Two-child benefit cap set to be scrapped in Herald win

UK Government sources told the Sunday Times the Chancellor had agreed to ditch the cap after modelling revealing tapering it would only save the Treasury around £200 million.

Child poverty charities that teamed up with The Herald to call for the abolition of the cap also expect it to be scrapped, it is understood, costing the government around £3 billion.

The cap was introduced by the Conservative government in 2017 and maintained by Labour despite intense pressure from backbenchers.

It means parents are unable to claim Universal Credit or tax credit for any third or subsequent children born after April 6, 2017.

In April, The Herald, backed by 23 leading anti-poverty charities, launched a campaign - called Scotland's Forgotten Children - against child poverty.

It included a letter to Prime Minister Sir Keir Starmer calling for the benefit cap to be scrapped, while also urging First Minister John Swinney to increase the Scottish Child Payment to £40 per week.

The Herald also took the campaign to Westminster, challenging Labour ministers and backbenchers on the controversial policy.

Read More:

• John Swinney told to stop wishing away 'shameful' child poverty
• Nappies, food and clothes for newborn babies: Inside Scotland's busiest food banks
• Rebecca McCurdy: I was ashamed of growing up poor – but I am proud of it now
• No evidence child payment deters work, admits Government
• This is why Scottish Labour MPs were tense in Westminster

The Scottish Government intends to mitigate the two-child benefit cap from April next year – but charities now want SNP ministers to recommit the funds into increasing the Scottish Child Payment.

Speaking ahead of Wednesday’s UK budget statement, John Dickie, director of the Child Poverty Action Group (CPAG) in Scotland, said: “The Chancellor’s top priority must be scrapping the two-child limit for all children.

“It is the key driver of raising child poverty across the UK, and scrapping it is the most cost-effective way to reduce that poverty.

“Scrapping the policy at source would also free up funds in the Scottish budget that are currently earmarked for mitigation, creating an opportunity to further build on the child poverty progress already being made in Scotland.”

The Herald, backed by 23 charities, wrote to the Prime Minister in April. (Image: NQ)

On a UK-wide level, around 350,000 children would be removed from poverty with the abolition of the limit, with around 20,000 of them in Scotland alone.

It is also expected to reduce the depth of poverty for 700,000 children across the UK, according to CPAG.

There is also evidence to suggest that poverty levels have worsened since the two-child benefit cap’s inception.

Child poverty in Glasgow increased nine percentage points from 27% to 36% in a decade since 2015.

Read More:

• 'Shift in power' needed to tackle child exploitation and poverty
• Mum demands action after autistic daughter's school assault
• Peter Capaldi: 'Glasgow has gone backwards - deep problems remain'

A long-awaited UK child poverty strategy is expected to be published days after the budget, with the report expected to link the scrapping of the cap to improved educational outcomes, leading to greater earnings in adulthood.

The Chancellor had considered introducing a tapering system where families would have received reduced payments for third and subsequent children.

The child element of Universal Credit is worth £339 per month for the first child born before April 6, 2017, falling to £292.18 for the second child – and any included in the exemptions list such as a controversial “non-consensual conceptions” clause.

On top of that, in Scotland, eligible families receive £27.15 weekly for each child through the Scottish Child Payment.

Rachel Reeves gave the strongest signal yet that she intends to scrap the benefit cap, telling BBC Radio 5 Live: "I don't think that it's right that a child is penalised because they are in a bigger family, through no fault of their own."

She said the Labour-led government would "take action".

The Herald's letter to the Prime Minister in April warned the cap "punishes children for circumstance entirely beyond their control".

"Families affected by the policy are more likely to experience food insecurity, rent arrears, mental health issues and extreme financial hardship," it said.

Scottish Labour leader Anas Sarwar said last week he had confidence the Chancellor would scrap the child benefit cap.

Meanwhile, mitigating the cost of the two-child limit in Scotland will cost SNP ministers an estimated £155m in 2026-26, according to the Scottish Fiscal Commission and rising to nearly £200m by 2029-30.

Separate modelling from the Institute for Public Policy Research (IPPR) suggests increasing the Scottish Child Payment to £40 per week would cost approximately £261m per year.