DWP warning: 250,000 people to be hit by 'unfair' benefits cap over next year

The two-child benefit cap, which limits child tax credit and universal credit to the first two children, currently affects two million children, with more affected each year as it applies to those born after April 5, 2017.

An additional 250,000 children will be affected by the capping of family allowances over the next year.(Getty Images)

By

Ruby Flanagan
12:45 p.m., June 17, 2024

A major warning has been issued as an additional 250,000 children will be affected by the two-child benefit cap over the next year.

The Institute for Fiscal Studies (IFS) said an additional 670,000 children across the UK will be affected by the end of the next parliamentary term. The two-child benefit cap, which limits child tax credit and universal credit to the first two children, currently affects two million children, and is affected more each year as it applies to those born after April 5, 2017.

It was introduced by the Conservative government in 2017 and campaigners have long called for it to be abolished because it could potentially lift thousands of children out of poverty. Poverty is defined as living in a household earning less than 60% of the median income after housing costs.

According to the IFS study, once fully deployed, the cap will affect one in five children, or 38% of those in the poorest quintile of households. It reports that 43% of children in households with at least one person of Bangladeshi or Pakistani origin will be affected. At the same time, affected households will lose on average around £4,300 per year, which represents 10% of their income.

The IFS said removing the cost of the limit would cost the government around £3.4 billion a year. This is roughly equivalent to freezing fuel taxes for the next legislature. Labor and the Conservatives have both said the cap would remain in place if passed, while the Liberal Democrats and Green Party have pledged to remove it.

Eduin Latimer, research economist at the IFS, said: “The two-child limit is one of the biggest social cuts since 2010 and, unlike many of these cuts, it becomes more significant each year as that it is extended to a greater number of families. »

Mubin Haq, chief executive of the abrdn Financial Fairness Trust, which funded the research, said: “The limit has contributed significantly to child poverty among large families at a time when poverty among families with one or two children was decreasing. The government is serious about fighting child poverty; it will have to review the limit of two children. This policy is inherently unfair because it only affects children born after April 5, 2017. The majority of affected families are working or employed. caring responsibilities for disabled parents or young children.