Two-child benefit cap exacerbating regional poverty

The Guardian reports on research from the Resolution Foundation which has found that the two-child benefit cap has contributed to a widening gulf in regional poverty, leaving almost half of all children in some towns and cities living below the breadline.

The paper says that the thinktank found that there is a “very strong relationship” between local levels of child poverty and the share of families affected by the measure introduced by the previous Conservative government:

According to the foundation, the failure to tackle entrenched regional inequalities over the past three decades had been compounded by the policy, leaving almost half of all children living in Birmingham, Tower Hamlets in London, Manchester, Sandwell, Stoke-on-Trent, Oldham, Wolverhampton and Walsall to grow up in families in poverty:

Starmer has faced demands from within Labour ranks and from opposition leaders to abolish the policy, which was announced in 2015 by George Osborne, then chancellor, and came into effect a couple of years later.

Regarded by experts as the UK’s biggest single driver of child poverty, affecting about 1.6 million children, the policy restricts child tax credit and universal credit in most households to the first two children. Abolishing it would cost the government between £2.5bn and £3.6bn this year.

In a report, published as far-right populists attempt to exploit economic divisions amid widespread rioting in some towns and cities, the Resolution Foundation said progress had been made in narrowing some regional pay and jobs gaps over the past three decades.

However, other divisions had sharply increased, including for relative poverty, defined in the report as when people live in households with income of less than 60% of the median, after housing costs.

It said the minimum wage had reduced pay gaps between places, but the two-child limit appeared to have done the opposite for overall incomes, hitting the north-west of England and the West Midlands most.

In these regions, more than five in 10 children in larger families (with three or more children) were in relative poverty in 2022-23. This compared with four in 10 nationwide.

Britain’s child poverty hotspots have also shifted dramatically. In 2014-15, 19 out of the 20 local areas with the highest rates were in London, but by 2022-23 this had fallen to just three in the capital, with the rest spread across the north-west and West Midlands.

The 20 local authorities with the largest percentage point increase in child poverty were in these two regions.

Whether these points will cut through to the former Chief Executive of the Resolution Foundation, who is now the MP for Swansea West and who voted to keep the cap, is yet to be seen.