The two-child benefit cap, which currently affects more than 1.5 million children in the UK, has been scrapped. Its removal, scheduled for implementation from April 6, 2026, could lift 350,000 children out of poverty and reduce the depth of poverty for a further 800,000 children, according to the Child Poverty Action Group. Scrapping the two-child limit will cost around £3 billion by the end of this Parliament. Labour leader Keir Starmer said he was proud to be lifting the two-child benefit limit, a move expected to lift half a million kids out of poverty, according to major media reports.
The policy, introduced under the Conservatives in 2017, prevented most families from claiming universal credit or child tax credit for any third or additional children born after April 2017, according to research from multiple sources. The cap did not affect child benefit, which is paid to families where the highest-earning parent earns less than £80,000, research indicates. In April last year, around 483,000 families were affected by the two-child limit, major media reports show. Government figures show 2.6 million children in the UK don’t have enough food at home and over 172,000 have no permanent home, according to major media sources. 300,000 children are living in relative poverty as a result of the two-child limit policy, multiple reports indicate.
This change comes as the Child Poverty Bill has received Royal Assent. The Bill includes changes around childcare, benefit rules and free school meals, according to major media reports. It is part of the Government’s plan to lift 450,000 children out of poverty before the final year of this Parliament, multiple sources said. The discrepancy in poverty reduction estimates—with government sources claiming 450,000 children lifted versus the Child Poverty Action Group's figure of 350,000—affects the perceived effectiveness of the policy, with independent advocacy groups projecting a lower impact.
Scrapping the two-child cap could see some families getting £300 more per month, major media reports indicate. Those with three or more children in the bottom half of earners will have their household incomes boosted by £1,400 this year, representing an average 7.7% boost to their living standards, according to multiple sources. Teesside has some of the highest levels of deprivation and child poverty in the UK, while Thornaby is ranked among the 10% most deprived areas nationally, according to government data. It remains unclear how many families will actually receive the £300 monthly increase mentioned by the Daily Mirror, and what the eligibility criteria are.
Other benefit adjustments are also underway. New benefit claimants for the health part of universal credit will get £217.26 a month, less than half the current rate of £429.80, while existing claimants and people with severe lifelong conditions will keep the higher rate, major media reports show. These cuts would save about £1 billion for taxpayers, according to multiple sources. The standard rate of UC will be boosted, with nearly 4 million households getting about £295 extra this year, and there were 2.7 million people on universal credit assessed as having limited capability to work in England, Scotland and Wales, reports indicate. More than 12 million pensioners will get a boost to their state pension, with an increase of up to £575 a year, and the full new state pension rises to £241.30 a week, up from £230.25, according to major media.
Millions of families claiming Child Benefit will see an increase in payments from April 6, with claimants receiving £27.05 per week for the eldest or only child, and £17.90 per week for additional children, multiple sources said. There is no limit to the number of children parents can claim Child Benefit for, reports indicate. More than 6.9 million families receive Child Benefit payments, but only 72% of families claimed it in their baby’s first year, according to major media. The standard rate of Universal Credit is going up by 6.2%, worth around £265 a year for a single person and £465 for a couple, multiple reports show.
Political reactions have been sharply divided. Labour's axing of the two-child benefit cap will see working families foot the bill for a £6,400 benefits boost for unemployed households, according to the Conservatives. The Conservatives and Reform UK have both vowed to reimpose the two-child cap if they win power at the next general election, major media reports indicate. Labour disputed the Tory analysis, accusing them of fiddling figures and lying about disabled people, according to a Labour spokesperson.
Critics have raised concerns about the welfare system's generosity. A hypothetical healthy couple with three young children in central London could amass £70,000 worth of handouts under the welfare system, according to critics. This couple could get up to £26,000 in housing credits to cover central London rent, and could claim back 85% of childcare fees, up to a maximum of £22,000, critics said. All in all, the couple would get about £73,900 in benefits, according to critics.
The economic context includes impacts on middle earners. GPs in England earn an average of £120,200 before tax, ending up with around £76,200 after tax, according to major media reports. Typical middle earner households were previously set for a £300 boost this year but are now projected to take a £480 hit due to the economic shockwave from the Iran war, multiple sources said. The discrepancy in cost estimates for scrapping the two-child limit—with one estimate at £3.5 billion per year versus another at £3 billion a year by 2029-30—could influence public and political debate over the fiscal responsibility of the policy.
Policy background includes the Department for Work and Pensions’ Policy Simulation Model (PSM), which is used to model the impact of policies on individuals and low income poverty levels, research indicates. The specific measures included in the Child Poverty Bill beyond childcare support and free school meals expansion have not been detailed. How the government will fund the estimated £3-3.5 billion annual cost of scrapping the two-child limit remains an open question.
Research and analysis on the policy includes a study by the Left-wing Resolution Foundation think tank, according to major media reports. The breakdown of the 1.5 million children affected by the cap in terms of region, family size, and income level has not been provided. It is also unclear how many of the 483,000 families affected by the two-child limit in April last year will benefit from its removal, and what the timeline for their relief will be.