Two-child benefit cap scrapped in UK Budget

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The UK Chancellor is scrapping the two-child benefit cap
Rachel Reeves’s tax and spending changes were revealed earlier than expected after an official forecast was accidentally published
The Office for Budget Responsibility published the document before midday on Wednesday
Income tax thresholds south of the border have been frozen for three years – Scotland sets its own rates

The Chancellor has scrapped the two-child benefit cap among a raft of tax and spending changes announced in the UK budget.

The Office for Budget Responsibility (OBR) has published what appears to be its forecast for the public finances and the economy ahead of Rachel Reeves’ announcement.

The limit was introduced by the Conservatives and restricts Child Tax Credit and Universal Credit to the first two children in most households.

Estimates suggest that scrapping the cap could lift 350,000 children out of poverty and reduce the level of hardship for a further 800,000 kids.

Reeves has faced pressure from both the Scottish Government and from Scottish Labour to remove the limit in recent months.

The First Minister said: “The UK Government, if it is serious about tackling poverty, must match our ambition and, at the very least, fully scrap the two-child limit so that a generation of children don’t have their opportunities limited by inaction.”

It was also one of the three key demands Scottish Labour leader Anas Sarwar made to the chancellor ahead of the budget.

“We have to confront child poverty, that’s why we need to see the end of the two-child benefit cap,” he said.

However, lifting the cap is expected to cost billions, and concerns have been raised over how it will be funded.

The move has been estimated to cost between £3bn and £3.5bn by the end of the Parliament.

The OBR report, which appears to have been published by mistake, also confirms that income tax thresholds south of the border will be frozen until 2030. It’s a tax rise of £26bn. Scotland sets its own rates.

More to follow…