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Why is there new controversy over the two-child allowance cap?

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A disagreement within the Labor Party has put the two-child allowance ceiling back in the spotlight. What is the policy and why is it controversial?

The two-child limit prevents parents from claiming Universal Credit or Child Tax Credit for a third child, with a few exceptions.

These benefits help with the cost of raising a child. Parents and guardians may be able to get them if their children are under 16 or, if they are in appropriate education, up to the age of 20.

The amount they receive depends on their income, how many children live with them and their childcare costs.

The cap, which came into force in April 2017, was one of the changes to the benefits system announced by then chancellor George Osborne in 2015.

At the time, the Conservative government said it wanted people on benefits to “make the same choices as those who support themselves solely through work”.

Around 1.6 million children lived in a household affected by the policy last year, according to the latest Department of Work and Pensions (DWP) statistics.

The number of households affected by the cap has increased every year since the policy was introduced, from 71,000 across the UK in 2017 to 450,000 in 2024.

Why was it controversial?

image source, Getty Images

The cap was opposed by anti-poverty campaigners.

The Child Poverty Action Group in Scotland said scrapping the cap, which it estimated would cost £1.3 billion, would lift 250,000 children in Britain out of poverty. That included up to 15,000 in Scotland.

Barnardos chief executive Lynn Perry called the limit “one of the biggest policy drivers of child poverty” and said it should be scrapped.

And research by the Resolution Foundation think tank found that six in ten families affected by the two-child limit were already in work.

There has also been controversy over what became known as the rape clause.

One of the exceptions to the rules was for a child born as a result of “fertilization without consent”.

The British government was accused of forcing rape victims to endure further trauma, forcing women to “prove” they have been raped in order to receive child support.

But the Conservatives insisted the scheme ensured women who had children through rape would not be denied tax credits.

The latest figures from the DWP showed that around 200 households in Scotland had been granted an exemption because the child was born of non-consensual sex.

Campaigners mounted a legal challenge to the two-child limit, claiming the policy breached the human rights of parents and children.

The Supreme Court rejected their case in 2021.

Why is the two-child cap in the news now?

Caption, Gordon Brown is among the politicians who have called for the cap on two child benefits to be scrapped

Politics has been a thirsty topic for the Labor Party, both when they were in opposition and now they are in government.

Sir Keir Starmer told the BBC’s Sunday with Laura Kuenssberg program a year ago that policy would not change under a Labor government.

Sir Keir said he would not set aside extra money for benefits without first boosting the economy.

He quickly faced a backlash from across his party for his refusal to scrap the two-child limit.

In an interview with the Daily Record, Scottish Labor leader Anas Sarwar said he would pressure Sir Keir to scrap the policy if Labor won power.

Deputy leader Jackie Baillie then told the BBC’s Good Morning Scotland program that Scottish Labor was “very clear, we are still opposed to the two-child benefit cap”.

During the election campaign, other parties used the benefit cap as a line of attack against both the Conservatives and Labour.

The SNP’s Westminster leader Stephen Flynn described UK Labour’s stance on the issue as “absolutely disgraceful” and First Minister John Swinney said it was “indefensible”.

But when he visited Scotland, Sir Keir reiterated his belief that it would not be economically feasible to abolish the benefit.

It put him at odds with some political heavyweights in his own party, with former prime minister Gordon Brown telling Radio 4’s Today program that the cap “dooms children to poverty”.

What has happened now that Labor is in power?

Caption, Anas Sarwar has called on Sir Keir Starmer to remove the cap on two child benefits

Scottish Labor has continued to call for the cap to be scrapped.

This week, Mr Sarwar said the daily record newspaper that the border is “wrong” and “must be reversed”.

But he added that he was “pushing on an open door” because he believes the Prime Minister is keen to lift the lid as soon as financially possible.

Wendy Chamberlain, deputy leader of the Scottish Liberal Democrats, said scrapping the law would be the “quickest and most cost-effective way” to help children out of poverty.

Sarwar’s call came as DWP statistics showed a total of 440,000 households across the UK were not receiving benefits for at least one child because of the policy.

Of that number, 59%, or 270,000, have at least one parent “in work”.

And of the affected households, 26,000, or 6%, are in Scotland – a 7.7% increase on the previous year’s figure of 24,160.

A further 1,000 or so Scottish households were granted an exemption.

The figures also revealed that the most affected council area in Scotland is in Glasgow (4,500 households) followed by Fife (2,100) and North Lanarkshire (2,000).

Claire Telfer, from the charity Save the Children Scotland, called the latest figures an “outrage” and “cruelty”.

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