The UK government's decision to scrap the two-child benefit limit is set to provide a crucial economic buffer for the poorest households as the country braces for the fallout from the Iran war, including potential spikes in oil prices and inflation. The policy change, which takes effect in April, will see more than half a million families with three or more children receiving an average of £440 extra per month through universal credit.
Economist Alex Clegg of the Resolution Foundation described the additional support as 'life-changing' for families with four or five children, amounting to thousands of pounds a year for those at the bottom of the income distribution. The standard allowance of universal credit is also increasing by 6.2%, above inflation, benefiting a wider group of low-income households.
The Resolution Foundation projects that 480,000 children will be lifted out of poverty in 2026 as a result of these changes. While the wave of war-fuelled price rises, dubbed 'Trumpflation' by the TUC, may reduce the purchasing power of the additional cash, the reinstatement of support scrapped by the Conservatives in 2017 comes at a critical time.
Sam Tims, lead analyst at the Joseph Rowntree Foundation, emphasised the importance of a strong safety net for families to manage shocks, ensuring they can still afford essentials like food. The government's impact assessment indicates that of the 2 million children in households likely to benefit by 2030, 600,000 live in 'deep material poverty', a new definition meaning families cannot afford heating, transport, or three meals a day.
Professor Ashwin Kumar of the Institute for Public Policy Research highlighted the economic argument for the policy, noting that children who are not fed or ready to learn in school represent wasted talent and future costs to the economy. Chancellor Rachel Reeves, who announced the change in her budget speech, framed it as part of her 'securonomics' philosophy, aimed at protecting families from economic shocks.
Mothers affected by the two-child limit have shared their relief with charity Save the Children. Kim, a mother of five from Ashton-under-Lyme, said the extra money would allow her to pay bills and keep the heating on longer for her children. Thea, a working mother of three in London, said it could mean winter clothes or new shoes, but ultimately she wants to spend a weekend playing with her kids without stressing about money.
