First, as part of a mixed-methods study, Nesta sought to understand families’ experiences by interviewing 35 parents impacted by the 2CL living across four local authorities in England (Bristol, Newham, Birmingham and County Durham). View the results of the study.

Second, Nesta commissioned the Institute for Fiscal Studies to investigate whether there is evidence of a relationship between children being affected by the two child limit and poorer outcomes at age five, as measured by ‘good level of development’ (GLD) in the Early Years Foundation Stage Profile.

The research carried out by IFS, funded by Nesta, did not find evidence of a link between the 2CL and a good level of development (GLD); children likely to be affected by the 2CL were not less likely to reach GLD. However, previous qualitative research carried out by Nesta did highlight the severe financial hardship experienced by affected families and parents’ concerns about their own mental health and their children’s wellbeing, current opportunities and future life chances.

The report by IFS, funded by Nesta, found that:

• Around 60% of families with a third or subsequent child under age five see their benefit entitlements for that child reduced by the 2CL at any given time.
• Despite these substantial income losses, we find no statistically significant impact of the policy on the proportion of children achieving a GLD at age five - a measure that covers communication, physical development, literacy and numeracy skills at the end of reception, which around two-thirds of children achieve in England. 
• We also find no evidence of an effect on the GLD for children in the groups most likely to be hit financially by the policy, such as families in the most deprived 20% of neighbourhoods and those entitled to free school meals prior to the third child’s birth. 
• These findings do not mean the policy has no wider consequences. The 2CL clearly contributes to higher rates of child poverty and lower material living standards for many low-income families. This research does not study outcomes such as child health, well-being, skills not captured in the GLD measure, later educational performance at older age, or parental stress. This means that these findings do not rule out other effects of the policy on children, now or as they grow up, or indeed on their parents.
• But the findings do suggest that scrapping or mitigating the 2CL would be unlikely to contribute cost-effectively to the government’s target to increase the GLD pass rate to 75%, up from the current rate of 68%. Other policies, such as integrated family services delivered via Sure Start, the free entitlement to 15 hours of childcare for 3- and 4-year-olds, or home visiting programmes such as the family nurse partnership, have been shown to have significant effects on school readiness.