Around 50,000 low-income families currently affected by the two child benefit limit will gain nothing when it is lifted in April, analysis by the Department for Work and Pensions (DWP) has found.
The benefit cap – a separate policy which limits the total amount a household can receive – will prevent these families from gaining any more after the change in brought in, the official impact assessment reveals.
It also adds that a further 20,000 will only see their incomes lift partially from April due to having their income raised to benefit cap level.
Chancellor Rachel Reeves announced an end to the two-child limit at last year’s Labour Budget. The move will increase the benefits for 560,000 families by an average of £5,310, according to the Office for Budget Responsibility’s (OBR) fiscal outlook.
The government estimates that the change will reduce the number of children living in poverty by 550,000 by 2030.
Meanwhile, the benefit cap will remain frozen in 2026/27, marking the fourth year it will not rise in line with inflation.
The level was last raised in 2023, to £1,835 a month for most couples or claimants with children, or £22,020 a year. In Greater London, it is £2,110.25 a month, or £25,323 a year.
There is a statutory obligation on the government to review the cap every five years, with the next review being due in November 2027. However, this does not prevent ministers from making decisions on it sooner.
The official assessment comes after the Joseph Rowntree Foundation warned last week that, without further action, 4.2 million children will still be growing up in poverty by 2029 despite the end of the two-child benefit limit.
Senior policy adviser at the Joseph Rowntree Foundation, Iain Porter, said: “It’s good news that the government has begun the process of reducing child poverty and the removal of the 2-child-limit for Universal Credit is a undoubtedly a step in the right direction.
“But on its own it’s not enough.
“Our analysis shows child poverty will fall sharply in April, but then stall. By the end of the parliament there will still be around 4m children in poverty – unless the government takes additional steps. An immediate and obvious step is to address the damage done by the benefit cap, which leaves families in hardship.”
The policy expert reiterates the charity’s call to create a protected minimum floor within Universal Credit to limit how much payments can be reduced by debt deductions or the benefit cap.
The foundation has also urged the government to consider an ‘essentials guarantee’ to ensure benefit payment levels are always enough for people to afford living costs.
A government spokesperson said: “Our Child Poverty Strategy will lift 550,000 children out of poverty by 2030 – the biggest reduction in a single parliament.
“Scrapping the two-child limit is just one of the ways we’re helping to lift children out of poverty, alongside measures including extending Free School Meals, boosting the national living wage, cutting energy bills by £150 and launching our £1bn Crisis and Resilience Fund to support families in need.”
