New analysis indicates that council areas with elevated immigration levels will see 2.2 per cent of households gain from Labour’s removal of the two-child benefit cap, almost double the rate in areas with minimal immigration.

The £3 billion policy shift represents a significant change to the welfare system, with the cap’s elimination set to provide additional Universal Credit and child tax credit payments to families with more than two children.

The disparity in benefit distribution across different communities has emerged as a contentious issue, with some viewing it as disproportionately favouring certain demographics.

The policy reversal affects 470,000 families across Britain, with the government’s spending watchdog projecting it will reduce child poverty by 450,000 by the 2029/30 financial year.

The east London borough of Barking and Dagenham tops the list, with approximately 3,400 of its 82,000 households set to receive increased benefits – representing 4.2 per cent of all households in the area.

Census data from 2021 shows that over 41 per cent of Barking and Dagenham’s residents were born outside the UK, ranking it as the 16th highest in the country for foreign-born population.

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Luton follows closely with 3.8 per cent of households benefiting, whilst Brent will see 3.4 per cent gain from the policy change. These areas have foreign-born populations of 38 per cent and 54 per cent respectively.

Notably, affluent London boroughs with substantial foreign-born populations, including Kensington and Chelsea, Westminster, and the City of London, are amongst those least likely to see benefits from the cap’s removal.

Data from the Children’s Commissioner reveals that 41 per cent of Pakistani families and 38 per cent of Bangladeshi families have three or more children, whilst just 14 per cent of White British families fall into this category.

Recent child poverty statistics indicate that nearly half of children from black and Asian backgrounds experience relative poverty, compared with approximately 25 per cent of white children.

The policy change will provide families with a typical £3,455 for each additional child beyond the second. For the 18,260 families with six or more children, this could mean annual increases exceeding £14,000.

Department for Work and Pensions figures show that amongst the 470,000 affected families, nearly two-thirds have three children, whilst a quarter have four children.

Robert Bates from the Centre for Migration Control told the Daily Mail that the policy represents “yet another attack on citizens who play by the rules, and a handout to high migration areas”.

He argued there was “no moral, fiscal or political justification for spending tens of billions of pounds every year in asylum costs, foreign aid and welfare handouts to migrants”, particularly when “British citizens are at breaking point”.

The Financial Times reports that Labour MPs are concerned the uneven distribution of benefits across different communities might create a “political flashpoint”.

Opposition leader Kemi Badenoch has characterised Chancellor Rachel Reeves’s Budget as favouring “Benefits Street” rather than supporting hardworking British families, with the cap removal funded through £30 billion in tax increases.

A Government spokesperson stated: “Nine in ten children impacted by the two-child limit have a UK-born parent. With almost three-quarters of children in poverty living in working households, this government is determined to give 550,000 of them a better start in life.”

Government sources have emphasised that Universal Credit eligibility remains based on immigration status and residence requirements rather than nationality, with existing eligibility rules unchanged by the cap’s removal.

The policy forms part of broader immigration reforms under Home Secretary Shabana Mahmood, which will require migrants dependent on benefits to wait 20 years for settlement – four times the current period and the longest waiting time in Europe.

The Institute for Fiscal Studies has identified that the increase in child poverty is “entirely driven by a large increase in relative poverty among families with three or more children”.