Budget Reforms: Scrapping the Two-Child Welfare Cap

The scrapping of the two-child limit on welfare payments will cost the UK approximately 3 billion pounds in 2029-30, according to the Office for Budget Responsibility. Introduced in 2017, the cap aimed to make low-income families face similar financial decisions as those not on welfare.

In a significant policy shift, the scrapping of the two-child limit on welfare payments is expected to cost the UK about 3 billion pounds in the 2029-30 fiscal year. This revelation comes from the Office for Budget Responsibility, which published the estimates unexpectedly ahead of Rachel Reeves' budget announcement on Wednesday.

The two-child cap, implemented by the Conservative government in 2017, restricts additional welfare benefits for families with more than two children. While Labour Party members support removing this limit, citing that it unfairly penalizes larger families, public opinion remains divided, with 59% of the population supporting the cap's continuation.

Designed to balance the financial decision-making between welfare-dependent families and those independently supporting themselves, the 2017 policy affects a significant portion of UK families. Data from the Office of National Statistics reveals that 15% of families with children under 18 have three or more children, while 41% have two and 44% have one child.

(With inputs from agencies.)