Rachel Reeves is set to announce the elimination of the contentious two-child benefit cap in her upcoming Autumn Budget. This cap restricts low-income families from receiving additional means-tested benefits when they have a third or subsequent child born after April 6, 2017, impacting those on Universal Credit and Tax Credits.

Initially introduced by the Conservatives in April 2017, the policy has faced criticism from advocates who argue that it pushes thousands of children into poverty. Documents released ahead of the Budget by the Office for Budget Responsibility (OBR) reveal that the cap will be removed starting in April, with an estimated cost of £3 billion by 2029/30.

According to the Department for Work and Pensions (DWP), approximately 1,665,540 children were affected by the two-child benefit cap in April 2025. The Institute of Fiscal Studies (IFS) estimates that families impacted by this policy could have received an average of £4,400 in benefits annually if the cap had never been implemented.

The IFS suggests that lifting the cap could incur an annual cost of £3.6 billion. Currently, Universal Credit claimants receive extra payments depending on the birth date of their children, with payments continuing until the child reaches 16 or 19 if in full-time education or approved training.