Chancellor Rachel Reeves has strongly indicated she will scrap the controversial two-child benefit cap in her upcoming Budget, delivering a significant financial boost to larger families claiming Universal Credit.
Budget Announcement Set for November
The landmark policy change is scheduled to be formally announced during the Budget on November 26, 2025. This move follows sustained pressure from within the Labour party to address concerns about child poverty.
The existing cap restricts benefit claims to only the first two children in a family. Under current rules, the child element of Universal Credit is worth £292.81 per child per month for children born after April 2017.
Financial Impact on Families
Removing this limitation will have a substantial impact on household budgets. For example, a family with four young children would see their monthly income increase by approximately £586 once the cap is lifted.
This change recognises the varied circumstances families face. "In many cases you might have a mum and dad who were both in work, but perhaps one of them has developed a chronic illness or one of them has passed away," Reeves told the BBC.
The Chancellor emphasised that children shouldn't be penalised for their family's size or financial situation, noting multiple reasons why families might have more than two children, including adoption and foster care arrangements.
Addressing Child Poverty Concerns
Reeves highlighted the broader economic implications of unchecked child poverty, stating: "I don't think we can lose sight of the costs to our economy in allowing child poverty to go unchecked."
This policy shift represents a significant victory for anti-poverty campaigners and Labour MPs who have long argued that the two-child cap has contributed to millions of children living in poverty across the UK.
The announcement is expected to provide relief to thousands of families struggling with the cost of living when it comes into effect following the Budget statement.
