Rachel Reeves has announced in her Autumn Budget that she will eliminate the two-child benefit cap, a policy that restricts further means-tested benefits for low-income families with 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 cap has faced criticism for pushing thousands of children into poverty. The Chancellor has confirmed that the cap will be removed starting April 2026, stating that punishing vulnerable children is not the solution to a flawed welfare system.
According to the Office for Budget Responsibility (OBR), the removal of the two-child benefit cap is expected to cost £3 billion by 2029/30. In April 2025, 1,665,540 children were affected by this policy, as reported by the Department for Work and Pensions (DWP).
Separate from the benefit cap, which limits the total amount of benefits one can receive, the two-child benefit cap’s elimination has been welcomed by Chris Sherwood, CEO of the NSPCC, as a crucial step in alleviating child poverty.
The Institute of Fiscal Studies (IFS) estimates that affected families could have received an annual average of £4,400 in benefits if the cap had never been implemented. While lifting the cap may incur a cost of £3.6 billion annually, Universal Credit claimants currently receive additional payments based on the child’s birth date.
Payments continue until the child turns 16, with extensions possible up to age 19 for those in full-time education or approved training. In moving forward, a comprehensive child poverty strategy is urged to address the underlying causes and ensure every child has the opportunity to thrive.
