In a notable shift, Reform UK leader Nigel Farage publicly endorsed scrapping the cap, arguing it would help lower-paid workers manage the costs of raising children.
The UK government has officially launched a review of the controversial Two-Child Benefit Cap, a policy introduced in 2017 that restricts child tax credits and Universal Credit payments to just the first two children in most families. The move comes amid mounting pressure from anti-poverty campaigners, rising living costs, and political debates ahead of a crucial general election. With child poverty figures reaching record levels, the policy’s future has become a key issue in welfare reform discussions.
Understanding the Two-Child Cap
The Two-Child Benefit Cap was introduced by the Conservative government in 2015 and implemented two years later. Its goal was to curb public spending by limiting financial support for families with more than two children. The cap applies primarily to child tax credits and Universal Credit payments, affecting thousands of households across the UK. It is important to note that this is a separate policy from the broader Benefit Cap, which places an overall ceiling on total benefits a household can claim.
While intended to encourage financial responsibility and reduce government expenditure, the cap has been criticised for its unintended consequences on vulnerable families, many of whom struggle to make ends meet.
The Impact on Families and Children
Campaigners argue that the policy exacerbates child poverty, with estimates suggesting that as many as 109 children fall into poverty each day due to the cap. Last month, a coalition of organisations including Unicef UK, the National Education Union, the Trussell Trust, and the National Children’s Bureau collectively called on the Treasury to abolish the cap entirely. They warned against a partial repeal, stating that any exception would leave the most vulnerable children trapped in poverty with no clear route out.
With child poverty figures reaching record levels, the policy’s future has become a key issue in welfare reform discussions.
Scotland has taken a different approach by pledging to mitigate the policy’s impact, with plans for additional payments expected to begin in 2026. However, this staggered timeline highlights disparities in welfare support across the UK and fuels ongoing debate about the fairness of the system.
Child Poverty at Record Highs
Data published by the Department for Work and Pensions (DWP) in March 2025 revealed that the number of children living in relative low income in the UK has hit a record 4.45 million, marking the highest level since records began in 2002/03. This figure represents an increase from 4.33 million the previous year and reflects the harsh economic realities faced by many families, particularly after housing costs are taken into account.
Relative poverty is defined as having an income below 60% of the median household income, and these figures underline the scale of the challenge facing policymakers.
Financial Implications
Ending the Two-Child Cap could provide immediate relief for an estimated 350,000 children, according to the Child Poverty Action Group (CPAG). However, the financial cost of removing the policy remains a contentious issue.
The Resolution Foundation estimates the cost could reach £3.5 billion by the end of the current Parliament in 2029/30. CPAG and the Joseph Rowntree Foundation offer lower estimates, around £2 billion for the 2025/26 fiscal year, rising to £2.8 billion by 2030. Meanwhile, the New Economics Foundation predicts costs starting at £1.9 billion from April 2025, increasing to £2.6 billion by the end of this Parliament.
Differences in these figures arise from varied assumptions on birth rates and spending patterns, adding complexity to the government’s budgeting decisions.
Political Responses
Labour leader Keir Starmer has previously expressed a desire to scrap the cap “in an ideal world,” but acknowledged economic limitations. Since taking office, the Labour government has faced pressure from activists and opposition parties to abandon the policy, especially amid public anger over welfare reforms and support measures.
Education Secretary Bridget Phillipson recently confirmed that the government’s child poverty taskforce is reviewing the policy. She emphasised that while “nothing’s off the table,” the costs involved mean decisions are “not straightforward.” The taskforce’s strategy, initially planned for spring, has been postponed to autumn to align with the Chancellor’s upcoming budget.
In a notable shift, Reform UK leader Nigel Farage publicly endorsed scrapping the cap, arguing it would help lower-paid workers manage the costs of raising children. Speaking in London, he said, “It’s not a silver bullet, it doesn’t solve all problems, but it helps them.” He framed this as support “aimed at British families” rather than encouraging welfare dependency.
Conservative leader Kemi Badenoch, however, stands firm in defending the policy. On Sky News, she criticised both Farage and Starmer for making promises without fiscal responsibility, stating, “I am saying what is the right thing to do – it may not be popular, but it is absolutely the right thing to do.”
As the government reviews the Two-Child Benefit Cap, the debate reflects a broader challenge: how to balance financial discipline with social justice. With child poverty at historic highs and public concern growing, policymakers face difficult choices ahead. The outcome will likely shape the UK’s welfare landscape and political discourse for years to come.
