Renewed calls to scrap the two-child benefit cap are understandable in the wake of figures showing a rise in children affected, a Cabinet minister has said but he indicated there will be no change to the policy without economy growth.

Campaigners and charities have made fresh pleas to Prime Minister Sir Keir Starmer to ditch the cap, as the latest statistics showed more than one and a half million children across the UK are affected.

An independent think tank has said that the majority of children in large families will fall below the poverty line by the end of this Parliament five years from now, unless the policy is abolished.

Figures published on Thursday by the Department for Work and Pensions showed there were 1.6 million children living in households affected by the policy as of April this year, up from 1.5 million to April 2023.

(PA Graphics)

Of these, 52% of children were in households with three children, 29% in households with four children, and 19% in households with five or more children.

Last month, before becoming Prime Minister, Sir Keir said he would scrap the two-child limit “in an ideal world” but added that “we haven’t got the resources to do it at the moment”.

Asked about the renewed calls to do away with the policy, Environment Secretary Steve Reed said “of course” the party understands those demands, but maintained the Government must keep “strict spending controls” to stabilise the economy.

He told reporters: “Of course we understand the pressure for that, of course we understand the difficulties families face because of the wider cost of living crisis.

“It is absolutely essential that this Labour Government maintains strict spending controls because we have to stabilise the economy after 14 years of Conservative chaos.

“It is that chaos and the way they crashed the economy that has left families hurting so much. As we grow the economy, we will be able to spend the additional income on other things that we want to achieve for this country.”

The Church of England has backed the call to end the policy, which was introduced in 2017 and restricts child tax credit and universal credit to the first two children in most households.

The Archbishop of Canterbury, Justin Welby, previously described it as “cruel” and one which is “neither moral nor necessary”.

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New Work and Pensions Secretary Liz Kendall called the child poverty situation “a stain on our society” and pledged to hold “critical meetings” with charities and experts about its strategy to tackle it.

Sir Keir, speaking at the party’s manifesto launch last month, said Labour will take “millions of children out of poverty” with a “strong plan” to deal with issues that “bear down” on poverty, such as housing, education, health and good jobs.

But campaigners criticised the absence of a pledge to scrap the cap and said any plan to reduce child poverty “won’t get off the ground” until this happens.

Thursday’s figures showed there were some 440,000 households in receipt of either universal credit or child tax credit who were not receiving the child element or amount for at least one child because of the policy, up from 409,050 as of April 2023.

The Resolution Foundation has said that abolishing the two-child limit would cost the Government somewhere between £2.5 billion and £3.6 billion in 2024/25, but that such costs are “low compared to the harm that the policy causes”.

In its briefing in January, it said scrapping the two-child limit “would be one of the most efficient ways to drive down child poverty rates”, estimating that if abolished at that point, 490,000 children would have been lifted out of poverty.

After the latest figures, it said almost two in five large families in the UK are now affected, and things will get worse if it remains in place.

Lalitha Try, an economist at the foundation, said there is little evidence the policy has achieved its aims of boosting employment and reducing the number of children families have, but that there is “clear evidence of the financial losses that affected families are facing, and rising rates of poverty”.

She added: “Unless the policy is abolished, the majority of children in large families will fall below the poverty line by the end of the parliament.

“Any new child poverty strategy should find the funds to remove it.”

Action for Children said the figures “confirm the relentless expansion of this cruel policy, which creates and entrenches child poverty”, while Save the Children described the statistics as “an outrage” showing how “more and more children will suffer every year just because they have siblings”.

Barnardo’s said it understands the Government “is having to make tough financial decisions”, but families “need action urgently, starting with a change to this unfair policy”.

In a speech on the same day the figures were published, the president of the Association of Directors of Children’s Services (ADCS) criticised the Government’s plan to “reduce” child poverty as not going far enough.

Andy Smith, in a speech to the ADCS annual conference, said: “We need to eradicate child poverty if we are to start to create a society that is based on the principles of social justice and recognises the importance of childhood for all children.”

The Liberal Democrats described the policy, which came in under the Conservatives, as “cruel and counter-productive” and vowed to keep campaigning to scrap it.

The figures come as the Child Poverty Action Group (CPAG) said its survey of 560 families affected by the policy shows “the deep suffering and deprivation it’s causing”.

Almost all of them (93%) said the policy had affected their ability to pay for food, while 82% said it meant they struggle to cover gas or electricity bills.

Almost half (45%) of respondents said they struggled to pay their rent or mortgage because of the policy while (46%) described struggling to manage childcare costs.

The Children’s Charities Coalition said a survey it commissioned YouGov to carry out of more than 2,000 adults found that 78% of respondents would support legislation to tackle the issue through the introduction of an End Child Poverty Bill.