Failing to abolish the controversial two-child benefit limit would critically undermine the government's child poverty ambitions and risk creating unprecedented levels of hardship, according to a stark analysis by the Resolution Foundation. The thinktank warns that if current trends persist and the limit remains, child poverty rates could reach a historic high by the end of the decade, a situation not seen under a Labour government for over half a century. Political courage is therefore deemed essential for ministers to demonstrate a serious commitment to reversing these alarming trends.

The Resolution Foundation explicitly advises against introducing 'half-measures' to mitigate the impact of the two-child limit, such as merely lifting the restriction for working families or implementing a tapered payment system. Such partial reforms, it argues, would have little to no meaningful effect on overall child poverty rates and would leave poverty levels higher at the end of the parliament than at the beginning. These compromise options, while potentially costing less (estimated at £1.8 billion to £2.6 billion for partial reversals compared to £3.5 billion to £3.6 billion for full abolition), would be 'fundamentally inconsistent' with Labour’s manifesto promise of an ambitious child poverty strategy.

Introduced by the Conservative government in 2017, the two-child limit restricts household welfare income by blocking payments of approximately £3,500 per child for third and subsequent children born to families on means-tested benefits. Currently, an estimated 1.7 million children live in households directly affected by this policy. Campaigners and Labour backbenchers view the limit as a powerful driver of child poverty and a potent symbol of Tory-imposed austerity.

The analysis from the Resolution Foundation concludes that full abolition of the limit is the 'bare minimum needed' to make a substantial impact. It projects that scrapping the two-child limit could immediately lift 330,000 children out of poverty and prevent a further 150,000 children from falling into poverty by 2029-30, saving nearly half a million children from hardship by the end of the decade. Without this action, child poverty rates are projected to rise from 31% to 34% by 2029-30, equating to 4.8 million children.

Education Secretary Bridget Phillipson, co-chairing the child poverty strategy, has affirmed that abolishing the two-child limit is the most cost-effective way to improve life chances for disadvantaged youngsters. Despite some government measures already in place, such as increasing universal credit and extending free school meals, these are insufficient to 'shift the dial' on the projected rise in child poverty. The thinktank emphasizes that even under an optimistic scenario of economic and employment improvement, child poverty rates would remain on 'a stubbornly upward trajectory' without significant additional state support for family incomes.

Economist Alex Clegg of the Resolution Foundation underscored this urgency, stating, 'If the government wants to meet its manifesto promise of developing an ambitious child poverty strategy, they should do the right thing and scrap the two-child limit in its entirety.' While a government spokesperson affirmed plans to 'publish an ambitious strategy to tackle the structural and root causes of child poverty' and highlighted existing investments like Best Start Family Hubs and a £1 billion crisis support package, the Resolution Foundation maintains that comprehensive reform of the two-child limit is non-negotiable for a credible child poverty strategy.