The controversial two-child limit will be lifted from April 2026
The two-child cap, which restricts households on Universal Credit or Child Tax Credit from receiving payments for a third or subsequent child born after April 2017, is set to be abolished.
A leaked document outlining the UK Government’s plans was revealed just prior to the Budget, confirming suspicions that the contentious benefit would be scrapped. The Office for Budget Responsibility (OBR) document indicates that the two-child limit within Universal Credit will be lifted from April 2026, costing £3bn by 2029-30.
From April 2026, the Government will remove the two-child limit within Universal Credit. This limit currently restricts the Universal Credit child element, which stands at £3,500 per year for second and subsequent children, to two children per family, excluding children born before April 6, 2017, and those who meet certain exemption criteria.
This move is projected to cost £2.3bn in 2026-27 and £3.0bn in 2029-30, including £300m by 2029-30 for the cost of an estimated 25,000 additional entitled families making a Universal Credit claim due to the increase in benefit eligibility.
According to UK Government estimates, the measure will reduce child poverty by 450,000 by 2029-30, reports Wales Online.
What is the two-child benefit cap?
The two-child benefit cap, which prevents parents from claiming child tax credit or universal credit for more than two children, was brought in by the Conservative Government in 2017.
Families eligible for benefits who have had a third or subsequent child after 6 April 2017 are barred from receiving additional support from the benefits system towards the cost of their child. This means parents miss out on £3,455 per year per child compared with families who have a third or subsequent child born before that date.
How will lifting the cap impact families?
According to data provided by the End Child Poverty Coalition, abolishing the cap would lift 250,000 children across the UK out of poverty. According to Policy in Practice, 17 per cent of families currently claiming Universal Credit would be affected.
The Bevan Foundation is among those calling for the abolition of the two-child cap. The charity has argued that by reducing benefit payments, the two-child limit leaves families short, pushing more children and their parents into poverty and some into destitution. This both impacts children in the short and long-term, particularly in terms of their health and education.
This policy also brings up significant questions about fairness when it comes to accessing public services. The public would be justifiably outraged if schools or hospitals turned away children because they have two older siblings, yet this is what the two-child limit on benefits does.
The policy has sparked considerable controversy even within the Labour party, with left-wing members arguing that Labour should be supporting the poorest, while others warn of an unsustainable welfare bill.
Many of Labour’s own MPs were campaigning for the cap to be lifted, and this Budget was viewed as crucial not only in winning back voters but also in gaining the support of Labour MPs.
Recent polling from YouGov indicates that 59 per cent of the public support keeping the cap in place, with only 26 per cent believing it should be abolished.
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