The Institute for Fiscal Studies (IFS) has reported that abolishing the UK’s two-child benefit cap could alleviate three-quarters of the child poverty surge seen under the previous Conservative government, albeit at an annual expense of £2.5 billion to taxpayers. Introduced in 2017 to cut welfare expenditure, the cap limits benefit eligibility to two children per family. Despite mounting pressure, the ruling Labour party has so far resisted removing the cap, citing budget constraints. Recently, seven Labour MPs were suspended for defying the government’s stance, and MP Rosie Duffield resigned, accusing the leadership of ignoring the needs of impoverished children and pensioners.
In a report that could increase pressure on Prime Minister Keir Starmer, the IFS noted that removing the cap could lift 540,000 individuals under 20 out of absolute poverty—defined as earning below 60% of the median income. Between 2010 and 2022, child poverty increased by 730,000 under Conservative rule, attributed largely to families with three or more children, according to IFS economist Anna Henry. Reversing the two-child policy would cost approximately £4,500 for each child moved out of poverty, making it a relatively cost-effective solution compared to other benefit modifications. However, the measure is not a comprehensive fix, as 70,000 households would fall under the benefit cap, which restricts the total welfare payments to non-working families.
The report, released in partnership with the Nuffield Foundation and Citi, precedes Labour’s inaugural budget on October 30. It suggests that eliminating both the two-child limit and the broader benefit cap could lift 630,000 children from poverty at a cost of £3.3 billion, though it could potentially decrease parents’ incentives to seek employment. This analysis was drawn from an automated news agency feed without text modifications.
Original Story https://www.livemint.com/news/world/ending-uk-benefit-cap-would-slash-child-poverty-ifs-says-11727911547892.html
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