The Department for Work and Pensions (DWP) has released an analysis revealing that around 50,000 low-income families will not benefit from the anticipated removal of the two-child benefit cap this April. Despite the removal, a concurrent benefit cap will thwart any income increase for these families.
DWP Findings on Two-Child Benefit Cap Impact
The analysis highlights that an additional 20,000 families will experience only a partial increase in their income due to adjustments up to the benefit cap level. This policy change arises following Chancellor Rachel Reeves’ announcement in last year’s Labour Budget.
Potential Benefits for Families
- Approximately 560,000 families are expected to see an average benefit increase of £5,310.
- The government’s initiative aims to reduce child poverty levels by 550,000 by the year 2030.
Current Benefit Cap Situation
The benefit cap, which has not increased for a fourth consecutive year in 2026/27, is currently set at £1,835 monthly for most families or £22,020 annually. In Greater London, these figures rise to £2,110.25 monthly, equating to £25,323 annually.
Under existing legislation, the benefit cap is subject to a review every five years, with the next review scheduled for November 2027. However, ministers retain the authority to make earlier adjustments.
Concerns Over Child Poverty
The recent findings come as the Joseph Rowntree Foundation warns about the ongoing risk of child poverty. They project that 4.2 million children may still live in poverty by 2029, even with the removal of the two-child benefit limit.
Iain Porter, senior policy adviser at the Joseph Rowntree Foundation, emphasized the importance of further action to combat child poverty. He noted that although the removal of the cap represents progress, it may not be sufficient on its own.
Recommendations and Government Response
Porter called for more proactive measures, including:
- Creating a protected minimum floor within Universal Credit to prevent excessive reductions caused by debt deductions or the benefit cap.
- Implementing an ‘essentials guarantee’ to ensure that benefit levels are sufficient for basic living costs.
A government spokesperson reiterated their commitment to tackling child poverty, stating that their strategy aims to lift 550,000 children out of poverty by 2030. They highlighted several initiatives, including the removal of the two-child limit, extensions to Free School Meals, increases in the national living wage, and the introduction of a £1 billion Crisis and Resilience Fund to support struggling families.
