New analysis: families hit by two-child limit face additional £900-plus shortfall this year as costs spiral

Published on: 
06 April 2022
  • 2,500-strong parents’ survey finds acute hardship on fifth anniversary of the policy
  • removing the two-child limit would lift 250,000 children from poverty

Three-child families affected by the two-child limit face an extra shortfall in meeting the cost of raising their children of £938 this year because benefits are lagging behind the surging cost of living and they are only getting support for two children through universal credit, new Child Poverty Action Group analysis finds. The shortfall for families with more than three children affected by the policy will be greater.

The charity estimates a total of 400,000 families with 1.4 million children are now affected by the policy, introduced five years ago today. Sixty per cent of affected families have three children.

With benefits due to increase by just 3.1 per cent this month, less than half the expected rate of inflation, all families will see a real-terms cut in their benefit income just as costs climb. But the squeeze for families affected by the two-child limit will be particularly acute. If the cost of raising children rises in line with inflation, the cost of three children will be £23 more a week than last year. But the support that three-child families affected by the policy receive from children’s benefits will increase by just £5 – a £938 annual shortfall.*

The two-child limit restricts child allowances in universal credit and tax credits worth £2,953 per year to the first two children in a family unless the children were born before 6th April 2017 when the policy came into force.

Affected families will have only £750 in child benefit to help with the costs of a third (or subsequent) child this year.

The two-child limit is the biggest driver of rising child poverty. By 2026/27, over 50 per cent of children in families with more than two children are predicted to be in poverty.** Removing the policy would lift 250,000 children out of poverty, CPAG’s analysis finds.

Parents affected by the policy who responded in the last year to a rolling survey for CPAG describe how the policy has forced them to cut both household essentials and children’s activities (see parents’ quotes below).

CPAG's analysis finds 55% of families affected by the policy are couple-families and 45% are single parent families. Existing Government data shows 56% of families affected are working.

A joint report marking five years of the policy, published today by Child Poverty Action Group, the Church of England and the Benefit Changes and Larger Families research project calls for the two-child limit to be abolished.

Commenting today, Sara Ogilvie, director of policy, rights and advocacy at Child Poverty Action Group said:

“The two child limit is a brutal policy that punishes children simply for having brothers and sisters. It forces families to survive on less than they need, and with soaring living costs the hardship and hunger these families face will only intensify. Government must abolish this senseless policy, and protect children from a lifetime of struggle.”

The Rt Revd Paul Butler, Bishop of Durham said:

“More than a million children are affected by the two-child limit after five years of its existence. This policy is pushing increasing numbers of children, most in working families, into poverty. It is time that the Government took this seriously and abolished the policy. All children deserve adequate support and sadly this policy discriminates against some of the most vulnerable in our society.

“The plight of larger families affected by this policy will only get worse over the coming months as we face inflation at its highest level in a generation and soaring energy bills.”

Parents responding to the survey said:

"People do not have children for money, people have children out of love. When we had our children we didn’t do it to claim extra benefit's we were both in work. Since having our extra 2 children that do not qualify in a home of 5 children we are struggling beyond belief. Basic needs like shampoo and toilet paper we are going without.”

“Having four children is hard as two was not planned (failed implant). I struggle buying day to day things for my children and I go without food most days just so my children can eat and be clothed.”

“We wear extra layers of clothes as I cannot afford to put the heating on. We shower on a Wednesday and Saturday to reduce energy bills but we shouldn't have to live like this.”

“Sometimes I struggle to pay rent and bills because I don’t always have enough money to buy food and get gas and electricity. So I’m now in a lot of debt. I also don’t believe in abortions so that was not an option. I fell pregnant while using contraception”

“My children have been effected socially and emotionally- have to give up their sports and extra educational programs. They lost close friends, confidence and I have been effected mentally with the guilt I cannot give my younger children the opportunities I used to afford the older kids.”

“I dread when the children come home with a letter for a school trip/scouts trip etc. as I know I am going to struggle to find the money to pay for it. I know it was my choice to have 4 children but it wasn't my plan to become a single parent. I feel like [I] fail my children. I want them to have all of the opportunities possible to become successful in their lives but it feels that in order to do this you need money.”

“I got pregnant despite having implant. When I found out it was too late for [an] abortion. I'm struggling since then as I had to give up my work”

“The two-child limit makes me feel like my third child is non-existent and or [not] considered in this world, and it’s heart-breaking that I feel I cannot fully provide for my youngest without struggling.”

Notes to editors:

Today’s report is here

*CPAG’s estimates are based on the Minimum Income Standard (MIS) calculations on the cost of raising a child in 2021. Assuming the cost of raising a child increases in line with inflation, a three-child family affected by the two-child limit will this year have an additional shortfall of £938 in meeting the basic costs of three children aged 11, 5 and under 1 due to a combination of the limit, rising living costs and sub-inflation uprating of benefits. This takes the shortfall between what the family needs to cover the basic costs of raising their children and the support they receive through children’s benefits to over £7,000 a year based on MIS. The basic cost of raising a child excludes childcare, rent and council tax.

** Resolution Foundation, Living Standards Outlook 2022, 2022

Parents’ quotes are from an ongoing survey of families affected by the two-child limit which has been running since February 2019. Users of the Entitled to benefits calculator who are likely to be subject to the two-child limit are invited to participate. By March 2022, the survey had received 2,510 responses, including 403 responses in the last six months.

CPAG press office: Jane Ahrends 07816 909302