Scrapping DWP two-child benefit limit would lift 'over half a million kids out of poverty'

The finding from the Institute for Fiscal Studies will pile further pressure on Keir Starmer to finally axe the Tory austerity-policy at Labour's first Budget in 14 years

Scrapping the two-child benefit limit would lift more than half a million kids out of absolute poverty, a major report says.

The finding will pile further pressure on Keir Starmer, who has resisted calls to finally axe the Tory austerity-policy at Labour's first Budget in 14 years. The PM has argued he will not make unfunded promises and last month suspended seven rebel Labour MPs for voting against the government on the issue.

In its report the Institute for Fiscal Studies says reversing the two-child benefit limit would pull 540,000 kids out of absolute poverty - and cost £2.5billion a year. The think-tank says the rise in child poverty has been "entirely driven" by higher rates of poverty among families with three or more children.

The policy, which prevents people from claiming Child Tax Credits or Universal Credit for more than two children, was introduced by the Tories in 2017. The latest government figures showed there were almost 1.6 million kids impacted.

But the IFS adds scrapping the policy is not a "silver bullet", with some 70,000 of the poorest families seeing any gains wiped out by the benefit cap - another Tory-era cut to welfare.

Introduced in 2013, it sees the amount of benefits a household receives reduced to ensure people do not receive more than the cap limit. Scrapping both the two-child limit and the benefit cap would lift 620,000 children out of absolute poverty but would cost more than £3billion annually, the IFS added.

Anna Henry, research economist at the IFS, said: "‘The recent rise in measured child poverty is entirely driven by higher rates of poverty among families with three or more children. Scrapping the two-child limit would be a cost-effective way of reducing child poverty, at a lower cost per child lifted out of poverty than all the other obvious changes to the benefits system, but it is not a silver bullet."

She added: "It would do nothing for households affected by the household benefit cap, who are among the poorest. In fact, removing the two-child limit would lead to 70,000 more households being affected by the household benefit cap, wiping out some or all of its effect for those households."

A Government spokeswoman said: “No child should be in poverty – that’s why our new cross-government taskforce is developing an ambitious strategy to reduce child poverty and give children the best start in life. Alongside this, we have extended the Household Support Fund to support the most vulnerable with essentials this winter and committed to reviewing Universal Credit while we deliver on our plan to tackle inequality and make work pay.”