Who Benefits From the Two Child Cap Lift?

The two-child benefit cap was announced by the Conservative Government in 2015, with the then chancellor, George Osborne, announcing the cap would be introduced in April 2017. The cap prevents parents claiming Universal Credit (UC) and Child Tax Credit (which ended on the 5 April 2025) on more than two children.

It is worth noting that Child Benefit, £17.25 per week, per child, is not capped. The cap only applies to Universal Credit top-ups after the first two children, which works out to around £68.32 per week. This cap also only applies to children born on or after the 6 April 2017, there are also exceptions in place, for example if the children have a disability or if they were born as twins or triplets etc.

This confusion likely arises from the terminology used (benefit cap) and the media don’t do a good job reporting on this subject, with journalists and political commentators often conflating the two.

Recent reports suggest the Labour Government is considering scrapping the two-child benefit cap, which was a contentious issue for Labour when it was announced and during the 2024 General Election. Nigel Farage, leader of Reform, has also announced that his party, if elected, would scrap the two-child benefit cap, as well as reversing the cut to winter fuel payments, which the Government have already backtracked on.

On the 25 May 2025, just a few days prior, Zia Yusuf, the chairman of Reform, at least at the time, posted on X (Twitter) about the UK’s collapsing birth rate, promising that Reform will do everything they can to encourage British people who want kids to have them, stating that: “Scrapping the two child cap is just the start”.

.From a purely cursory glance, this seems reasonable, the birth rate is plummeting, in 2016, the year prior to the introduction of the two-child benefit cap, there were 695,427 live births in England & Wales, fast forward to 2023 and this number dropped to 591,072, the lowest since 1977, so one could argue that in such a climate, any pro-natal policy, even ignoring other factors, is welcome.

Yet many online have railed against this proposal, arguing that it would primarily benefit immigrants, particularly Muslims and that it subsidises poor behaviour by encourages people to have more children than they can handle, whilst saddling working adults who often struggle to start their own families, with higher taxes to pay for it.

Here are just a few examples of the posts that have appeared on my timeline:

.According to polling by YouGov, 60 per cent of Britons support keeping the two-child benefit cap, including 84 per cent of Reform voters, 81 per cent of Conservatives, 54 per cent of Liberal Democrats and even 50 per cent of Labour voters, so on the surface, it would seem electorally unpopular to remove the cap, especially for Reform.

The counter argument is that lifting the two-child benefit cap would cost around £3.4 billion per annum and is estimated to lift around 500,000 children out of relative poverty, the majority of which are from households with three or more children.

But what is the demographic makeup of families with three or more children? Is there truth to the above claims, or are they just exaggerated statements?

First, let’s establish what percentage of families have three children or more, according to the ONS, in 2023, of all households with children, families with one child made up 45 per cent or 3.7 million, families with two children made up 41 per cent or 3.4 million and families with three or more children made up 14 per cent or 1.2 million.

In July 2024, the Department for Work & Pensions (DWP) released a report on the impact of the two-child limit for Universal Credit and Child Tax Credit. In Figure 2 of this report, it shows that 52 per cent of households affected by the two-child benefit cap are single-adult households, with 48 per cent being couple adult households.

.Removal of the two-child benefit cap would also disproportionately benefit non-working households, as of April 2024, of the 440,000 households not receiving a child amount for at least one child (three children or more), 180,000 (40.09 per cent) are out of work and with just 46,000 (12.43 per cent) of these households having both parents in work (Table 3, Universal Credit and Child Tax Credit claimants: statistics related to the policy to provide support for a maximum of 2 children, April 2024)

.
In October 2023, the Office for Health Improvement & Disparities, a branch of the Department of Health and Social Care, published a report into the sex ratios at birth in the United Kingdom, this data covers births in England & Wales, from 2017 to 2021 and includes data on the ethnicity of those who have three children or more.

Table 3 of this report shows the total number of live births, then provides a breakdown by ethnicity, covering first child, second child and then third child or more.

We can work out the percentage for each ethnic group by taking the total number of third child or more births as a percentage of the total number of live births from each ethnic group.

For example, if we take White British, 410,581 was the number of third child or more births, during the coverage period from 2017 to 2021, as a percentage of all live births for this ethnic group, a total of 1,903,471 for the coverage period, we get a percentage of 21.57 per cent for this ethnic group.

If we were to look at Pakistanis, there were 52,176 third child or more births during the coverage period, and as a percentage of 137,049, all live births for this ethnic group, this gives us a percentage of 38.07 per cent.

The chart below shows the percentages of third or more children, for each ethnic group.

We can conclude the removal of the two-child benefit cap would primarily benefit those of Pakistani, Bangladeshi, Black African, Other Black and Black Caribbean backgrounds, with those of Indian, White Other, Mixed and White British background benefiting the least, due to lower fertility rates and smaller family sizes.

In 2022, the Children’s Commissioner also published a preliminary report for a family review for Policy Exchange, where they found the following and confirm the general trend we see above: “The share of families with three or more children varies from 14 per cent in White British families to 41 per cent in Pakistani families and 38 per cent in Bangladeshi families.”

We can safely conclude that ethnic groups such as Pakistani and Bangladeshis tend to have larger families, and as such, are more likely to be the benefactors if the two-child benefit cap is removed.

The Department for Work and Pensions also publishes data on the ethnicity of Universal Credit claimants, the latest report covers December 2024 to January 2025 and can be found on Table 2_2.

There is some disparity between ethnic groups offered in the census and what the DWP collects data on, so I’ve had to collate some ethnic groups together, for example, the DWP bundles Black African, Black Caribbean and Other Black together, whereas the census offers them each as separate options, so I’ve collated them both under Black.

I’ve created a table showing ethnic groups, with a breakdown of their population size at the time of the 2021 census, compared to the proportion claiming Universal Credit (UC) in January 2025.

We can see that Bangladeshi, Pakistani, Black and Other White ethnic groups are overrepresented for Universal Credit claimants, whereas Indian, White British and White Irish groups are underrepresented, relative to their population size.

We can also see similar trends if we use the ONS 2021 Census Map for England & Wales, if we pick an area with a large Pakistani population, for instance, Toller Lane & Infirmary in Bradford, we can see that 79.7 per cent of those in this area, at the time of the 2021 census, identified as being of Pakistani ethnicity.

We can also see a breakdown in household size for this area, if we want to look at households with three children or more, then assuming the mother and father live together, we would have to look at households with five or more people.

According to the ONS map, 13.9% of households in this area had 5 people, 10.1% had 6 people, 6.5% had 7 people and 6.4% of households had 8 people or more; a combined total of 36.9% of households having five members or more, which closely matches the previous statistic of 38.07% of Pakistani births being a third child or higher, and of course, this is only looking at a specific area, using different sets of data, so the results are unlikely to align perfectly, but they do all show similar trends.

.Finally, we have data from the 2011 Census on the number of dependent children in the family by religion, this is a little outdated and I don’t believe the ONS have published anything like this using more recent data from the 2021 census, but the overall trend is unlikely to have changed much.

From this chart, we can see that Muslim and Jewish households with children are much more likely to have three children or more, compared to Christians, Buddhists, Hindus, Sikhs, other religions and the non-religious.

There may be more information out there, but using the above, we can safely assume the biggest beneficiaries of the removal of the two-child benefit cap would be single parent households and non-working households, and would benefit those of Pakistani, Bangladeshi and Black African ethnicity and assuming data from the 2011 census still holds true, would also benefit those from Muslim and Jewish families. This is to say, that those criticising the removal of the two-child benefit cap for the reasons mentioned earlier, the data is on their side.

---