The Two-Child Benefit Cap Will Be Scrapped From 2026
The news was leaked by the OBR ahead of the Budget (Alamy)
2 min read
The government will scrap the two-child benefit cap from April 2026, Chancellor Rachel Reeves has confirmed.
The news was accidentally made public by the Office for Budget Responsibility (OBR), which released its independent growth forecast before Reeves could deliver her Budget in the House of Commons on Wednesday. The OBR apologised for the error and said it was investigating how it happened.
Reeves confirmed the move in her statement shortly after, telling MPs that the cap "pushes kids into poverty more than any other".
The limit, which was introduced under the Conservatives in 2017, prevents parents from claiming Universal Credit (UC) or child tax credit for more than two children.
Families that receive Universal Credit can receive £3,500 a year for each additional child they have, but the introduction of the policy meant they could not claim the money for any third or subsequent child born after 6 April 2017.
According to the OBR report, the government estimates that this measure will reduce child poverty by 450,000 by 2029-30, relative to the level had the two-child limit remained in place.
The removal will cost £2.3bn in 2026-27 and £3.bn in 2029-30, "including £300m by 2029-30 for the cost of an estimated 25,000 additional entitled families making a UC claim as a result of the increase in benefit generosity", according to the OBR.
The OBR also says that an estimated 560,000 families see an increase in UC award averaging £5,310 per year because of the policy.
The announcement will be welcomed by many Labour MPs who say removing the cap is key to tackling child poverty.
Former deputy prime minister Angela Rayner, Labour's deputy leader Lucy Powell, and Labour mayor of Greater Manchester Andy Burnham had all called for it to go in the run-up to the Budget on Wednesday.
