Has the two-child limit affected how many children families have?

This briefing summaries the findings of two papers from the Benefit Changes and Larger Families research study which explore whether the two-child limit has affected families’ decisions about how many children to have. The papers are here. 

The two-child limit restricts means-tested benefits to just the first two children in a family. It was introduced in 2017 as part of a range of cuts to social security during the 2010s which aimed to reduce government spending.

Around 400,000 families (with 1,400,000 children) are affected by the policy, meaning they miss out on around £3,000 a year for every child they have after the first two. As the policy was introduced to cover new births from April 2017, it currently only applies to children aged 5 and under but, every year, more and more families are affected. When fully rolled out, the two-child limit will affect 800,000 families and 3 million children.

Along with reducing spending, the government implied that the two-child limit would influence people’s decisions about how many children they have. George Osborne, the chancellor at the time, claimed that the policy would ensure that families in receipt of benefits faced "the same financial choices about having children as those supporting themselves solely through work". Despite the apparent distinction this creates between working and non-working families, the majority (56 per cent) of parents affected by the limit are in work.                 

Did the two-child limit affect people’s decisions to have children?

It is possible to estimate the impact the two-child limit has had on families’ fertility decisions using administrative birth records in England and Wales from 2015 to 2019, and the Annual Population Survey. By comparing the likelihood of having a child among different sub-groups, the researchers were able to isolate the effect of the policy on families’ decisions to have more than two children.

The data shows that the probability of having a third or subsequent child declined by just 0.36 percentage points (or 5 per cent) after the introduction of the two-child limit – equivalent to reducing the number of births by around 5,600 a year.

Why was the impact on fertility so small?

Interviews with larger families subject to the two-child limit conducted as part of the study shed some light on why the impact of the policy on fertility decisions has been so small. The interviews illustrate the complexity of people’s lives and the range of circumstances in which children are conceived. For one thing, pregnancies are not always planned. This was the case for Asma, a mother of five children:

"It [the pregnancy] did come out of the blue sort of thing but yes, it was, how should I put it? A bit of a shock. Yes, it did come out of the blue and I was worried that I wouldn’t be entitled to any child tax, so that was a bit of a concern."

Other families were simply unaware of the restriction until after their affected child was born. Laura, a mother of three children, only found out about the policy after the birth of her third child:

"I was just so shocked; I suppose at the time I didn’t really question anything because I was so surprised by what they’d said, and then I went away and looked into it online and realised that actually what they’d said to me on the phone was right."

Some parents, like Jessica who has four children, did not consider the availability of government support because they were financially secure when deciding to have another child. It was only when Jessica’s circumstances changed that her family became affected by the two-child limit:

"It didn’t concern me because obviously I was in a financially stable place. Also it was my husband’s first child as well so we were quite happy to not have to even take that into consideration really, we wanted the child and we was fairly stable. So it didn’t really affect us much at that point."

Alongside financial considerations, the decision to have children can be deeply tied to cultural norms and religious values about family size, contraception and abortion. For Hammad, a Muslim father of four children, the availability of government support was not a factor when deciding how many children to have:

"To be honest, for us we not looking for that two more in the same way; we believe that, that in our community or in our background home we don’t think about that [financial incentives], because, you know, we are Muslim."

Sara, a mother of four children, also made her decisions about family size without regard to government support:

"I don’t just have kids to get benefits and stuff like that, I have kids because I love ‘em and stuff like that."

Conclusion

The research suggests that the availability of government support is only a minor factor in a family’s decision to have another child, and that reality is much more complicated than the policy assumes. Given the qualitative evidence above, it is not surprising that the two-child limit has had a minimal impact on fertility rates. It has however had a significant impact on the wellbeing of children in larger families.

The study suggests the two-child limit has reduced the number of births by an estimated 5,600 a year, but around 400,000 affected families with three or more children are significantly worse off as a result. Every year about 50,000 children are pushed into poverty as a result of the two-child limit, and a further 150,000 children who are already living in poverty see their circumstances deteriorate further.¹

If the central aim of the two-child limit was to reduce the number of people deciding to have a third child it has largely failed. The most sizable impact of the policy has been to increase child poverty.

About the Benefit Changes and Larger Families research project

This briefing is a summary of two papers that consider the impact of the two-child limit on fertility. These were produced as part of the Benefit Changes and Larger Families research project. The project examines how the risk of poverty for larger families has changed as a result of recent benefit reforms which have broken the link between needs and entitlement in the social security system. It is a collaboration between the University of York, the University of Oxford, the London School of Economics and Political Science and Child Poverty Action Group. The project has been funded by the Nuffield Foundation, but the views expressed here are those of the authors and not necessarily the Foundation.

[1] CPAG’s calculations using Family Resources Survey 2019-20, UKMOD