The number of children affected by the two-child benefit cap looks set to rise by a third over the next five years, according to new analysis from the Institute for Fiscal Studies.
The limit currently affects two million children, with more hit each year because it applies to those born after April 5 2017.
Next year, 250,000 more children will be affected, rising to 670,000 before the end of the next parliament.
Labour is coming under increasing pressure to commit to some form of reform.
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The policy brought in by George Osborne means that households claiming child tax credit or universal credit are unable to claim for a third or subsequent child.
However, there is an exemption for families where a third child is the result of “non-consensual conception.”
To apply for this so called “rape clause,” claimants must either be able to point to a conviction for rape or coercing, controlling behaviour, or a Criminal Injuries Compensation scheme award, or have a third party such as a health professional or social worker fill in a form for the DWP.
When fully rolled out, it will affect one in five children, rising to 38% of those in the poorest fifth of households, the IFS research found.
It said that 43% of children in households with at least one person of Bangladeshi or Pakistani origin will be affected.
Affected households on average will lose £4,300 per year, representing 10% of their income, according to the analysis.
The introduction of the cap has helped drive up the share of children in large families who are in relative poverty from 35% in 2014-15 to 46% in 2022–23, a period when poverty for families with one or two children fell, the IFS said.
The research institute said removing the cost of the limit would cost the Government about £3.4 billion a year, roughly the same as freezing fuel duties for the next parliament.
IFS research economist Eduin Latimer said: “The two-child limit is one of the most significant welfare cuts since 2010 and, unlike many of those cuts, it becomes more important each year as it is rolled out to more families.”
Mubin Haq, chief executive of the abrdn Financial Fairness Trust, which funded the research, said: “The limit has been a significant contributor to child poverty amongst large families during a period when poverty for families with one or two children fell.
“If the next government is serious about tackling child poverty, it will need to review the two-child limit.
“There is an inherent unfairness in the policy as it affects only those children born after April 5 2017.
“The majority of families affected are in work or have caring responsibilities for disabled relatives or young children.”
Writing in the Daily Record, Stephen Flynn said: “The other strange thing about this election is that the crippling caution of Sir Keir Starmer is suffocating any sense of enthusiasm.
“Starmer’s status quo, his choice to change the guard but not to change course, won’t deliver real change.
“The consequence of Starmer’s caution means more spending cuts, more Brexit and more of the same.”
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While Labour’s manifesto, published last week, included the promise of an “ambitious strategy to reduce child poverty” there was no mention of the two-child limit.
Speaking during Sky News' Battle for No10 programme on Wednesday night, Sir Keir was asked why he would not get rid of the cap.
He said: "It's a difficult choice.
"We will have an anti child poverty strategy. Of course we will.
"But the easiest thing in the world is what Rishi Sunak is doing.
"[It] is to simply say you can have everything come unfunded commitments, unfunded promises.
"That's what got us into this problem in the first place. And working people are paying the price for higher bills and their mortgages.
"I'm not prepared to have a Labour government ever make that mistake."
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