Two-child limit and the benefit cap fail to meet their own aims, study concludes

The benefit cap and the two-child limit has caused hardship to tens of thousands of families, with both policies failing to meet their original aims, according to the findings of a new study.

The study, funded by the Nuffield Foundation and led by the University of York, in partnership with the University of Oxford and the London School of Economics, details the results of interviews with families in London and Yorkshire over a three-year period and reveals how the benefit cap and the two-child limit impacts families with three or more children. 

The authors of the report say the findings show that both policies disproportionately affect certain households: those with higher living costs which include larger families and renting households – which in turn means they disproportionately affect minority ethnic households, and those less able to increase their income through employment, including single parents and families with younger children. 

The policies have contributed to the rising levels of child poverty in the 2010s, which have predominantly hit larger families, the researchers say. The study shows that larger families were at risk of poverty even before the introduction of the benefit cap and the two-child limit, due to wider cuts to social security benefits for families with children.

The researchers say they found evidence that the policies had a negative impact on people’s mental health, increasing stress and anxiety, and harming their well-being, with knock-on effects on children's opportunities and wellbeing. 

Parents struggle to afford a wide variety of essential items for their children, including food, clothes and heating, affecting children's emotional and physical development, according to the study.

Dr Ruth Patrick from the School for Business and Society at the University of York, said: “Our research evidence makes clear that the two-child limit and benefit cap are poverty-producing policies, which fail to meet their stated aims. 

“Both policies need to be removed urgently, as part of a broader commitment to addressing child poverty and investing in children and families. We urge the government and policymakers to engage with and act upon this new, timely and powerful evidence base.”

The two-child limit was presented by the government as a policy that would encourage parents to make decisions about whether to have children based on what they could afford. But the researchers say the analysis found that the two-child limit has had only a very small effect on fertility, meaning its main effect is to push families with three or more children further into poverty. 

The research found that of the families interviewed, many did not know the two-child limit existed until after their child was born, often because they were not receiving benefits at the time of birth, only needing support later after circumstances changed. 

Alisha, who has five children and is affected by the two-child limit and the benefit cap in Yorkshire, said: “It has put me under pressure to try and rush my younger one's potty training which he's clearly not ready for, but I can't afford nappies. It is stressing me out … I don't have money at the end of the month. I have to make ends meet, so I have to sell things, I have to do whatever I can.”

Alex Beer, Welfare Programme Head at the Nuffield Foundation said: “This report shows that the benefit system is failing many families. The two-child limit and the benefit cap are not incentivising families as the government intended and instead is leaving them unable to afford even basic necessities and affecting their mental health. These policies should be placed under review, and ideally removed.”

Alison Garnham, Chief Executive of Child Poverty Action Group, policy partner on the project, said: “The benefit cap and two-child limit just have to go. They are the single most poverty producing policies in the social security system and look set to continue pushing up child poverty until they are finally abolished. 

“The social security system is our main defence against family poverty and yet these policies are causing enormous hardship and as such are the least rational social policies.”

The report will be available on 17th July at www.largerfamilies.study. Contacts below if require an embargoed version.

Ends

Notes to editors

• Please contact the University of York Press Office for interview requests and for further information pressoffice@york.ac.uk. Note that members of the research team and parents affected by both policies are available for interview. 
• The benefit cap, first implemented in 2013, places a cap on the amount a household can receive in benefits if they have no, or low, earnings, meaning that some families do not receive their full benefit entitlement. 
• The introduction of the cap affected 114,000 households and 280,000 children in February 2023. Affected families lose an average of £50 per week, but the amount capped varies widely from this.
• The two-child limit was implemented in 2017 and prevents families from receiving additional means-tested support for their third or subsequent children, worth up to £3,235 a year per child in 2023/24. Official statistics out last week confirmed that one in 10 children live in households affected by the two-child limit (1.5 million children).
• Some families are affected by both policies at the same time; it is estimated that 32,000 households, containing 110,000 children were subject to both the benefit cap and the two-child limit in March 2022.
• The Nuffield Foundation is an independent charitable trust with a mission to advance social well-being. It funds research that informs social policy, primarily in Education, Welfare, and Justice. The Nuffield Foundation is the founder and co-funder of the Nuffield Council on Bioethics, the Ada Lovelace Institute and the Nuffield Family Justice Observatory. The Foundation has funded this project, but the views expressed are those of the authors and not necessarily the Foundation. www.nuffieldfoundation.org.