Chancellor Scraps Two-Child Benefit Limit in Autumn Budget

The UK government has announced a significant policy shift with the abolition of the two-child limit on benefits, a move expected to lift hundreds of thousands of children out of poverty. In her autumn budget speech delivered on October 23, 2023, Chancellor Rachel Reeves emphasized the detrimental impact of this policy, which she attributed to the previous Conservative administration.

“This policy pushes kids into poverty more than any other,” Reeves stated, highlighting the failure of the limit to achieve its intended purpose of reducing costs and encouraging behavioral change among families. Instead, she noted that the limit has exacerbated poverty for many households, directly impacting around 1.6 million children across the country.

The two-child limit, introduced in 2017, restricts families from receiving additional universal credit for any third child or subsequent children. Families affected by this policy miss out on approximately £3,500 per child each year, according to various estimates. The Child Poverty Action Group (CPAG) projects that the removal of this cap will immediately lift around 350,000 children out of poverty and significantly alleviate the financial burden on many others.

Impact on Families and Public Services

The decision to eliminate the two-child limit comes with considerable financial implications, with estimates from the Resolution Foundation suggesting the policy change could cost the government around £3.5 billion annually by the end of the decade. However, the long-term costs associated with child poverty could far exceed this, with the Women’s Budget Group estimating that child poverty could cost the UK around £40 billion by 2027 due to increased unemployment, decreased earnings, and rising public service expenditures.

Advocacy groups have lauded this change, with Lord John Bird, founder of the Big Issue, calling it a critical step toward alleviating the hardships faced by families. He stated, “A situation where young people are punished for the lottery of their birth is intolerable.” Bird emphasized that the removal of this policy would provide essential relief to many children who have little control over their circumstances.

Many charities are urging the government to consider further reforms, including the abolition of the benefit cap, which limits the total amount of support families can receive. This cap disproportionately affects larger families and has been criticized for exacerbating poverty among the most vulnerable.

Future Steps and Ongoing Challenges

Despite this landmark decision, challenges remain. Lynn Perry, chief executive of Barnardo’s, welcomed the removal of the two-child limit but stressed the need for additional measures. “With one in three children growing up in poverty, there is still much more to do,” she remarked, calling on the government to lift the benefit cap to better support struggling families.

The government’s child poverty strategy, which is set to outline further plans to tackle child poverty in the UK, is expected to be published in the coming weeks. Initially slated for release in the spring, it has been delayed until this autumn to coincide with the budget announcement.

Helen Barnard, director of policy at Trussell, expressed optimism about the implications of this policy change. She noted that the previous two-child limit had forced numerous families to rely on food banks for survival. The swift removal of this limit, she argued, will not only help ensure a better start in life for children but also relieve pressure on public services and contribute positively to the economy.

As the government moves forward with its plans, advocates continue to push for a comprehensive child poverty strategy that includes measurable targets. Lord Bird reiterated the call for a bold approach, stating that the strategy must provide benchmarks to track progress and drive meaningful change.

The elimination of the two-child limit on benefits marks a pivotal moment in UK social policy, with the potential to reshape the lives of many families struggling against the tide of poverty.