New analysis by the Institute for Public Policy Research reveals that scrapping the two-child limit will disproportionately benefit working households, contrary to the ‘Budget for Benefit Street’ narrative pursued by some in the last 24 hours.

IPPR analysis shows that 70 per cent of the additional spending from removing the two-child limit will go to families who are in work. This is targeting support for low-income working households who are being priced out of a decent standard of living despite doing everything asked of them.

Additionally, the long-term benefits of lifting the two-child limit are likely to outweigh the costs. Some estimate the wider economic burden of child poverty at £39bn a year – lifting 10 per cent of children out of poverty will help alleviate this, reducing pressures on public services and boosting long-term economic participation. Evidence consistently shows that reducing child poverty leads to better educational and health outcomes and higher earnings in adulthood, which in turn benefits the wider economy and the public finances.

The policy’s removal also represents exceptional value for money. For less than a 1 per cent increase in welfare spending, 450,000 children will be lifted out of poverty. It is the most cost-effective lever available to reduce child poverty, and without this change, child poverty would have been higher at the end of this parliament than at its start.