What’s the two-child benefit cap and why is Keir Starmer facing heat on it?

In brief

• The two-child benefit cap, introduced in 2017, limits child tax credit or universal credit payments parents can claim for their first two children, with no additional payments for third or subsequent children born after April 2017.
• The policy has been widely criticized for contributing to child poverty in the UK, with campaigners arguing that abolishing the cap could lift around 250,000 children out of poverty.
• While the Labour Party has faced pressure to commit to scrapping the cap if elected, party leader Keir Starmer has cited financial constraints as the reason for not including it in their manifesto, though he has acknowledged the "powerful argument" for abolishing the policy.

What is the two-child benefit cap?

You might hear it brought up in TV debates, radio interviews and of course most importantly, by the electorate. The two-child benefit cap. It’s become a sticking point in this General Election, going hand in hand with the discourse around child poverty in the UK. But what is it and why does it matter?

Many eligible families in the UK can claim child tax credit or universal credit for their children. It amounts to around £3,455 a year for each child.

But in 2017, former Conservative chancellor George Osborne introduced the ‘two-child benefit cap.’

Essentially, low-income families can still claim for their first two children, but can no longer claim for their third or any subsequent children who were born after 5 April 2017.

The policy was introduced during a period of austerity, with Osborne saying it would “incentivise” parents who weren't already working to work, or to take on more hours.

But the cap has resulted in thousands of more children being thrown into poverty and was even dubbed the "biggest driver" of child poverty in the UK by Alison Garnham, the chief executive of Child Poverty Action Group.

The Institute for Fiscal Studies has predicted that if the policy isn’t reformed, 250,000 more children will be affected by the limit when it is fully rolled out, with that figure rising to 670,000 before the end of the next parliament.

Why is it such a big discussion point in this General Election?

Across the UK over 30% of children are in poverty, according to End Child Poverty.

The two-child benefit cap has been widely criticised for contributing to this high figure.

A study by Loughborough University found that “child poverty rates are directly and strongly correlated with the percentage of children affected by the two-child limit in that local area, providing further evidence that the policy is a key driver of child poverty.”

Campaigners have argued that abolishing the cap would lift 250,000 children out of poverty and a further 850,000 would be in less extreme poverty.

It is therefore argued by many as a no brainer.

However, as always with politics, it’s about weighing up what money there is to be spent, and how best to spend it.

What do the UK political parties say on removing the cap?

What’s really interesting is that calls to abolish the two-child benefit cap have transcended parties.

Former Labour Prime Minister Gordon Brown noted that “a family on low pay or a family that is struggling cannot afford to lose £60 a week”. Right-wing former Home Secretary Suella Braverman said “all the evidence suggests that it is not having the effect of increasing employment or alleviating poverty. Instead, it’s aggravating child poverty.”

Looking at this election specifically, not only have both the Liberal Democrats and the Green Party said they would abolish the two-child benefit cap were they to come into power, but so has Nigel Farage.

The Reform UK leader said during an ITV debate that he was in favour of scrapping the cap if he were to win, in order to encourage people to have more children.

And although both the Conservatives and the Labour party have said they would not abolish the cap, it’s really Labour - and Keir Starmer - who are coming under the most heat.

Why is Keir Starmer facing pressure?

There’s been a high expectation put on Labour to end the cap if they come into power. But it was absent from the party’s manifesto, to some people's surprise.

The Labour leader, who has previously spoken out in favour of abolishing the cap, has said that choosing not to pledge to remove the cap in his election manifesto was a “tough decision”.

Scrapping the two-child limit is estimated to cost approximately £3bn a year, by the Institute of Fiscal Studies. Starmer told LBC’s Nick Ferrari, “we don’t have a magic wand” and that “there isn’t any more available”.

What’s the takeaway?

The Labour argument is that if they are to come into government, they will help tackle child poverty with other policies.

However critics argue that the cost of abolishing the cap, in the grand scheme, is not only a relatively low price to pay to lift thousands, or even hundreds of thousands, of children out of poverty. But also, that it is the most cost effective way to do so.

Comments from Starmer make you wonder if he has left the door open on the policy. While he insisted that Labour can’t commit to abolishing the cap now, he also said: “I’m not going to put a date on these things, but I’m not immune from just how powerful an argument this is.”

If moral pressure mounts, could we see Starmer do a u-turn on the policy this side of the election? To be continued.

The News Agents' take

Emily Maitlis put the question of child poverty, and it's lack of mention in the Labour manifesto, directly to Labour's Peter Kyle, asking him:

"These are the statistics staring at you in the face right now. 46% of children in families with three or more kids are in poverty. Why isn’t that screaming at your party to end the cap on child benefits? Why aren’t you listening to Gordon Brown who said we’ve got to rethink it?"

Listen to The News Agents full interview with Peter Kyle below.

Listen to the latest episode of The News Agents podcast now.