There is perhaps no policy that has had a more obvious impact than the two-child benefit cap. The measure was announced by George Osborne in 2015 with the intention of ensuring that “families on benefits face the same financial choices about having children as families who are supporting themselves solely through work”.
But while the policy – which restricts benefits to the first two children in most households – has had no notable effect on fertility, it has led to a surge in child poverty. At present, families lose around £3,200 a year and – contrary to Osborne’s framing – 57 per cent of those affected have at least one person in work.
Owing to the policy and other benefit cuts, the share of children in larger families (those with three or more children) in poverty has increased from 35 per cent in 2014/15 to 46 per cent. Over the same period, child poverty among families with one or two children fell from 26 per cent to 22 per cent – proof of the cap’s impact. As revealed today, the number of children affected by the policy now stands at 1.6 million, a total that will continue to rise across this parliament.
The political coalition range against the policy is increasingly impressive. It includes Scottish Labour leader Anas Sarwar, Gordon Brown, the Archbishop of Canterbury, the Liberal Democrats, the SNP, the Greens, Nigel Farage, and Conservatives such as Suella Braverman (who warned that the policy was “creating the very culture of dependency that we are trying to vanquish”).
The Resolution Foundation, until recently led by new Labour MP Torsten Bell, describes scrapping the cap as “one of the most efficient ways to drive down child poverty rates”, estimating that 490,000 children would be lifted out of poverty. The cost of doing so would be £2.5bn to £3.6bn – a relatively modest sum in the context of a government budget of £1.2 trillion a year.
Pressure on Keir Starmer to change Labour’s policy intensified during the election. In office, it will reach new heights. John McDonnell, the grandfather figure of the Socialist Campaign Group, has vowed to table an amendment to next Wednesday’s King’s Speech if the government does not act.
As Tony Blair learned, a large majority does not prevent backbench rebellions (indeed, it can even encourage them). In December 1997, just seven months after his landslide victory, the new Prime Minister endured a major revolt over cuts to benefits for single-parent families: 47 Labour MPs voted against the government, 100 abstained, one minister (Malcolm Chisholm) and two Private Parliamentary Secretaries resigned (Michael Clapham and Gordon Prentice) and another (Alice Mahon) was sacked. Should he fail to act, Starmer risks a significant rebellion – opposition to the two-child limit stretches far beyond the party’s radical left.
So will this be his first U-turn? Starmer, for now, is adamant that there will be no reversal. At his first No 10 press conference last Saturday, Starmer emphasised that he “meant” the “tough things” he said during the campaign. Labour is focused on entrenching the narrative that Tory misrule means there is less money around (the mirror image of Osborne and David Cameron’s 2010 strategy). A sudden pledge to scrap the cap would undermine this.
But in an interview with the BBC during the campaign, Starmer cited the abolition of the two-child limit when asked what was “number one of the list of the things” that he would do in an ideal world. He has promised to introduce a detailed “child poverty strategy” – the success of which will hinge on scrapping the cap (for both political and policy reasons). Liz Kendall, the new Work and Pensions Secretary, described today’s figures as a “stain on society”. One can imagine Labour, after a period of improved economic growth, declaring that enough money has been found to act.
But if Starmer is to scrap the cap, he will need to be prepared to have – and win – a political argument on welfare spending. Polling shows that around 60 per cent of voters support the cap – the problem with Osborne’s welfare cuts was never their unpopularity. Were Labour to act, it would be charged by parts of the right with allowing “unlimited benefits” for “workshy” families. Entering this political battleground – as much as raising the money – is the real test for Starmer.
[See also: Is there a progressive argument for pro-natalism?]
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