Two child benefit cap explained as 1.6 million could be affected by scrap | Personal Finance | Finance

Education Secretary Bridget Phillipson has offered a ray of hope for larger families trying to make ends meet. She told Sky News that ministers are “considering” lifting the two child benefit cap which has been in place since 2017.

The rule essentially means that families can only claim benefits for their first two children. This includes vital support like Universal Credit, which offers £339 or £292.81 extra per month for each child. This rule only applies to children born after April 2017. An exception is also made for children born as a result of rape.

The two child benefit cap was first proposed in 2012 under the coalition government who said it would ensure households on benefits would have to navigate the same financial concerns when it comes to deciding to have children as families without benefits.

Government figures show 1.6 million children are living in homes affected by the two child limit.

Analysis by the Resolution Foundation claims that if the cap stays in place, the number of children in poverty could grow to 4.8 million by the next election.

These families on benefits with more than two children would see a noticable jump in income if the rule was scrapped, potentially increasing by £3,455 per additional child per year.

In doing so, it could cost around £3.4billion per year, according to the Institute for Fiscal Studies. 

The Child Poverty Action Group notes: “It leaves families without means-tested support for their third and subsequent children worth £3,514 a year.

“This tax on siblings is the biggest driver of rising child poverty in the UK today. It breaks the link between what children need and the support they receive.”

One family with three children and working parents revealed to the organisation that their income is already so tight due to restrictions from the cap that when the father was out of work due to ill health, the youngest had to go without cake or presents for their birthday.

The family hoped the child would simply be too young to remember.

Phillipson’s comments have fueled speculation that the government’s perspective on the cap is shifting, particularly as the child poverty strategy was only delayed from spring until autumn.