Rachel Reeves has utilized the Autumn Budget to officially announce the elimination of the contentious two-child benefit cap. This policy restricts low-income families from receiving further 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 advocates who argue that limiting benefits is leading to increased child poverty. The cap is set to be removed starting April 2026, with the Chancellor emphasizing a stance against penalizing vulnerable children in the welfare system.
According to the Office for Budget Responsibility (OBR), the removal of the two-child benefit cap is projected to incur a cost of £3 billion by 2029/30. In April 2025, around 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 imposes a limit on total benefit amounts, the two-child benefit cap has drawn extensive criticism. Chris Sherwood, CEO of the NSPCC, praised the decision to scrap the two-child limit, highlighting the positive impact it will have on lifting children out of poverty.
Looking ahead, the NSPCC urges the government to implement a comprehensive child poverty strategy to address the underlying causes and ensure all children have the opportunity to flourish. The Institute of Fiscal Studies (IFS) estimates that affected families could have received an average of £4,400 annually in benefits if the cap had never been enforced.
Furthermore, the IFS suggests that eliminating the two-child benefit cap could result in an annual cost of £3.6 billion. Notably, Universal Credit claimants with children born before April 6, 2017, receive additional monthly support, while those with children born on or after this date have different payment structures until the child reaches 16 years.
Parents can continue receiving payments until their child reaches 19 if the child is pursuing full-time education or approved training. The decision to abolish the two-child benefit cap has been seen as a significant step towards addressing child poverty and promoting a more supportive welfare system.