Chancellor Rachel Reeves has used the Budget to announce a significant increase in Universal Credit for thousands of families across the UK.
An End to the Two-Child Limit
The central reform is the abolition of the two-child benefit cap, a policy introduced by the previous Conservative government. This restriction had limited parents to claiming Universal Credit support only for their first two children.
From April next year, this rule will be scrapped, allowing larger families to claim for third, fourth, and all subsequent children. The Labour government states this move is a crucial step in its mission to help lift millions of children out of poverty.
The Financial Impact on Families
The change will have a direct and substantial impact on household finances. Currently, the child element of Universal Credit is worth £292.81 per child per month for children born after April 2017.
This means a family with four young children, for example, would see their monthly income rise by an extra £586 under the current payment levels. For many, this represents a major financial boost that will help cover essential living costs.
A Divisive Political Decision
The Chancellor's confirmation follows significant pressure from within her own party, with many Labour MPs having campaigned for the cap's removal.
However, the issue remains politically contentious. While critics of the cap argue it has unjustly forced millions of children into poverty, some Conservatives maintain that the previous system was fairer, believing it was unreasonable for the state to fund support for an unlimited number of children in a household.
Despite the debate, the government is proceeding with the change, marking one of the most significant early welfare reforms under the new administration.
