Scrapping the two-child cap would be a start – but still not enough

Most of us are only one job loss, one relationship breakdown, one unexpected bill, one sudden illness or another tragic event away from needing the social security safety net.

This net should be there to catch us when we need it most, providing stability and support in times of crisis. Social security should also support those who have additional needs and costs. But the years of austerity policies tore apart our safety net, and the most vulnerable are still falling through it. If Keir Starmer’s new government is serious about its “laser focus” on poverty, it must start by rebuilding our broken safety net.

It is very disappointing that the Labour government – which promised “change” – has refused to reverse the two-child limit, even going so far as to suspend MPs who chose to vote for the SNP amendment supporting the removal of that damaging policy.

The evidence of the severe damage caused by the two-child limit on benefits is mounting, with the current policy cutting off Child Tax Credit and Universal Credit benefits that would have been allocated per child to a maximum of two children per family. It's shocking that successive governments have chosen to penalise children through the two-child limit, a significant driver of child poverty, and its absence in Labour's election manifesto was notable.

The End Child Poverty Coalition reports that in two-thirds of UK constituencies, at least one in four children now live in poverty. At the UK level, 4.2 million children are living in poverty, almost 30%. Of those living in households with three or more children, 46% are living in poverty. Unfortunately, this is neither a surprise nor unexpected.

Families with children, especially those with three or more, are the hardest hit by the post-2010 social security cuts. Our latest analysis shows that households with three or more children lose, on average, £5,962 per year because of cuts and changes to social security since 2010. Almost £2,000 corresponds directly to the two-child limit on benefits.

Delaying the scrapping of this cruel policy will make things worse and cost society more in the long run. The societal costs of child poverty from greater unemployment, lower earnings, and public service spending are estimated to be £39 billion a year in 2023. Abolishing the two-child limit would lift 250,000 children out of poverty and could save £2.3bn in future societal costs – nearly twice what it would cost to remove the policy.

Social security net

While scrapping the two-child limit would be an important step in the right direction and make a big difference for hundreds of thousands of children, wider reform should be considered. We need a functioning social security net – and Labour should be the party to deliver that.

Women are more likely than men to depend on social security for a larger portion of their income. As they do more unpaid care work, they have less time available for paid work. For those with a formal job, juggling caring responsibilities and their paid work is a real challenge. Many women opt for part-time employment. The result? Women earn less than men on average, have fewer savings and are more exposed to unexpected crises or risks.

After a series of economic shocks – the global financial crash, the pandemic, and now the cost of living crisis – households' financial resilience has been severely eroded, particularly for low-income households, a majority of them headed by women. Living costs have surged as the real value of most benefits has dwindled. The consequences are stark, with women being hit hardest by the cost of living crisis.

Instead of increasing or even maintaining support during these crises, UK governments slashed social security spending by around £14bn between 2010 and 2021. The brunt of these cuts falls on the most vulnerable, who are more likely to depend on social security: women on the lowest incomes, lone parents (most of whom are women), Black and Asian women, Disabled women, and their children.

Polling last year by the Women's Budget Group and YouGov found that women were significantly more likely to be concerned about the cost of living crisis than men, whereas men were more likely to name 'the economy' as one of their key concerns. While one might argue that these are interchangeable, it does tell us something about where women place themselves in the current economic landscape and the acute and personal nature of the economic strain they face. Women are more likely to oversee the household budget and cut back on essentials and food for themselves to provide for their children and other family members.

It was therefore profoundly significant when Rachel Reeves, as the first female Chancellor, committed to building an economy that works for women and no longer undervalues their contribution to society in her first address to the Treasury. However, this recent inaction on scrapping the two-child limit was a missed opportunity to follow words with actions.

We cannot wait for economic growth before we can address the underlying issues of poverty, our collapsing public services and persistent inequalities. After 13 years of austerity, a global pandemic and an ongoing cost of living crisis, it is not fair to ask the millions of children and women living in poverty to wait. It does not make economic sense either.

If this government won’t invest in the very people that keep the economy running, they will fail to restore it to health. Labour must invest in the core foundations of our economy which include our social infrastructure – our NHS and social care system, and our schools and nurseries – and repairing and reforming our social security system. This is fundamental to achieving the change that Labour has promised the people of this country.

A functioning social security system is a fundamental part of a caring economy. It should serve as a safety net providing income security and promoting well-being, not a trapdoor to persistent poverty. If Keir Starmer wants to honour his promise of real change, he must choose compassion over cruelty, support over sanctions, and fairness over austerity.