Amber Rudd scraps extension of two-child benefit cap after winning cash battle with Chancellor

Posted On: 
10th January 2019

Plans to extend the controversial cap on Universal Credit payments to families with more than two chilren have been ditched after Amber Rudd won a cash battle with Philip Hammond.

Amber Rudd had demanded Philip Hammond find the money to prevent the two-child limit being extended.
PA Images

Under the policy, which came into effect in April 2017, families on benefits only receive Universal Credit payments for their first two children.

It was designed to force welfare recipients to make the same choices families in work have to do when deciding whether to have more children.

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But a little-known measure voted through by MPs in 2012 meant that from next month, the rule was set to apply to families who had their third child before the policy came into effect.

The changes would have affected 15,000 families and saved the Treasury around £250 million.

PoliticsHome understands that Ms Rudd wrote to the Chancellor shortly after she became Work and Pensions Secretary in November asking him to find the money to halt the rollout.

It is understood he finally gave the green light to scrap the extension in the last 24 hours.

In a speech later today, Ms Rudd will say: "As it stands, from February 2019 the two child limit will be applied to families applying for Universal Credit who had their children before the cap was even announced. That is not right.

"These parents made decisions about the size of the family when the previous system was the only system in place. So I can today announce that I am going to scrap the extension of the two-child limit o Universal Credit for children born before April 2017.

"All children born before that date will continue to be supported by Universal Credit. This will help approximately 15,000 families a year."

The minister will also confirm that she is delaying the migration of around 3 million benefit claimants onto Universal Credit over fears the system is not yet ready to cope. Instead, a pilot involving 10,000 people will take place from July.

"The lessons from the pilot will inform our next steps, but there will be no overall delay," Ms Rudd will say. "Universal Credit migration will be completed, as planned, by 2023.  However I will consider
carefully the results of the pilot, and its implications for scaling-up migration."

Shadow Work and Pensions Secretary Margaret Greenwood said: "This partial U-turn does not go far enough. Labour has long called for the Government to abandon the two child limit in its entirety.

"Universal Credit simply is not working: it is pushing many families into poverty, rent arrears and towards foodbanks.

"The Government must stop the roll out immediately before more people are pushed into financial hardship."