In her Autumn Budget announcement, Rachel Reeves confirmed the elimination of the contentious two-child benefit cap. This policy restricts low-income families from receiving additional means-tested benefits when they have a third or subsequent child born after April 6, 2017, impacting those on Universal Credit and Tax Credits.
Initially introduced by the Conservatives in April 2017, the two-child benefit cap has faced criticism from activists who argue that limiting benefits is driving many children into poverty. The cap is set to be abolished starting from April 2026, with Reeves stating, “Punishing the most vulnerable children is not the solution to fixing a broken welfare system.”
The Office for Budget Responsibility (OBR) projects that the removal of the two-child benefit cap will incur a cost of £3 billion by 2029/30. According to the Department for Work and Pensions (DWP), approximately 1,665,540 children were impacted by this cap in April 2025.
Separate from the benefit cap, which sets a maximum limit on total benefits, the two-child benefit cap has garnered mixed reactions. Chris Sherwood, CEO of the NSPCC, hailed the decision to scrap the limit, emphasizing the positive impact on children living in poverty. He urged the government to develop a comprehensive child poverty strategy to address underlying issues and provide every child with the opportunity to flourish.
Estimates from the Institute of Fiscal Studies (IFS) suggest that affected families could have received an average of £4,400 annually in benefits if the cap had never been implemented. However, lifting the two-child benefit cap could result in an annual cost of £3.6 billion, with Universal Credit claimants currently receiving an additional monthly payment based on the child’s birthdate.
Parents with children born after April 6, 2017, or with a second child, receive extra payments until the child reaches 16. Payments may continue until the child turns 19 if they are in full-time education or approved training.
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