Universal Credit - mitigation of the two-child limit: consultation

Ministerial foreword

The Scottish Government’s most recent budget continues to deliver game-changing policies keeping children in Scotland out of poverty. There can be no acceptable number of children living in poverty, and this government will do everything within its powers and financial abilities to eradicate child poverty.

Eradicating child poverty in Scotland is the Scottish Government’s top priority, and we make no apology for continuing to strive to meet the stretching child poverty targets we have set. Modelling published in February last year estimates that this Government’s policies will keep 100,000 children in Scotland out of relative poverty in 2024-25, with relative poverty levels 10 percentage points lower than they would have otherwise been. Last month, the Joseph Rowntree Foundation published research showing that child poverty rates in Scotland remain much lower than those in England and Wales^[1].

This is thanks in part to keeping an estimated 60,000 children out of relative poverty this year through investment in Scottish Child Payment (SCP). SCP is part of a new social security system built from the ground up in Scotland and delivering 15 benefits, 7 of which are only available in Scotland. It has a rights-based approach, grounded in treating people with dignity, fairness and respect – a system from which any of us may need help, and of which we can be rightly proud.

We are investing around £6.9 billion in Social Security benefits and payments in 2025-26, around £1.3 billion more than the UK Government gives to the Scottish Government for Social Security. This additional investment is forecast to reach almost £1.7 billion by 2029-30 – money which will go directly to people who need it.

The investment demonstrates our commitment to our national mission to end child poverty and to help low-income families with their living costs, support older people, provide vital assistance to Scotland’s unpaid carers, and enable disabled people to live full and independent lives.

And social security is just one area where this Government is investing to ensure that we continue to do all we can within our powers to fight the scourge of child poverty in Scotland. The draft 2025-26 budget continues to allocate over £3bn a year to policies which tackle poverty and the cost of living for households. It takes a whole family wellbeing approach which, in addition to our investment in social security benefits, includes the expansion of free school meals for primary school pupils, £768 million for affordable homes, funding of £4 million for homelessness prevention pilots, and the expansion of breakfast clubs in primary schools across Scotland.

But our efforts to tackle child poverty are being undermined by the social security policies of the UK Government, not least the two-child cap. This policy prevents parents from claiming universal credit for more than two children except in some limited circumstances, and the Scottish Government has been one of many voices consistently calling for its abolition.

It is deeply disappointing that the UK Government has failed to take the opportunity to abolish the two-child cap, given the irrefutable evidence that the policy is increasing poverty and hardship across the UK.

The End Child Poverty coalition estimates that 12,500 children across the UK had been pulled into poverty by the two-child cap between the UK Government taking office in July and the end of October last year, with a further 16,000 children set to be pulled into poverty by the time their Child Poverty Taskforce reports this Spring.

These figures show just how big the problem created by the two-child cap is across the UK. Here in Scotland, the Child Poverty Action Group estimates that scrapping the two-child cap in Scotland could lift 15,000 children out of poverty. The Scottish Fiscal Commission estimates that 42,000 children in Scotland will benefit from mitigation of the two-child cap in 2026-27; this will help to keep thousands of children out of poverty, and reduce the depth of poverty faced for many more.

Our decision to invest in Scotland’s social security safety net reflects the values that I think are fundamental to who we are as a nation. We know that inequality is bad for our health, bad for our communities and bad for our economy. Social security is an investment in Scotland’s people, its communities, and its future.

That’s why in the coming financial year we will develop the systems necessary to effectively scrap the impact of the two-child cap in Scotland in 2026. The draft budget announced a commitment to spend £3 million to develop the necessary systems. The First Minister has already provided two guarantees: that the first mitigation payments will be made in this coming year if we are able to safely get the systems up and running in this coming year, and that if the United Kingdom Government does the right thing and abolishes the two-child cap across the United Kingdom, the resources we have committed to this policy will continue to be used on measures to eradicate child poverty in Scotland.

While our work continues at pace, I want to hear from you, to help shape how we take this important part of our fight against child poverty in Scotland forward.

Shirley-Anne Somerville MSP

Cabinet Secretary for Social Justice