Rachel Reeves has announced during the Autumn Budget that she will eliminate the controversial two-child benefit cap. This policy, implemented by the Conservatives in April 2017, restricts low-income families from receiving further means-tested benefits for a third or subsequent child born after April 6, 2017, impacting those on Universal Credit and Tax Credits.
The Chancellor stated in the Commons that the cap will be removed starting from April 2026, emphasizing the importance of not punishing vulnerable children in a broken welfare system. According to the Office for Budget Responsibility (OBR), the cost of abolishing the two-child benefit cap is estimated to reach £3 billion by 2029/30.
In April 2025, a total of 1,665,540 children were affected by the two-child benefit cap, as reported by the Department for Work and Pensions (DWP). It is crucial to note that this cap is distinct from the benefit cap, which sets a limit on the total benefit amount one can receive.
Chris Sherwood, CEO of the NSPCC, praised the decision to scrap the two-child limit, highlighting its potential to lift hundreds of thousands of children out of poverty. He stressed the importance of addressing the root causes of child poverty through a comprehensive strategy to ensure all children have the opportunity to thrive.
The Institute of Fiscal Studies (IFS) projected that affected families could have received an average of £4,400 per year in benefits if the cap had never been implemented. While lifting the two-child benefit cap may cost around £3.6 billion annually, Universal Credit claimants currently receive extra payments depending on the child’s birthdate until they turn 16 or continue full-time education or approved training until age 19.
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