Scottish government to end two-child benefit cap from March
The Scottish government will effectively scrap the two-child benefits cap north of the border from 3 March next year, ministers have announced. The UK-wide policy prevents parents from claiming universal credit or child tax credit for more than two children, with a few exemptions.The Scottish government will mitigate the cap by offering payments to affected families. Social Justice Secretary Shirley Anne Somerville said the move would help keep 20,000 children out of relative poverty.
The payments are due to start two months before next year's Scottish Parliament election.
What is the two-child benefits cap?
The two-child cap prevents most families from claiming means-tested benefits for any third or additional children born after April 2017.It was introduced by Conservative ministers as part of cost-cutting measures. It has been kept in place by Sir Keir Starmer's Labour administration. However, Labour ministers have indicated in recent months that they could scrap the policy.Somerville said the Scottish government could not wait for a decision at Westminster.The minister said payments would be delivered 15 months after the government announced it would mitigate the cap, which she said was the fastest a social security benefit in Scotland had ever been delivered.She added: "This builds upon the considerable action we have taken in Scotland, including delivering unparalleled financial support through our Scottish Child Payment, investing to clear school meal debts, and continuing to support almost 10,000 children by mitigating the UK government's benefit cap as fully as possible."
In its Budget announcement last year, the Scottish government vowed to provide payments to families affected by the policy by April 2026, or earlier if possible.It said it needed data and assistance from the UK government before it could introduce the payments.The Scottish Fiscal Commission has estimated that 43,000 children in Scotland will benefit from mitigation of the cap in 2026-27. It predicts this will cost £155m in that year, rising to almost £200m by 2029-30.The Institute for Fiscal Studies has estimated that mitigating the policy would reduce relative child poverty in Scotland by 2.3 percentage points, equivalent to 23,000 children.The think tank described removing the cap as a "highly cost-effective policy", with an estimated annual cost of £4,500 per child lifted out of poverty.
'Real hardship'
However, it has also warned mitigation could weaken incentives to work because some of the lowest-paid workers could earn more on welfare than in employment.The government's announcement was welcomed the Child Poverty Action Group in Scotland.Director John Dickie said: "It is absolutely right that the Scottish government acts to effectively scrap the UK government's two-child benefit limit in Scotland. "Families affected, most of whom are working, are facing real hardship and the sooner these payments can be made the better."He also called on the UK government to scrap the policy "as a matter of utmost urgency". Prime Minister Sir Keir Starmer has previously said he would consider "all options" to tackle child poverty.
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