Big news coming up! Rachel Reeves, the Chancellor of the Exchequer, is set to announce a major change in the benefit cap that could impact 630,000 people and cost up to £6.3 billion. A key focus is the two-child benefit cap, introduced in 2017, restricting universal or child tax credit to the first two children.
The Institute for Fiscal Studies highlights that reversing this cap could be a game-changer for reducing child poverty. A full reversal might cost £3.6 billion and lift an estimated 630,000 children out of poverty. There are also more targeted options on the table that reduce costs. For instance, exempting working families could lower the cost to £2.6 billion, aiding 410,000 children.
Decisions need to be made on prioritising support. Options include helping the youngest children, boosting work incentives by modifying the cap for working families, or spreading benefits more widely but thinly.
It’s part of broader government efforts to tackle child poverty, including investing £500 million in Best Start Family Hubs and extending free school meals. A new £1 billion package will also ensure the poorest children are fed during holidays.
Stay tuned for the official announcement this autumn, which promises to outline ambitious strategies to combat child poverty. This is a crucial moment to support every child, offering them the best start regardless of their background. What are your thoughts on these proposed changes? Let us know in the comments!