Government recognises financial challenge in mitigating two-child cap

Independent

17-06-2025

The Scottish Government recognises paying for the flagship policy of ending the two-child benefit cap will be a 'challenge', a minister has said.
Social Justice Secretary Shirley-Anne Somerville said applications will open for mitigation of the welfare policy on March 2, with payments being made 'as soon as possible' afterwards – meaning it will likely take place just ahead of the Scottish Parliament election.
She said the move will lift 20,000 children out of relative poverty, according to Scottish Government estimates.
However the minister also told MSPs she is 'deeply disappointed' that Scotland's interim child poverty targets have not been met, saying there is no single reason for them being missed.
Plans to mitigate the two-child cap were first announced last year but First Minister John Swinney said his Government needed time to set up the system.
Introduced under the Conservatives, the two-child cap limits benefits in most cases to the first two children born after April 2017.
Labour has cited fiscal constraints for keeping the cap, but in May the Prime Minister said he will be 'looking at all options' to tackle child poverty.
Ms Somerville said Scotland cannot wait for a decision at Westminster and implementing it in March – 15 months after the initial announcement – will be the fastest a new social security has even been introduced in Scotland.
Following an announcement on Tuesday morning, Ms Somerville addressed MSPs on the Government's 'tackling child poverty delivery plan'.
She said it is 'deeply disappointing' that interim child poverty targets have not been met, but rates are nevertheless coming down, and she pledged to 'build on that progress' ahead of 2030 targets.
Conservative MSP Liz Smith pressed the minister on how the mitigation policy will be funded, saying the Scottish Fiscal Commission (SFC) has noted a 'widening gap' between the Scottish Government's welfare spending and its funding.
She said: 'Can I ask where the other cuts will be made to pay for that mitigation?'
Ms Somerville said her Government is 'resolute' in tackling economic inactivity, saying people should not be punished for having children.
Decisions from the UK Government have pushed more people into poverty, she claimed.
Discussing the SFC's forecasts, she said: 'Those are choices that we have taken – to ensure that we are protecting disabled people and children.
'Because we need to protect them from the effects of poverty.
'Those are decisions which will obviously be set out in the work that is being taken forward by the Cabinet Secretary for Finance as we look to the sustainability of our finances.
'We recognise that challenge.'
She said the 'easiest way to deal with that challenge' would be for the UK Government to scrap the two-child cap and proposals to cut disabled benefits.
Scottish Labour's Paul O'Kane said: 'For all the rhetoric we've had from the First Minister and the Cabinet Secretary after 18 years in office, relative child poverty after housing costs has only fallen by 1%.
'When the Cabinet Secretary says rates are broadly stable, what she means is that the dial hasn't shifted.'
The Scottish Fiscal Commission said the mitigation will cost around £150 million next year, before rising to nearly £200 million by the end of the decade.
Ms Somerville said around 43,000 children would benefit initially, rising to 50,000 by the end of the decade.
In March, the Institute for Fiscal Studies warned the policy could harm incentives to work because some of the lowest-paid workers could earn more on welfare than in employment.
The move has been welcomed by anti-poverty charities, who have urged the UK Government to scrap the cap, with the Child Poverty Action Group saying the move would lift 350,000 children across the UK out of poverty.