Budget: Removal of two-child benefit cap welcomed but calls to unfreeze LHA ignored

Introduced under the Conservatives in 2017, the policy means parents can only claim Universal Credit or tax credits for their first two children.

Announcing the move during her Budget yesterday, Chancellor Rachel Reeves said the policy will be scrapped in full from April next year.

The Scottish Federation of Housing Associations (SFHA) said the move “has come not a day too soon”. 

Chief executive Richard Meade said: “It is greatly welcome that the UK Government has finally abolished the two-child limit. This policy needlessly pushed thousands of children and families into poverty significantly impacting Scotland’s social tenants - its end has come not a day too soon.

“The Scottish Government’s previous commitment to mitigating this policy was also a positive step forward. Now we need to see funding set aside for this to go into further efforts to end child poverty.

“With the UK Budget now published, we look forward to the Scottish Government confirming its spending priorities and committing to the promised £4.9bn over four years to support affordable housebuilding in Scotland. Given that housing associations will attract significant private financial investment in building new affordable rented homes, the Scottish Government must contribute considerable public investment to make these projects viable.”

Despite this positive focus, charity Crisis said the lack of investment in housing benefit means thousands of low-income households will be unable to afford their rents and be pushed into homelessness.

With new research from Crisis showing that almost 300,000 households are experiencing the worst forms of homelessness in England alone, the charity is calling for the UK government to urgently reconsider the ongoing freeze on housing benefit ahead of the publication of their strategy to get us back on track to ending homelessness.

Francesca Albanese, director of policy and social change at Crisis, said: “Families will be breathing a sigh of relief to hear the Chancellor commit to scrapping the two-child benefit limit. This is hugely welcome and will help struggling parents with the rising cost of day-to-day living.

“What this Budget doesn’t do, however, is help hundreds of thousands of households across Great Britain who are homeless or at risk. The choice to keep housing benefit frozen, and wildly out of step with the true cost of rents, will directly lead to a rise in homelessness and pile additional pressure on councils whose combined temporary accommodation bill in England alone is nearly £3bn a year.

“Without restoring housing benefit, many low-income households will remain trapped in poverty. As they finalise their strategy to tackle homelessness, the Westminster government must urgently reconsider this decision as it flies in the face of their manifesto commitment to get the country back on track to ending homelessness.” 

For the Chartered Institute of Housing (CIH), the Chancellor should have gone further to tackle poverty.

CIH chief executive Gavin Smart: “Today’s Budget takes welcome steps on the cost-of-living crisis, including ending the two-child limit. But without changes to the benefit cap, LHA, and long-term investment in supported housing and energy efficiency, too many people and services will continue to struggle.

“Affordable, good quality housing remains central to tackling poverty. We look forward to seeing the outcome on rent convergence early in the new year so that the social housing sector can plan with confidence and support with delivery of the government’s housing ambitions.”

Citizens Advice Scotland agreed that other measures to tackle the cost of living fall short of what is needed.

Chief executive Derek Mitchell said: “As hundreds of thousands of people across Scotland face this winter desperately worried about how to afford the essentials we all need, it was imperative that this Budget delivered hope to those experiencing the most harm.  

“The two-child limit has been a cruel and pernicious policy that has forced families into poverty. Scrapping this will be transformational for around 20,000 children in Scotland, and will also enable the Scottish Government to further invest in measures to tackle child poverty – this is such welcome news.”

Mary Glasgow, chief executive of Children First, added: “We welcome the UK Government’s decision to scrap the two-child limit as outlined in the Office for Budget Responsibility report. This is long overdue and frees up the Scottish Government budget for other crucial support for children and families.  

“Poverty has a devastating impact on children’s mental and physical health, development, happiness and ability to learn that can last a lifetime.   

“Both governments must now work together to build on progress and meet the legal target to reduce child poverty in Scotland. Families need a stronger social security offer, for example, through the Scottish Child Payment and whole family support across Scotland to give every family the financial, practical and emotional help they need to tackle the root causes of poverty.  

“Children can’t wait. The Scottish Government must use this opportunity to go further and faster in their stated mission to eradicate child poverty.”

The Institute for Public Policy Research (IPPR) Scotland hailed the move to end the two-child limit as a milestone in ending child poverty, but warned that more was needed to tackle the cost-of-living.

Stephen Boyd, IPPR Scotland director, said: “We enthusiastically welcome the removal of the two-child limit, which will immediately lift around 20,000 children in Scotland out of poverty. This is the single most important measure the Chancellor could have announced today to tackle child poverty.  

“The Scottish Government must now carefully consider how best to use the funding previously earmarked for this policy to improve the lives of children living in poverty across Scotland. 

“The Budget measures to ease the cost of living are a good start — but they remain only a start. Only a sustained, committed effort to bring down bills will allow households to feel better off by the end of the parliament.   

“The additional funding for Scotland is, of course, welcome. But as we look ahead to the Scottish government’s January budget, it must be recognised that this settlement barely begins to address the fiscal gap outlined in the Scottish government’s own Medium-Term Financial Strategy. Tough decisions and trade-offs still lie ahead if Scotland is to protect services, invest for the future and deliver better outcomes for the public.”