Plans to lift two-child benefit cap will land UK's biggest jobless families with £20K a year costing taxpayer £3.5B
Around 70,000 families would receive more than £18,000 a year in child benefits if ministers move to lift the controversial limit.
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Some of the largest families in the UK would find themselves more than £20,000 better off compared to the current system, however this could come at a hefty cost to the taxpayer.
The two-child benefit cap - introduced by the Conservatives in 2017 - means parents cannot claim Universal Credit payments (worth about £300 a month) for more than two of their kids.
However, ministers have floated the idea of scrapping the cap - which would cost £3.5 billion.
Pressure has been growing on Keir Starmer to change the policy, with his backbenchers believing the cap is deeply unfair to children growing up in poverty.
However, the Conservatives argue it would be 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.
Former prime minister Gordon Brown has pleaded the government to increase gambling levies in order to fund the scrapping of the cap.
If lifted, around half a million children could be taken out of poverty.
Nigel Farage has said Reform UK would also lift the cap to encourage families to have more children, leaving the Tories somewhat isolated in their position.
At present, the two-child benefit cap prevents families from claiming the £292.81-a-month child element of Universal Credit for third or subsequent children born after April 6, 2017.
Around 71,000 families with five or more children on Universal Credit would stand to gain significantly from the abolished cap, official figures show.
Changes to UC & PIP payments in full as Labour reveals bruising welfare bill concessions in bid to quell rebellion
Each one of these would become eligible for at least £18,122.88 every 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.
On top of these, there are 424 families with ten or more children who, without the cap, could gain child Universal Credit payments worth more than £35,000 a year, in addition to other benefits.
Exactly how much each family stands to gain depends on when their children were born.
Shadow Work and Pensions Secretary Helen Whately 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."
The prime minister has faced backlash from his backbench in recent months, including pressure which led to a u-turn on planned tightening for Personal Independence Payments (PIP) claims.
Whately said: "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."
TWO-CHILD BENEFIT CAP IS 'BIGGEST DRIVER OF RISING CHILD POVERTY'
However, Chief Executive of the Child Poverty Action Group Alison Garnham said that "evidence shows the two-child limit does not affect parents' decision about family size".
She highlighted that just two per cent of families on benefits had five or more children, arguing it was "poor policy" to focus on extreme cases.
Garnham added: "Clearly for these households, money does not drive decisions about family size since the vast majority are only receiving UC support for two children"
Around 4.5 million children currently live in relative poverty, with Garnham saying the two-child limit was the "biggest driver of rising child poverty".
100,000 more children entered relative poverty last year, and Garnham argues that "scrapping it is the most cost-effective way to reverse the increase".
She said: "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."
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