DWP gets warning as families to be hit by ‘crude’ cap.

The number of children affected by the two-child allowance cap will rise by a third over the next five years, the Institute for Fiscal Studies has warned. The cap currently affects two million children, with more hitting each year, as it applies to those born after April 5, 2017.

Next year, a further 250,000 children will be affected, rising to 670,000 before the end of the next parliament if the policy is not reformed, according to the think tank. Neither Labor nor the Conservatives promised in their election manifestos to abandon Tory policies long accused of keeping children in poverty.

The cap, described as “cruel” by campaigners, was introduced in 2017 and restricts Child Tax Credit and Universal Credit, paid by the Department for Work and Pensions (DWP), to the first two children in most households. When fully rolled out, it will affect one in five children, reaching 38% of those in the poorest fifth of households, the IFS research found.

It says 43% of children in households with at least one person of Bangladeshi or Pakistani origin will be affected. According to the analysis, affected households will lose an average of £4,300 a year, representing 10% of their income.

The introduction of the cap helped increase the share of children in large families who are in relative poverty from 35% in 2014-15 to 46% in 2022-23, while poverty for families with one or two children fell, the IFS said . The think tank said scrapping the cost of the cap would cost the government around £3.4 billion a year, about the same as freezing fuel duty for the next parliament.

IFS research economist Eduin Latimer said: “The two-child limit is one of the most significant welfare cuts since 2010 and, unlike many of these cuts, it is becoming more important every year as it is extended to several families”.

Mubin Haq, chief executive of the abrdn Financial Fairness Trust, which funded the research, said: “The cap has made a significant contribution to child poverty among large families at a time when poverty for families with one or two children has fallen. If the next Government is serious about tackling child poverty, it will need to review the two-child limit.

“There is an inherent inequity in the policy as it only affects those children born after April 5, 2017. The majority of affected families work or have caring responsibilities for disabled relatives or young children.”

Child Poverty Action Group chief executive Alison Garnham said: “Child poverty in the UK is a national shame and the biggest factor is the two-child limit. It makes life worse for children up and down the country and limits their future chances.

“Children affected by child poverty have no voice in this election, but politicians of all parties have a responsibility to them to show leadership. Any government serious about making things better for the next generation will have to scrap the two-child limit, and do it fast.”

Paul Carberry, chief executive of Action for Children, said: “This is yet more shocking evidence of the huge scale of damage caused to children and families by the cruel two-child limit, which is well known to push families into poverty and which, if it would be scrapped, it would take out 300,000 children with difficulty.

“The election is an opportunity to take bold and ambitious action and for all political parties to commit to ending child poverty once and for all. This must include an increase in the universal child credit element and the removal of the two-child limit and the benefit cap.”