Scrapping the controversial two-child benefit limit would reduce child poverty but not necessarily help with a youngster’s early development and their readiness for school, a new report has suggested.
The Institute for Fiscal Studies (IFS) concluded that the policy, which anti-poverty campaigners have repeatedly criticised, has “no statistically significant impact” on the proportion of children in England achieving what is known as a “good level of development” by age five.
The Government is expected to publish a strategy to tackle child poverty this autumn, and has been under pressure to scrap the policy, including from former Labour prime minister Gordon Brown and the Church of England’s current most senior bishop, Archbishop of York Stephen Cottrell.
The two-child limit was announced in 2015 by the Conservatives and came into effect in 2017. It restricts child tax credit and universal credit to the first two children in most households.
Charities and organisations working in the sector estimate more than 100 children a day are pulled into poverty through the policy.
The Child Poverty Action Group (Cpag) has previously said its analysis suggests an estimated 350,000 children would be lifted out of poverty immediately if the policy was scrapped.
Estimates for the cost of scrapping the policy vary, at between £2 and £3.5 billion by the end of this Parliament (2029/30).
In its latest report, published on Wednesday, the IFS said scrapping the policy would be “one of the most effective ways” to reduce child poverty.
But it also concluded that the policy currently has “no adverse impact on children’s development as measured by their teachers at the end of the reception year”.
The Government has a goal of raising the proportion of children starting school ready to learn, from current levels of 68% to 75% by 2028.
The “good level of development” (GLD) measure covers a child’s communication, physical development, literacy and numeracy skills at the end of reception – around age five.
The IFS said it found “no statistically significant impact” of the two-child benefit limit on the proportion of children achieving a GLD by this age, and also found “no evidence of an effect on the GLD for children in the groups most likely to be hit financially by the policy, such as families in the most deprived 20% of neighbourhoods and those entitled to free school meals prior to the third child’s birth”.
Tom Waters, an associate director at IFS and report author, said: “The Government has set the dual objectives of raising children’s school readiness levels and reducing child poverty. Reversing the two-child limit, at a cost of £3 billion a year, would be one of the most effective ways to target the latter goal.
“However, our research shows that the two-child limit has had no adverse impact on children’s development as measured by their teachers at the end of the reception year.
“This suggests that it might be hard for the Government to ‘kill two birds with one stone’ – simultaneously reducing child poverty and raising school readiness – through scrapping the two-child limit.”
The IFS said their findings did not mean the policy has no wider consequences.
Their report stated: “The two-child limit clearly contributes to higher rates of child poverty and lower material living standards for many low-income families.
“This research does not study outcomes such as child health, well-being, skills not captured in the GLD measure, later educational performance at older age, or parental stress. This means that these findings do not rule out other effects of the policy on children, now or as they grow up, or indeed on their parents.”
Cpag chief executive Alison Garnham said: “Like the research that’s gone before it, today’s report confirms that scrapping the two-child limit will reduce child poverty from its current record high.
“The wider evidence is clear that poverty casts a shadow on children way beyond the narrow measure of school readiness, resulting in worse health and school outcomes, lower earnings in adulthood and most starkly, lower life expectancy.
“Unless the policy goes in the autumn child poverty strategy, this Government’s shameful legacy will be more children in poverty at the end of this Parliament than when it took office.”
A Government spokesperson said: “Every child, no matter their background, deserves the best start in life.
“That’s why our Child Poverty Taskforce will publish an ambitious strategy to tackle the structural and root causes of child poverty.
“We are investing £500 million in children’s development through the rollout of Best Start Family Hubs, extending free school meals, rolling out of 30 hours’ Government-funded childcare, investing £1.5 billion to rebuild early years services and ensuring the poorest don’t go hungry in the holidays through a new £1 billion crisis support package.”
