New costings: scrapping two-child limit is 'by far' most cost-effective way to cut child poverty

• Policy has pulled 30,000 children into poverty since Labour took office
• Eighth anniversary of the policy on Sunday 6 April

Scrapping the two-child limit would be the most cost-effective way to lift children out of poverty, new costings from Child Poverty Action Group (CPAG) show.

And the charity warns that other interventions to reduce child poverty will fall flat unless the policy goes. This is because as the two-child limit applies to third or subsequent children born after April 2017, it is effectively still being rolled out, with more and more children affected every day. This means the policy acts as a brake on any alternative steps government may take. The number of children affected by the policy will continue to increase until 2035 when the first children born under the two-child limit turn 18.  

Every day 109 more children are pulled into poverty by the policy.

CPAG’s analysis finds that on the eighth anniversary of the two-child limit (Sunday 6 April), an estimated 30,000 more children will have been pulled into poverty by the policy since the government took office.

If the policy were scrapped, 350,000 children would be lifted from poverty instantly, at a cost of £2bn. The depth of poverty would be reduced for another 800,000 children. 

CPAG costed alternative social security changes and found that to lift the same number of children out of poverty via other interventions would require:

• increasing the child element of universal credit (UC) by £17 a week, and would cost £3billion, or
• increasing the UC standard allowance by £25 a week, costing £8 billion.

The charity is calling on government to invest in a package of measures that will lift children out of poverty. Government’s child poverty strategy is due in June.

Chief executive of Child Poverty Action Group Alison Garnham said:

The government’s child poverty strategy will fall flat on its face unless it scraps the two-child limit. Every day the policy forces families to go hungry and damages the life chances of children up and down the country. Reducing the record high levels of child poverty in the UK will require a whole government effort, but abolishing the two-child limit is the essential first step.

Notes to editors:

The two-child limit denies the child allowances in universal credit and tax credits to third or subsequent children born after April 2017.

CPAG’s new analysis, embargoed for 04.04.2025, is HERE. The charity’s costings/poverty-impact calculations are for 2025/26. Its analysis was carried out using UKMOD version B1.11. UKMOD is maintained, developed and managed by the Centre for Microsimulation and Policy Analysis (CeMPA) at the University of Essex. The results and their interpretation are the author’s sole responsibility.

Child poverty is at a record high of 4.5 million children under the poverty line (2023/24) up from 3.6 million in 2010/11. CPAG estimates that unless government takes substantive action, 4.8m children will be in poverty by the end of this parliament.  1.6 million UK children are affected by the two-child limit.

Media contact: Jane Ahrends 07816 909302