Rachel Reeves has announced in her Autumn Budget that she will eliminate the contentious two-child benefit cap. This cap restricts low-income families from receiving additional means-tested benefits for a third or subsequent child born after April 6, 2017, affecting those on Universal Credit and Tax Credits.
Initially implemented by the Conservatives in April 2017, the policy has faced criticism from advocates who argue that limiting benefits is driving many children into poverty. The cap will be removed starting April 2026, with the Chancellor stating, “We do not believe in punishing the most vulnerable children as a 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, around 1,665,540 children were impacted by this cap as reported by the Department for Work and Pensions (DWP).
Separate from the benefit cap, which sets a maximum limit on total benefits, the two-child benefit cap has been a significant concern for affected families. Chris Sherwood, CEO of the NSPCC, welcomed the decision to scrap the limit, emphasizing the positive impact it will have on lifting children out of poverty.
Looking ahead, the NSPCC urges the government to address the root causes of child poverty through a comprehensive strategy. The Institute for Fiscal Studies (IFS) estimates that families affected by the cap could have received an average of £4,400 more in annual benefits if the restriction had never been introduced.
While the removal of the two-child benefit cap will provide relief to many families, the IFS warns of the potential annual cost of £3.6 billion. Notably, Universal Credit claimants with children born before or after April 6, 2017, receive varying additional payments until specific ages.
Parents can receive continued payments for children up to age 19 if they are in full-time education or approved training. The decision to eliminate the cap signifies a step towards alleviating financial strain on vulnerable families and ensuring a more secure future for children.