How do the benefit cap and the two-child limit interact?

Summary

The two-child limit and the benefit cap were introduced as part of the UK Coalition and Conservative Governments’ efforts to reduce spending on working-age social security benefits. Both policies disproportionately affect larger families, those with three or more children. While there is growing recognition that both policies are contributing to rising levels of child poverty, the interaction between the two policies has been little explored and is poorly understood. Indeed, their similarities cause them to be frequently conflated by researchers, policy experts and benefit claimants: the two child-limit is often referred to as the ‘two-child cap’ or the ‘benefit cap’. This briefing corrects this gap in our knowledge base, drawing on a freedom of information request and qualitative data from interviews with families affected by both policies in Yorkshire and London.

The latest statistics show that in March 2022 more than one in four families who were benefit capped were also subject to the two-child limit - 32,327 households in all, containing over 110,000 children. This number will grow over time as the reach of the two-child limit increases each year (the two-child limit applies to third and subsequent children born since April 2017). All families currently subject to both policies have at least one child under five in their household and often face significant barriers to work. The two-child limit and benefit cap both cause severe immediate hardship for those affected. The two-child limit also reduces the financial gains capped households will see when they enter paid work in the future (and so escape the cap but not the two-child limit). To reduce hardship and improve children’s longer-term prospects both policies need to be removed. This should be a priority for any government committed to addressing child poverty and improving the life chances of all children.