — a top-up worth more than a year's full-time pay on the minimum wage. Not only is this unaffordable, it's also unfair. If you're in work you don't get extra pay for another child, so it doesn't make sense for parents on benefits to get more.'
She added: 'Working people shouldn't see their taxes go up to fund uncapped payouts to others who've opted out of work but opted in to multiple children.'
After Starmer was forced to abandon plans to rein in sickness benefit spending after a backbench rebellion, Whately added: 'Starmer's Britain is living beyond its means. He needs to stand firm against the pressure from his backbenchers and make the firm but fair choices to get welfare costs under control.'
But Alison Garnham, the chief executive of the Child Poverty Action Group, said that 'the evidence shows the two-child limit does not affect parents' decisions about family size'. She pointed out that only 2 per cent of families on benefits had five or more children, arguing it was 'poor policy' to focus on extreme cases.
'Clearly for these households, money does not drive decisions about family size since the vast majority are only receiving UC support for two children,' she said.
About 4.5 million children currently live in relative poverty, a figure that rose 100,000 last year, and Garnham said: 'The two-child limit is the biggest driver of rising child poverty and scrapping it is the most cost-effective way to reverse the increase. Giving all children the best start in life will be impossible unless the government abolishes the policy in its autumn child poverty strategy.'
A government spokesman said: 'Every child — no matter their background — deserves the best start in life. That's why our child poverty taskforce will publish an ambitious strategy to tackle the structural and root causes of child poverty, and in the meantime we are investing £500 million in children's development and ensuring the poorest children don't go hungry in the holidays through a new £1 billion crisis support package.'