DWP data shows 1.3m children affected by limit as research shows risk of long-lasting harm increasing due to cost of living crisis

One in 12 of all UK children now live in families hit by the two-child limit, the government’s controversial cap on benefits that cuts household income by at least £2,800 a year and puts affected youngsters at risk of poverty and emotional harm.

The latest official statistics revealed that 1.3 million children in 359,000 households were subject to the two-child limit in April as the policy dragged an additional 150,000 kids in 40,000 families into its net.

New research into the impact on affected children found they suffered social and emotional harms as a result of their parents finding it almost impossible to afford basic needs, from food and nappies and new shoes to buying birthday presents for friends.

The study by York and Oxford academics found the continuation of the policy during the cost of living crisis was “creating an almost impossible context for affected families, with a risk of long-lasting harm for millions of children”.

Asked about cost of living pressures, Asma, a mother interviewed as part of the Benefit Changes and Larger Families project, said: “If anything, I think it is about to get worse … things are going up so high … so you know, that is worrying … I don’t think there is any hope at the moment.”

A briefing by the project said: “We hear a great deal of the heat-or-eat dilemma that households in poverty routinely face. Families affected by the benefit cap and two-child limit also told us about the stressful and difficult decisions they face choosing which of their children’s basic needs to meet.”

The new figures were published as the government started to issue the first tranche of a one-off, flat rate £650 payment to around 8 million low-income UK families to help them cope with the rising cost of living.

Campaigners said this payment offered little comfort to those already falling deeper into poverty at a time of rising prices. “Today’s emergency cost of living payment does nowhere near enough to pull them back,” said Alison Garnham, chief executive of the Child Poverty Action Group.

The two-child limit restricts some benefit payments to the first two children born to the poorest households after 6 April 2017. Affected households claiming universal credit or tax credits lose £55 a week for their third and subsequent children.

The policy was introduced five years ago as an attempt to cut the welfare bill and supposedly prevent “benefit scroungers” having large families, with one minister declaring that it would teach feckless parents “the reality that children cost money”.

However, a recent analysis revealed that since the policy’s introduction, the fertility rate for third and subsequent children born to poorer families has barely fallen. Instead it has become the biggest single driver of child poverty, especially for families with three or more children.

The policy was also recently disavowed by the Tory peer Lord Freud, the former welfare reform minister, who called it “vicious” and an “excrescence” and said it had been imposed by the Treasury against the wishes of the work and pensions ministerial team at the time.

The latest figures showed that despite ministers’ belief that the two-child limit would incentivise work, 59% of the families affected by the limit are already working. Some 1,830 mothers received a special exemption from the two-child limit after they reported that their third or subsequent child was born as a result of rape, or in the official jargon, “non-consensual conception”.

A Department for Work and Pensions spokesperson said: “This policy means families on benefits are asked to make the same financial decisions as families supporting themselves solely through work, including considering our comprehensive childcare offer for working parents and child benefit for all children.

“Meanwhile, to help with rising prices, over 8 million households on benefits are in line to receive the first instalment of our £650 cost of living payment from today, with millions getting at least £1,200 in extra support.”