As ministers consider scrapping the two-child limit, Child Poverty Action Group’s cost of a child calculations show many families with children – including those working full-time - don’t have enough money for even a minimum acceptable living standard and their income gaps have widened significantly since 2008.
The calculations for 2025 show families with three children fare particularly badly because although the costs of third and subsequent children are similar to earlier children and families do not benefit from notable economies of scale, the two-child limit substantially reduces social security support for the third (and any subsequent) children.
The research - based on what the public deems a minimum acceptable living standard - shows that many families with children working full-time don’t have enough income to cover basic costs. For three-child couples working full-time even on a median wage, a minimum, acceptable living standard, as defined by the public, is unaffordable. These families can cover only 83 per cent of their costs (a £150 weekly shortfall). Three-child couple-families on the minimum wage can meet only 68% of costs (a £290 weekly shortfall).
For working lone parents with three children, the gaps are bigger still: even on a median wage a lone parent can meet only 60% of costs (£290 shortfall); on the minimum wage she covers only 51% of her costs (a gap of £370 per week).
Out-of-work families with three children are very far from being able to meet costs: couples can cover only 34% of costs. Lone parents can stretch to 40% of costs.
Family types with one or two children are also unable to cover all the costs, but fare better than families with three children, as they are not subject to the two-child limit.
Commenting on the findings, chief executive of Child Poverty Action Group Alison Garnham said:
'Low-income families are desperate after years of rising costs and social security cuts and those hit by the two-child limit look particularly precarious. The policy pulls 109 children into poverty every day and government won’t deliver on its ‘moral mission’ to cut child poverty until it’s gone. The two-child limit must be scrapped in its entirety in the forthcoming child poverty strategy, before it pulls more children under the poverty line.'
Dr. Juliet Stone (Loughborough University), who did the calculations for the report, said:
'Our latest analysis of the cost of bringing up a child shows that for low-income families, even full-time work is unable to provide them with the income needed for a socially acceptable standard of living. This is compounded for families with more than two children by the punitive two-child limit, with even those working at median earnings falling far short of meeting their minimum needs. Policy reform is urgently needed, or children will increasingly be living in households without the income needed for a dignified standard of living.'
All families (not only larger families) are able to cover far less of the cost of children than in 2008, largely due to social security cuts. Costs have risen much faster than increases to the social security system and since 2020 have risen by much more than inflation and earnings.
For example, a lone parent with two children, working full time on the minimum wage could nearly cover all her costs (97%) in 2008, but in 2025, can only cover 69%.
In 2008, a couple with two children, working full-time on the minimum wage could cover 93% of their costs, whereas in 2025 only 82% of costs are covered.
The Cost of a Child 2025, based on calculations produced for Child Poverty Action Group by Loughborough University’s Centre for Research in Social Policy, looks at the cost of raising a child from birth to 18 and at what families need for a minimum socially acceptable living standard as defined by the public. The research has been running since 2008.