The poorest households in the country would see little improvement if the two-child benefit limit was scrapped but the overall benefit cap was kept in place, a think tank has warned.
Keir Starmer’s new Labour government has faced intense pressure to dispose of the policy, which stops most families from claiming child tax credit and universal credit beyond their first two children.
But the Institute for Fiscal Studies (IFS) says that move would need to be made alongside ending the cap on benefits for the biggest possible impact.
If both policies were ditched, around 620,000 children would be lifted out of poverty – but it would cost the government more than £3 billion each year.
Ministers say they are unable to drop the two-child limit at the moment due to spending controls and that it would only make a difference alongside economic growth.
