The Department for Work and Pensions (DWP) is implementing a major rule change affecting seven key benefits, most notably Universal Credit. The move follows Chancellor Rachel Reeves's Autumn Budget announcement to scrap the controversial two-child limit, a policy that restricted financial support to the first two children in a family.
Which Benefits Are Affected by the Change?
The abolition of the two-child limit will apply across a range of welfare payments. The affected benefits include:
- Universal Credit (including its housing element)
- Jobseeker’s Allowance (JSA)
- Employment and Support Allowance (ESA)
- Income Support
- Child Benefit (when combined with other household benefits)
- Child Tax Credit (where applicable)
- Housing Benefit (for those not on Universal Credit)
Benefit Cap Continues to Limit Support for Families
Despite this significant reform, a stark warning has been issued by policy experts. Analysis from Policy in Practice reveals that one in five households currently impacted by the two-child limit will remain ineligible for the full allowance once it is removed.
This is because the separate benefit cap, which sets a maximum total amount a household can receive, will still be enforced. Deven Ghelani, director of Policy in Practice, stated: "Our analysis finds that one in 10 children hit by the two-child limit won't benefit from it being abolished, and a further one in 10 will only benefit partially, unless the chancellor lifts the benefit cap too."
Ghelani emphasised the complexity this creates, noting it requires "complex analysis needed to ensure support on the frontline gets to those families who need help the most."
Projected Impact and Political Reaction
The Office for Budget Responsibility (OBR) estimates that removing the two-child limit will lift 450,000 children out of poverty by 2030. The decision has been welcomed, albeit with criticism over the remaining cap.
In Scotland, Social Justice Secretary Shirley-Anne Somerville welcomed the UK Government's "delayed" decision, attributing it to sustained pressure from the Scottish Government and charities. However, she expressed frustration: "I am, however, frustrated that the benefit cap will still be enforced, which is a conscious choice to continue to shackle families and their children to hardship."
Somerville confirmed that funding previously allocated by the Scottish Government to mitigate the two-child limit would be redirected to other anti-poverty measures, with details to be outlined in the Scottish Budget on January 13.
