In her Autumn Budget announcement, Rachel Reeves has confirmed the elimination of the controversial two-child benefit cap. This cap restricts low-income families from accessing further means-tested benefits when they have a third or subsequent child born after April 6, 2017, impacting those receiving Universal Credit and Tax Credits.
Initially introduced by the Conservatives in April 2017, the policy has faced criticism from advocacy groups for exacerbating child poverty. The cap will be removed starting April 2026, with the Chancellor expressing that penalizing vulnerable children is not the solution to a flawed welfare system.
According to the Office for Budget Responsibility (OBR), the removal of the two-child benefit cap is projected to cost £3 billion by 2029/30. In April 2025, a total of 1,665,540 children were affected by this cap, as reported by the Department for Work and Pensions (DWP).
Distinct from the benefit cap, which sets a limit on total benefit amounts, the two-child benefit cap’s removal is anticipated to uplift numerous children out of poverty, as stated by NSPCC CEO Chris Sherwood. The NSPCC emphasizes the importance of a comprehensive child poverty strategy to address underlying causes and ensure a poverty-free childhood for all.
Estimates from the Institute of Fiscal Studies (IFS) suggest that families impacted by the cap could have received an average of £4,400 annually in benefits if the cap had never been implemented. Reversing the two-child benefit cap could potentially incur a yearly cost of £3.6 billion, with Universal Credit claimants receiving additional monthly payments based on the child’s birth date.
Payments for additional children continue until the child reaches 16, with the possibility of extension until age 19 for those in full-time education or approved training. The move to eliminate the two-child benefit cap signifies a significant step towards alleviating financial strain on families and promoting child welfare.
