The erosion of the income safety net left households with little, if any, financial security on the eve of the pandemic – 31% of families could not afford a decent standard of living in December 2019.3 Among the most egregious of these cuts are the two-child limit and benefit cap. [...] Despite the economic turbulence of the 2008 crash, a decade of austerity, the pandemic and now the cost of living crisis, the OBR’s social security multiplier has remained at its starting point of 0.6 since 2010.17 This is in part driven by the range of views on the appropriate magnitude of multipliers.18 That the variation in the output gap has little, if any, effect on the size of the OBR fiscal. [...] Table 4: The cost of child poverty will be 7.1% lower if the caps are scrapped in 2025/26 Reduction in the cost of child poverty if the two-child limit and benefit cap are scrapped, percentage of children benefitting and percentage of children in poverty gaining in 2025/26 Reduction in cost Children in poverty Area Children gaining of child poverty gaining North East £140,000,000 13.3% 34.4% North. [...] 20 Capping ambitions To signal the serious intent of the government, the publication of the child poverty strategy in the spring will inevitably require a recommendation to end the two-child limit, with the detrimental contribution of the benefit cap on incomes and wellbeing at least significantly addressed. [...] But with an additional 109 children pulled into poverty by the two-child limit every day since the election and the impact of the benefit cap increasing with large and sustained rent hikes, the government should not wait until the spring to make this decision.28, 29 The government should confidently make the case that ending these policies is not only the right thing to do morally, but also econom.
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Table of Contents
- Written by Published 1
- Executive summary .............................................................................................................................. 3 2
- The harmful current and future impacts of the caps ..................................................................... 5 2
- A vital foundation for the child poverty strategy ........................................................................ 10 2
- The wider economic benefits of reducing child poverty ........................................................... 13 2
- Conclusion ........................................................................................................................................... 20 2
- Appendix A Modelling methodology ........................................................................................... 21 2
- Appendix B Table of results ........................................................................................................... 22 2
- Endnotes .............................................................................................................................................. 23 2
- Table 1 London experiences the benefit cap more than any other region 5
- Region 5
- Children impacted by the benefit cap 5
- Quarterly increase 5
- Gain to region if benefit cap removed 5
- Table 2 Constituencies in Birmingham Bradford and Bolton are the most impacted by 7
- Constituency 7
- Children impacted by the two-child limit 7
- Income lost 7
- Figure 1 One in seven children will be impacted by the two-child limit by 202930 7
- Figure 2 Half of children in poverty live in larger families 8
- Figure 3 40000 families impacted by the benefit cap have a child under three 9
- Figure 4 Scrapping the caps will reduce child poverty in larger families by a sixth 10
- Figure 5 A wider child poverty strategy is required beyond scrapping the caps 11
- Table 3 Social security spending is a strong choice of investment for the new government 14
- Category of multiplier Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 14
- Figure 6 Poorer areas will gain double the richest if the two-child limit is scrapped 16
- Table 4 The cost of child poverty will be 7.1 lower if the caps are scrapped in 202526 19
- Area Reduction in cost of child poverty Children gaining Children in poverty gaining 19
- Table B1 Summary of results if the two-child limit is removed 22
- Finding Year 22
- Cost to central government 22
- Children benefitting 22
- Reduction in cost of child poverty 22
- Table B2 Summary of results if the two-child limit and benefit cap are scrapped 22
- Finding Year 22
- Cost to central government 22
- Children benefitting 22
- Reduction in cost of child poverty 22
