The two-child limit for benefits – a move away from a ‘needs based’ system

The two-child limit for benefits – a move away from a ‘needs based’ system

Richard Machin

Over the last seven years the UK benefits system has undergone the most significant transformation since the inception of the welfare state in the 1940s. Changes to the social security system have always been driven by ideology, economics and demographics. We have witnessed such significant change in each of these factors in recent times that opinions on the purpose and scope of the welfare state have become polarised. What then should a modern welfare state look like and which members of society should be recipients of welfare?

The government have introduced a two- child limit for child tax credit and universal credit, benefits which provide means-tested support for low income families. In doing so a very significant change was made to the underlying philosophy of financial support for families. A needs based assessment of the minimum financial requirements of a family has been replaced by a judgment based eligibility criteria, raising significant practical and ethical questions.

A very clearly defined line has been drawn – have more than two children and don’t expect the state to contribute to the financial needs of your ‘additional’ children as your family is too big to warrant help. The government believe that this change provides a fair deal to the tax payer on the basis that families who are in work do not experience a rise in wages when their family size increases and families who are in receipt of welfare payments should not expect additional financial support where there are more than two children in the family. This policy has drawn strong criticism from a wide range of campaigning groups such as Child Poverty Action Group (CPAG) and the Children’s Society who oppose the ideology that underpins this benefit change and believe that it will result in a significant increase in child poverty. For academics, welfare rights practitioners and claimants this policy raises fundamental questions about the role of the welfare state in supporting families and the extent to which behaviour change is influenced by government policy.

The impact of moving away from a needs based benefit system
The two child limit means that the child elements of child tax credit and universal credit are no longer paid for the third or subsequent child born after April 2017. It is estimated that by 2020/21 640,000 families will be affected by this policy with families with three or more children losing up to £2,780 per year for each additional child. The government’s rationale that families who are in receipt of benefits should face the same financial choices as those in work is clear. However, there are compelling arguments that this policy will result in the financial needs of many vulnerable families not being met and that the policy will have a disproportionately negative impact on some groups. CPAG argue that increased levels of poverty will be the inevitable result of a policy underpinned by moral judgements about family size rather than considerations about the cost of living. CPAG believe that there is an inherent injustice in a system where some children in a family unit are seen as more deserving that others.

One of the key challenges in designing a social security system is to ensure that it meets the needs of a hugely diverse population without creating eligibility criterion and administrative processes that are so complex that they restrict access. Ironically the simplicity of the two child policy can be seen as one of its greatest weaknesses as basing financial support on family size overlooks the diversity and complexity of families living in the UK. The Children’s Society has voiced concerns that this policy will have a negative impact on families with disabled children who incur considerable additional costs as a result of ill health or disability. Bereaved parents may look to the benefit system for financial support following the death of a partner and find that their benefit entitlement does not extend to all of their children.

Consideration of the appropriateness of the two-child policy also has a faith-based dimension. A joint report by the UK’s biggest churches expressed concern that families (such as Roman Catholics) who have larger families for religious reasons could be penalised by this policy. They view the policy as fundamentally ‘anti-family’ and raise concerns that it could lead to the break-up of families and increased abortion rates. The responsibility of meeting the needs of the family often rests with women. Fran Bennett of the University of Oxford has stated that ‘in low-income families in particular it is often women who manage the day-to-day budgeting, and who bear the costs when this is not enough to meet the household’s needs’. Perhaps an unintended impact of this policy is to create vulnerability for some women but it is a real consequence nonetheless.

What constitutes a ‘reasonable’ income for a family is a highly subjective matter. The Joseph Rowntree Foundation’s annual Minimum Income Standard (MIS) provides an assessment of what the public think is needed to achieve an acceptable standard of living. Their latest analysis found that a couple with two children need to earn at least £20,400 each to reach the minimum income standard. However, two child couples who rely on out of work benefits achieve only 59% of what they need based on the 2017 MIS figures. As the two-child policy affects a greater number of families in the coming years we will see a greater discrepancy between levels of benefits for families and the Minimum Income Standard.

To what extend does the benefit system shape behaviour?
The two-child policy is, in part, predicated on the idea that government policy influences behaviour. Welfare conditionality in essence asks benefit claimants to do the ‘right thing’ or face the consequences. CPAG rightly highlighted that it was impossible for claimants to make an informed choice about the 2-child limit when it was first implemented as families will have been unaware of a policy that was not widely promoted or understood. As we approach the first anniversary of this policy it remains the case that future circumstances are unpredictable. Unemployment, separation, bereavement or failed contraception cannot be described as ‘lifestyle choices’ but all of these circumstances could lead to a change in family composition and the need to rely on means-tested benefits which are now limited to the first two children in a family. When similar policies have been introduced in the United States there has been no evidence of changed behaviour but concerns about increased levels of poverty. There is little evidence to suggest that other areas of the government’s welfare reform agenda (such as the benefit cap and the ‘bedroom tax’) have produced the behaviour change that policy makers sought. The Office for National Statistics birth rate statistics indicate a reasonably steady number of births in England and Wales over the last ten years and it will be interesting to see if the two-child limit policy has any impact on these rates in the coming years.

By far the most controversial element of the entire two-child policy is the so called ‘rape clause’. If there is evidence that a third or subsequent child was born as a result of rape or non-consensual conception at a time when the claimant was in an abusive relationship and subject to control and coercion an exception to the two-child policy will apply. A third-party evidence system has been introduced meaning the Department for Work and Pensions should accept evidence from a professional such as social worker or GP and not make their own independent enquiries. Organisations such as Engender have expressed concerns about women being compelled to make disclosures about sexual violence or face a reduced benefit income, an experience which may have a re-traumatising effect. The extent to which the system can guarantee anonymity is also a concern (for example, it may become apparent that this exception has been applied when a women is receiving debt or benefit advice or applying for student finance). Again we can see significant complications with entitlements based on claimant’s behaviour. In relation to the ‘rape clause’ the appropriateness of women needing to prove that a third or subsequent child has been born in circumstances which are accepted by the benefit authorities is highly controversial.

The two-child policy raises significant questions about the role of the welfare state, the appropriateness of moving away from a needs based benefit system and the extent to which social policy influences public behaviour. There is legitimate cause for concern that this policy will increase poverty levels. Particular scrutiny should be applied to the administration of the ‘rape clause’ and the third party evidence system that underpins this. A robust and timely review of the entire policy, and in particular the exceptions, should be completed to identify the impact on the groups of people that this article has discussed. It should also be remembered that many claimants affected by the two-child policy will also be affected by cuts to other benefits as a result of the welfare reform programme and public services.


Richard Machin is a senior lecturer and course leader in Social Welfare Law, Policy and Advice Practice at Staffordshire University. His areas of academic expertise include social security and poverty. He worked within welfare rights services in local government for over 10 years.