470,000 households have Universal Credit payments cut due to controversial rule

Scottish Sun

10-07-2025

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HUNDREDS of thousands of households have had their Universal Credit payments capped due to a controversial rule.
New data from the Department for Work and Pensions (DWP) shows that 469,780 households were impacted by the two-child cap in April 2025, marking a 3% increase compared to the previous year.
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Critics argue the policy deepens child poverty
Credit: Alamy
The policy, which denies additional child-related benefits for third or subsequent children born after April 2017, now impacts 1.67million children.
It means parents can't claim the child elements of Universal Credit worth up to £3,513.72 per year for third or subsequent children.
While 453,600 households receive no child element for at least one child, 26,300 households were granted exceptions, mostly for multiple births.
Critics argue the policy deepens child poverty, with the Child Poverty Action Group (CPAG) revealing it has pushed 350,000 children into poverty and 700,000 into even worse conditions.
Lynn Perry, chief executive of Barnardo's, also said: "Ending the policy would lift half a million children out of poverty."
Labour leader Sir Keir Starmer previously stated his government couldn't afford to remove the cap, which the Institute for Fiscal Studies estimates would cost £3.4 billion annually.
Ministers have toed the party line for months, but the narrative started to shift in May, with Sir Keir reported to have asked the Treasury to see how scrapping it could be funded.
Labour MPs who pushed Sir Keir Starmer to reverse major PIP cuts last week had hoped to scrap the benefit cap next.
However, plans to shelve the rule have been binned because of Labour's £5billion welfare U-turn.
The DWP has been contacted for comment.
All the freebies you can get on Universal Credit
Who's exempt from the two-child benefit cap?
THE two-child benefit cap means that you can only get more child tax credit or Universal Credit for your third (or more) child if: They were born before April 6, 2017
They are disabled (disabled child element only)
You qualify for an exception in child tax credit or special circumstances apply in Universal Credit
You qualify for an exception or special circumstances for each third (or subsequent) child if: You have adopted them or other children in your household
You receive guardian's allowance for them or other children in your household
They are the second (or more) child born in a multiple-birth
They or other children in your household are the offspring of one of your children who is under 16 years old
They or other children in your household are not your child or stepchild, and you look after them under a court order
They or other children in your household are not your child or stepchild and you look after them under an arrangement with Social Services (except for formal foster care)
They were conceived as a result of rape, and you do not live with the perpetrator
What additional childcare help is available?
Up to 30 free childcare hours
You may be able to get free childcare for your child aged nine months to four years old if you live in England.
The number of hours working parents can claim depends on the age of their child.
If your child is:
Nine months to two years old, you can get 15 hours per week of free childcare
Three to four years old, you can get 30 hours per week of free childcare
From September 2025, children aged nine months to two years old will qualify for 30 hours per week of free childcare
To qualify, you'll need to earn at least the equivalent of the national minimum wage for 16 hours a week.
Both parents will need to earn the equivalent of at least £166 per week, each with a taxable income of no more than £100,000.
Your two-year-old can also get free childcare if you live in England and get any of the following benefits:
Income support
income-based jobseeker's allowance (JSA)
income-related employment and support allowance (ESA)
Universal Credit and your household income is £15,400 a year or less after tax, not including benefit payments
The guaranteed element of pension credit
Child tax credit, working tax credit (or both), and your household income is £16,190 a year or less before tax
Universal Credit childcare costs
Parents on Universal Credit and in a paid job can have up to 85% of their childcare costs covered, up to £1,031.88 a month for one child and £1,768.94 a month for two or more children.
It doesn't matter how many hours you work.
If you live with a partner, you both need to work to qualify.
You usually have to pay for the childcare and claim back the costs, but if you go back to work or increase your hours you can request for the money to be paid upfront.
Child benefit
You can get child benefit if you're responsible for a child aged under 16, or if they are under 20 and in approved education or training.
Child benefit is currently worth £26.05 a week for the eldest child or only child. For each subsequent child, parents get £17.25 a week.
The cash is paid every four weeks and there's no limit to how many children you can apply for.
Bear in mind though, that those who earn more than £60,000 a year have to start paying back some of their child benefit through the High Income Child Benefit Charge (HICBC).
If you or your partner earns £80,000 or more, you have to pay all your entitlement back.
You have to pay the HICBC to HMRC through self-assessment.