The two-child cap policy in the UK restricts low-income families from receiving additional benefits for more than two children, resulting in 1.6 million children affected. Introduced by former Chancellor George Osborne, the policy limits claims for universal credit or tax credits to the first two children born after April 6, 2017. The Institute for Fiscal Studies estimates that families impacted by this cap could have received around £4,400 annually, which constitutes roughly ten percent of their disposable income. On a broader scale, the cap is projected to save the Treasury approximately £3.6 billion annually.
Clarification is often needed regarding the distinction between the two-child cap and child benefit. The cap only applies to universal credit and tax credits and does not influence child benefit payments. Families with children born before the specified date, along with certain exceptions—such as twins or triplets following a single birth, children born from coercive relationships, or adopted children—can still receive full benefits.
Criticism of the cap has come from over 100 charities and several Labour backbench MPs advocating for its removal, arguing it could lift numerous children out of poverty. However, critics note that eliminating the cap may necessitate financial adjustments through budget cuts, tax increases, or increased government borrowing to compensate for the loss of projected savings.
As the Budget approaches, Chancellor Rachel Reeves has suggested potential modifications to the policy, indicating that children in larger families should not be penalized for circumstances beyond their control. Possible alternatives include lowering benefits for all families regardless of the number of children, offering partial payments for additional children, or adjusting the cap to include more children.
Source: https://www.bbc.com/news/articles/ce3xrz3drk9o?at_medium=RSS&at_campaign=rss