UK Two-Child Benefit Cap Reduces Poverty Without Affecting School Readiness

A recent Institute for Fiscal Studies (IFS) report finds that scrapping the UK's two-child benefit cap would significantly reduce child poverty but has no statistically significant effect on children's early development or school readiness by age five. The two-child limit, introduced in 2017, restricts welfare benefits like universal credit to the first two children in most households, disproportionately affecting larger families financially. While ending the cap could cost between £2 billion and £3.5 billion by 2030, it is considered one of the most effective ways to alleviate child poverty, potentially lifting an estimated 350,000 children out of poverty. However, the policy does not appear to impact children's development markers at the end of reception year, including communication, literacy, numeracy, and physical skills. The government aims to increase the proportion of children starting school ready to learn from 68% to 75% by 2028 but may need other targeted policies to improve early educational outcomes. Political figures like Labour's Bridget Phillipson and former Prime Minister Gordon Brown have called for scrapping the cap, but the government has yet to finalize its strategy, expected this autumn.