Rachel Reeves has announced during the Autumn Budget that she will eliminate the contentious two-child benefit cap. This policy restricts low-income families from receiving additional means-tested benefits for 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 advocates who argue that limiting benefits is driving many children into poverty. The cap is set to be removed starting April 2026, with the Chancellor emphasizing a stance against penalizing the most vulnerable children within the 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), as of April 2025, around 1,665,540 children were affected by this cap. It is important to note that the two-child benefit cap differs from the benefit cap, which imposes a ceiling on the total amount of benefits an individual can receive.
Chris Sherwood, CEO of the NSPCC, welcomed the decision to scrap the two-child limit, highlighting the positive impact it will have on lifting hundreds of thousands of children out of poverty. He emphasized the importance of addressing the underlying causes of child poverty to ensure every child has the opportunity to thrive.
The Institute of Fiscal Studies (IFS) estimates that families impacted by the cap could have received an average of £4,400 in benefits annually if the restriction had never been implemented. However, projections suggest that eliminating the two-child benefit cap could result in an annual cost of £3.6 billion, with Universal Credit claimants currently receiving additional monthly payments based on the birth dates of their children.
Payments for children born before or after April 6, 2017, vary, with additional support provided until the child turns 16 or, in some cases, 19 if they are in full-time education or approved training.