Reasons for keeping two-child benefit cap are thin at best and cruel at worst – Labour must lift it

As the UK’s largest debt advice charity, we see people from all backgrounds in financial difficulty coming to us for support. Yet among our client base, there is one demographic always overrepresented: parents.

Almost half of StepChange’s debt advice clients are parents with dependent children, and it’s not hard to see why, as living costs have soared in recent years, and those pressures are heightened for parents as they face the increased cost of clothing, additional food, childcare, and more, while often having to cut back on working hours due to caring responsibilities. It’s not surprising that many find themselves turning to credit to make ends meet. 

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Over 30 years on, the frontline has showed us that poverty and debt very often go together: people have difficulty meeting the cost of living, which leads to a reliance on credit, which then draws them deeper into difficulty. A debt trap. And our clients with children are often in households at greater risk of poverty, like single parents and larger families. 

Among StepChange’s new clients with children in 2023, a quarter had three or more children, which is much higher than the UK figure of one in seven. It is unsurprising that our clients with more than two children have expenses that tend to be higher, and they are also more likely to have priority debts like housing, council tax and energy. It’s for this reason we are calling for the government to lift the two-child benefit cap at the autumn budget as the starting point for the child poverty strategy the government has committed to.

The Conservative government introduced the limit in April 2017, and it effectively means that affected families will miss out on up to £3,455 of support for each child subject to the limit. The cost of living crisis over the last few years has stretched household budgets, and our research consistently tells us that parents often cannot pay for basics, cannot afford to save and have little choice but to go into debt to cope with living costs. 

Problems are particularly acute among families affected by both the two-child limit and benefit cap, and research suggests there is a clear link with the limit and poor mental health – a theme also picked up by our advisors on the phone day in, day out, as parents struggle to make ends meet. In modern Britain it is shocking that people are facing debt because of inadequate help in the face of exorbitant parenting costs. 

The justifications made for the policy such as encouraging work look misguided in light of experience: the limit has disproportionately affected those less able to increase their income through employment, particularly single parent households and families with younger children – therefore the limit has increased hardship without shifting the dial on employment. In short, it is counterproductive. 

What’s more, in recent years we have seen those who rely on the social security system are increasingly impacted by the stigma of receiving benefits. A sense of shame at needing support contributes to mental health problems and difficulty coping with difficult life events and debt problems. When politicians play on a sense that people should be able to pay for their children, it fuels stigma and social division. Raising young children is one of the most financially difficult times of most parents’ lives, and will likely need support to do so, whether that be from the state or otherwise. As such, justification for the two-child limit seems thin at best and cruel at worst. 

The new child poverty strategy is an opportunity to reset. There are deep and pressing problems driving child poverty that cannot be solved overnight. Ending the two-child limit and the benefit cap is a cost effective way the government can begin to lift half a million children out of poverty according to the Institute for Fiscal Studies. More than that, the new strategy marks a chance to reinstate an important principle of fairness in the social security system and help begin changing the conversation about families and benefits, away from a narrative of strivers and shirkers to one of supporting those who need it.

Vikki Brownridge is CEO of StepChange.

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