Today, 3 February, the Universal Credit (Removal of Two Child Limit) Bill received its second reading in the Commons. This moves it one step closer to realisation, and promises better standards of living for over a million children.
Campaigning organisation the Child Poverty Action Group (CPAG) urged MPs to vote in favour of the bill. The group explained that:
Removing the two-child limit will increase the living standards of 1.6 million children overnight, while also ensuring hundreds of thousands of children are no longer affected in the future. Investing in social security is also highly beneficial for children’s health, development, educational and economic outcomes.3 An improved financial situation at home means better developmental outcomes, higher educational attainment and lower health costs in childhood. This leads to greater employment prospects and better health outcomes in adulthood. Public expenditure is therefore lower and tax revenue higher. Tackling child poverty is the right thing to do – for children and their families now and in the future, as well as for our public services and wider economy.
In anticipation of the reading, the government put out an announcement for a new £1bn Crisis and Resilience Fund (CRF). The intention behind the fund is to create a “safety net” to support families with the rising cost of living.
However, the news isn’t all good. A Department of Work and Pensions (DWP) impact assessment has recently revealed that over 70,000 households won’t receive the full benefit of scrapping the two-child cap.
Crisis and Resilience Fund
The government press release called the £1bn Crisis Resilience Fund:
the most significant investment in local crisis support in a generation.
The CRF will launch in April 2026. Local Authorities across England will receive portions of the funding, which will replace both Household Support Fund (HSF) and Discretionary Housing Payments.
The HSF was previously renewed on an ad hoc basis, at the discretion of the government. The press statement called this an “annual cliff-edge funding cycle”. In its stead, the CRF forms the first multi-year pot intended for crisis support, confirmed until 31 March 2029:
This will allow the fund to act as a genuine safety net to prevent families from falling into poverty by giving Local Authorities the certainty they need to run long-lasting initiatives targeted at the needs of their local area.
Sabine Goodwin, director of the Independent Food Aid Network, stated that:
The eagerly awaited Crisis and Resilience Fund is set to be groundbreaking for households living on low incomes in English local authorities. Its newly published guidance outlines the delivery of effective crisis support via prioritised cash payments enabling choice and dignity as well as the need to help residents build financial resilience through bolstered community support.
Taking a cash-first approach to poverty, this multi-year funding pot has the capacity to reduce the number of people having to turn to charitable food providers and to help fulfil the Government’s commitment to end mass dependence on emergency food parcels.
Thousands of families missing out
A Department of Work and Pensions (DWP) impact assessment has revealed that roughly 50,000 families who are currently affected by the two-child limit won’t actually be any better off once the cap is removed in April. This is due to the separate, overall benefit cap, which limits the total amount a single household can receive.
Likewise, another 20,000 families won’t receive the full benefit of the two-child cap’s removal, as it would take them above the overall limit.
The overall cap is currently frozen, and hasn’t increase with inflation since 2023. As things stand, the upper limit on benefits is currently £22,020 for a couple with children.
Worse still, it will remain in place for the coming fiscal year 2026/2027. MPs are only under a statutory obligation to review this limit every 5 years.
‘It’s not enough’
The DWP’s assessment underscores a warning issued last week by independent social change organisation the Joseph Rowntree Foundation. It stated that, even in spite of the removal of the two-child benefit cap, 4.2 million kids will still grow up in poverty by 2029.
Iain Porter, a senior policy adviser at the JRF, 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 foundation urged the government to adopt a ‘protected minimum floor’ for Universal Credit. This would set a limit on payment reductions such as the overall benefit cap or debt deductions. Likewise, the JRF also called for an ‘essentials guarantee’, ensuring that benefit payments meet a minimum standard of living costs.
The second reading of the Universal Credit Bill brings us that bit closer to seeing the ruinous two-child cap scrapped, as it should have been all along.
However, as the Joseph Rowntree Foundation warned, Labour has much more work to do if they’re serious about their plans to tackle child poverty across the UK.
Featured image via Unsplash/the Canary
