Rachel Reeves, in her Autumn Budget announcement, has confirmed the elimination of the controversial two-child benefit cap. This policy restricts low-income families from receiving further means-tested benefits for 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 campaigners who argue that it pushes thousands of children into poverty. The Chancellor declared that the cap would be removed starting April 2026, emphasizing a belief that punishing vulnerable children is not a solution to a flawed welfare system.
The Office for Budget Responsibility (OBR) estimates that the removal of the two-child benefit cap will incur a cost of £3 billion by 2029/30. According to the Department for Work and Pensions (DWP), approximately 1,665,540 children were affected by this cap in April 2025.
Separate from the benefit cap, which imposes a limit on total benefit amounts, the two-child benefit cap’s elimination has been lauded by Chris Sherwood, CEO of the NSPCC, as a positive step towards lifting hundreds of thousands of children out of poverty. The NSPCC urges the government to develop a comprehensive child poverty strategy to address underlying issues and ensure every child has the opportunity to thrive.
The Institute of Fiscal Studies (IFS) estimates that affected families could have received an average of £4,400 in benefits annually if the cap had not been implemented. While lifting the two-child benefit cap could cost around £3.6 billion per year, Universal Credit claimants currently receive additional monthly payments depending on the child’s birth date.
Families can receive these extra payments until the child reaches 16 or, if in full-time education or approved training, up to the age of 19. Parents with children born on or after April 6, 2017, or with a second child, are eligible for these additional benefits.