Analysis from the Department for Work and Pensions (DWP) reveals approximately 50,000 low-income families will not benefit from the removal of the two-child benefit cap set for April. This change comes as part of a broader initiative aimed at supporting families, yet the benefit cap will hinder these households from seeing any financial gain.
DWP Analysis: Impact of Two-Child Benefit Cap Removal
The report indicates that a further 20,000 families will experience only a partial increase in their income after the policy change. They will reach the benefit cap level, but this will not equate to significant financial relief. Chancellor Rachel Reeves announced the end of the controversial two-child limit during last year’s Labour Budget.
Expected Benefits for Families
The move is projected to benefit 560,000 families, providing an average increase of £5,310 to their benefits, as outlined by the Office for Budget Responsibility (OBR). This adjustment aims to alleviate child poverty, with an objective to decrease the number of children living in poverty by 550,000 by 2030.
Current Benefit Cap Status
- The benefit cap will remain unchanged for the 2026/27 financial year.
- It was last increased in 2023 to £1,835 monthly for couples or claimants with children, totaling £22,020 annually.
- In Greater London, the limit is set at £2,110.25 monthly, or £25,323 yearly.
Despite a legal requirement to review the cap every five years, the next evaluation is scheduled for November 2027. However, the government may adjust the cap sooner if deemed necessary.
Concerns from Experts
The Joseph Rowntree Foundation highlighted the need for further action, warning that 4.2 million children may still face poverty by 2029, even with the removal of the benefit limit. Iain Porter, a senior policy advisor at the foundation, emphasized the need for additional measures to address poverty effectively, including reforming the benefit cap.
Porter advocates for establishing a protected minimum floor within Universal Credit to safeguard families from extreme financial hardship. He also suggested implementing an ‘essentials guarantee’ to ensure benefits cover basic living expenses.
Government’s Response to Child Poverty
A government representative stated that the Child Poverty Strategy aims to lift 550,000 children from poverty by 2030. Measures alongside scrapping the two-child limit include:
- Extending Free School Meals
- Boosting the national living wage
- Cutting energy bills by £150
- Launching a £1 billion Crisis and Resilience Fund for families
While the removal of the two-child cap is viewed as a positive step, experts argue that further measures are essential to ensure families receive adequate support.
