SCRAPPING the two-child benefit cap is essential for any credible poverty strategy, a think tank has said.

The Resolution Foundation projected that a three-child limit on benefits could cut child poverty by 320,000 by the end of this parliament.

Labour has been under pressure, including from within the party, to abolish the policy amid record highs rates of child poverty.

The government’s child poverty taskforce is due to present a strategy in spring.

Before the next general election, child poverty will hit a record high of 4.6 million on current forecasts, according to the Resolution Foundation.

The two-child limit was first announced in 2015 by the Conservatives and came into effect in 2017. 

It restricts child tax credit and universal credit to the first two children in most households.

But the Resolution Foundation has warned the current limit is incompatible with a credible plan to tackle child poverty.

Adam Corlett, principal economist at the foundation, said: “With a record 4.6 million children set to fall below the poverty line by the end of this parliament, the government is right to be formulating a new strategy to combat this scourge of modern Britain.

“However, a credible new strategy will need more than warm words. A government that is serious about reducing child poverty will need to undo some of the policies announced by previous governments, such as scrapping the two-child limit. 

“The upcoming spending review should also look to extend free school meals to more families.

“An ambitious strategy could support around 900,000 children out of poverty by the end of the decade. 

“And while the cost of this action may seem daunting, the cost of inaction is far greater and could leave the government with an embarrassing record of rising child poverty.”

The Resolution Foundation estimated scrapping the two-child limit and benefit cap would cost around £4.5 billion by 2029-30.

It warned the government: “It’s time to move on from warm words and start cutting child poverty.”

Prime Minister Sir Keir Starmer has previously indicated he would like to scrap the two-child limit but that the government cannot afford to.

The Department for Work and Pensions was contacted for comment.