The impact of the two-child benefit cap on parental mental, general, and financial health in the UK

Background: The two-child benefit cap, implemented in April 2017, restricted Universal Credit and Child Tax Credit to the first two children in households with three or more children. We evaluate the impact of the two-child benefit cap on parental mental, general, and financial health, as well as investigate how this may differ in particular sociodemographic and economic subgroups based on sex, ethnicity and income. Methods: Data was obtained from parents (youngest child aged 5 or under) in the UK Household Longitudinal Survey from 2009 to 2023. Outcomes included parental mental health (psychological distress and life satisfaction), general health (health-related quality of life (HRQoL), self-rated health and health satisfaction), and financial health (current financial situation and financial outlook). We used complementary policy evaluation methods with different strengths and assumptions to triangulate evidence and strengthen inference: interrupted time series (ITS), difference-in-differences (DiD) and controlled time series analysis (CITS). Subgroup analyses were stratified by sex, ethnicity, and income. Findings: Across methods, findings consistently indicate that the policy worsened life satisfaction, self-rated health, health satisfaction, and financial health for parents of 3+ children. Findings were less consistent across methods for psychological distress and HRQoL. For instance, for psychological distress ITS and CITS indicate adverse impacts of the policy; however, one DiD model did not support this conclusion due to greater average worsening in the control group between the pre- and post-periods. Subgroup analyses indicate greater mental health and general health impacts in lower income, male and ethnic minority parents; while financial health was negatively impacted in all subgroups examined. Conclusions: Using repeated cross-sectional panel data and triangulating across causal inference methods, we conclude that the two-child benefit cap in the UK had a measurable adverse impact on most health outcomes examined, with worse outcomes for male, lower income and ethnic minority parents.