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What the two-child benefit cap means for your money

Labour will not scrap the two-child benefit cap if it enters power, Sir Keir Starmer said during at the leaders’ event on Wednesday evening.

The party leader said scrapping the limit, which prevents parents from claiming child tax credit or universal credit for more than two children, is not in Labour’s manifesto, which has been a “really difficult decision”.

The cap has led to soaring rates of child poverty in families with more than two children, according to the Resolution Foundation think tank.

Here, i looks at what the child benefit cap means for your money and what Labour has said about it.

How much is child benefit?

The child benefit rate for an eldest or only child is £25.60 a week.

The rate for any additional children is £16.95 a week per child.

What does the two-child benefit cap mean for your money?

The two-child benefit limit means most families cannot claim means-tested benefits and tax credits for any additional children born after April 2017.

Drawn up by former chancellor George Osborne during the years of austerity, it was designed to reduce public spending and encourage families to make decisions based on their financial circumstances.

Some 420,000 families were affected by the two-child limit in 2023, according to the Resolution Foundation.

When it is fully rolled out in 2035, it is set to affect around 750,000 families. The report also stated scrapping the policy completely would cost £3.6billion in today’s prices and take 490,000 children out of poverty.

Families affected by the cap in 2023-24 lost up to £3,200 a year in benefit support for their third and each subsequent child.

The Women’s Budget Group (WBG), which describes itself as a “feminist economics think-tank”, recently told i the two-child limit on benefits was one of the key drivers of child poverty.

What has Labour said about the two-child benefit?

Sir Keir Starmer told Sky News during the leaders’ event in Grimsby scrapping the two-child benefit will not be in the party’s manifesto.

He said: “Huge damage has been done to our economy under this Government.

“We’re probably going to inherit a broken economy […] and I’m not going to make promises I cannot keep.

“I know the benefits of it, we need to deal with child poverty.”

“People are fed up with politicians who before the election say ‘we’ll do everything’” and then do not deliver, he said.

“It’s a difficult choice; we will have an anti-child poverty strategy,” he added.

He said that Prime Minister Rishi Sunak is proposing “unfunded commitments,” and he will not make that “mistake”.

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