The two-child limit and child poverty in the United Kingdom

Abstract

The United Kingdom two-child policy was announced in 2015 and began to operate from April 2017. A mother claiming a range of means-tested benefits who had a third or subsequent child born after 6 April 2017 could not receive a child addition for them, while a new claimant with three or more children would now receive no more than a claimant with two children. Using data from nationally representative annual living conditions surveys for the period up to 2019/20, we find that larger families experienced substantial real income losses since the introduction of the two-child limit, with proportionally greater losses among those on lower incomes. Income losses among larger families were driven primarily by changes in income penalties to family characteristics, such as the presence of children under three, rather than changes in the distribution of these characteristics. Although this is not a causal analysis, these findings are consistent with a negative impact of the policy change on larger families' incomes.