Two-child Benefit cap leads to families missing out on thousands annually | Personal Finance | Finance

The „two-child“ benefit cap from the Department for Work and Pensions could lead to low-income families losing out on almost £2,000 a year, new research has found.

Non-profit organisation the Women’s Budget Group (WBG) released research that found a clampdown on the benefits system means that sole parents are losing out on an average of £6,992 annually, severely impacting recipients of Universal Credit.

The group’s research analyses the impact of benefit cuts since 2010 and forecasts to 2027/28 using data based on pre-election Government spending plans.

This benefits cut is equivalent to an 18 percent reduction in a claimant’s baseline income.

Families with three children face losing £5,962 in income on average and couples with children face losing an average of £2,262 per year compared to couples with no children.

An astonishing £1,838 of this loss comes from the loss of the „two-child“ benefit cap specifically.

The cap was introduced by the Conservatives in 2017 and it restricts Universal Credit support and tax credits for families with three or more children.

Rishi Sunak announced his intention to keep the cap in place in April despite some pushback from Conservative MPs, including Suella Braverman the former Home Secretary.

The cap costs the UK £39 billion every year according to research from the Child Poverty Action Group.

A Government spokesperson said: “ There are 1.1 million fewer people living in absolute poverty compared to 2010, including 100,000 children and our £108 billion cost of living support package prevented 1.3 million people falling into poverty in 2022/23.

„Children are five times less likely to experience poverty if they are living in a household where all adults work compared to those in workless households.“

The WBG’s head of Research and Policy and deputy director, Dr Zubaida Haque, said: „Households with children, especially those with three children or more are the ones most harmed by social security cuts since 2010.

„It is shocking that successive Governments since 2010 have chosen to penalise children through the two-child limit on benefits, one of the key drivers of child poverty. They have also chosen to further penalise low-income households who were already struggling financially, including disabled people.

„If the next Government is serious about tackling child poverty and addressing persistent inequalities, it must repair and reform the social security system. This starts with scrapping punitive and cruel sanctions and restoring the real value of benefits.“

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