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

Delivery of Mitigation Payments

Introduction

The Scottish Government’s priority is to make mitigation payments as soon as possible, given the immediate impacts that the two-child cap is having on peoples’ lives. In order to administer the payments, the consultation paper set out three possible options which have been considered, as follows:

• to ask for the two-child cap to be disapplied in Scotland ‘at source’ as part of the Universal Credit system controlled by DWP - this would have multiple benefits and positive effects, but would require the UK Government to introduce new legislation and make system changes which would take additional time;
• for mitigation payments to be delivered by local authorities in a similar way to Discretionary Housing Payments (DHPs) - however, the DHP scheme was designed to mitigate the bedroom tax and other benefit caps and welfare cuts related to housing. It is focused solely on housing costs, so if this approach is adopted, some families may be excluded from receiving the two-child limit mitigation payments; or
• for Social Security Scotland to deliver mitigation payments - this will require engagement with DWP around data sharing and to pass any necessary legislation in Westminster. However, it will allow a consistent approach without adding pressure to local authorities. It will also mean that the Scottish Government will retain control of the implementation timetable.

The consultation identified Social Security Scotland as the preferred option for administering the mitigation payments and sought feedback on this proposal.

Q1. Do you agree or disagree with the Scottish Government's assessment that Social Security Scotland should deliver payments to mitigate the two-child cap in Scotland?

¹ Seven respondents did not answer this question, all were organisations.

Of those who answered the question, nearly three quarter (73%, n=190) of respondents disagreed with the assessment that Social Security Scotland should deliver payments to mitigate the two-child cap in Scotland. There was, however, a stark difference in opinion between individuals and organisations. Overall, 84% (n=189) of individuals disagreed with the proposal, while 86% (n=30) of organisations agreed with it.

Reasons for Disagreeing

Disagreement came almost entirely from individuals - of the 190 respondents who disagreed, 189 were individuals. Within the individual respondent cohort, the majority disagreed with this proposal, with 84% disagreeing, compared to 14% who agreed and 2% who did not know. Only one organisation expressed explicit disagreement with this proposal, although their response represented wider views based on a survey of different departments and service users rather than an agreed organisational standpoint. This response provided mixed feedback overall.

Individuals who disagreed at this question generally supported the current two-child limit on benefits payments and were against the introduction of mitigation payments.

Parental rather than taxpayer responsibility

Among the reasons given by individuals, there was an overwhelming view that parents should take responsibility for their own children and family size. Respondents commonly suggested that people should not have more children than they could afford to care for:

“Don’t have children if you can’t afford to keep them.” (Individual)

“Every person should tailor their lifestyle to their available finances.” (Individual)

“If parents can’t afford children they shouldn’t have them.” (Individual)

Many also felt that the cost of raising other people’s children should not fall on, or be subsidised by, the taxpayer. Again, parental responsibility was considered paramount in this, however, some people also felt that the current tax burden was too high (with a few noting that tax is higher in Scotland than the rest of the UK), and that the total cost of benefits was too high:

“Having children is a financial choice - it is not for the taxpayer to pay for people's choice to have more children.” (Individual)

“Taxpayers should not be responsible for bringing up children. If you can't afford them, don't have them” (Individual)

A few also felt that mitigation payments may be considered unfair to working families^[4] and those who have chosen to limit the number of children they have due to financial constraints:

“As a full-time working parent me and my partner decided we could not afford to have a third child a few years ago so we didn't. We could not afford the additional childcare costs plus all other stuff associated with having a child. Why should we pay our taxes to support people on benefits to have as many kids as they want…?” (Individual)

Several were concerned about how these mitigation payments would be funded. They were concerned that the available finances were not already available in the public purse and therefore, this could result in higher taxes over time.

Reliance on benefits

Another common issue for individuals was a perception or concern that these additional payments could simply encourage greater reliance and dependency on benefits rather supporting people to seek employment or higher paid jobs. It was suggested that these additional payments would make ‘a life on benefits’ more attractive than working as the money individuals receive on benefits would be higher than they could achieve via work:

“The taxpayer should not be held responsible for people’s life choices. No one wants to see children suffer as a result of their parents’ situation/ choices, but when people always feel someone else (the state in this case) will step in every time, they become less responsible/resilient and it becomes too easy to make poorer choices. Parents need to be encouraged and supported to provide good physical and emotional care for their own children, not expect taxpayers to do it for them.” (Individual)

Several individuals were also concerned that some people currently abuse the system. This included perceptions that people have more children in order to claim additional benefits. It was suggested that this could lead to an increase in the number of larger families, and therefore an increase in the cost of mitigation payments and negatively impact housing and education provision.

Another concern linked to abuse of the system was that claimants do not/would not use the money as it was intended (i.e. it was not or would not be spent on children). In particular, it was suggested that some people on benefits spend money on branded and luxury items, rather than on the child’s/children’s welfare.

One individual was also concerned that these mitigation payments, which would only be available in Scotland, could result in families moving to Scotland in order to take advantage of the higher benefits. This would result in greater pressure on other infrastructure and public services, such as housing, education, health services, etc.

Rather than implementing a mitigation payment, several individuals suggested that more needed to be done to tackle low wages and unemployment instead. It was argued that tackling the root causes of poverty would be more beneficial:

“A better way to reduce poverty is to tackle the root cause. This is low wages and high unemployment. If people can’t afford to have kids the state shouldn’t be paying for them. Scotland has always prided itself on hard work and being thrifty. This policy engenders a work-shy attitude.” (Individual)

Other priority issues

Several individuals also suggested that there were other societal issues that needed to be more urgently addressed, and that public money should be targeted at these before considering benefits. This included housing, healthcare, education, transport and the roads, drug and alcohol deaths, etc.

Individuals also highlighted that many other supports and payments are already available to low-income families in Scotland. These included breakfast clubs, the Scottish Child Payment, etc. A few argued that, between the income related benefits available from DWP, and the existing additional payments and supports available within Scotland, families were already sufficiently provided for.

Support for alternative approaches

Several individuals advocated for alternative approaches to mitigating the impacts of child poverty.

A few suggested that, rather than removing the two-child limit on state provided benefit payments, other more targeted safety net provision should be provided for cases of extreme poverty. It was argued that this should be provided on a case-by-case basis via tailored and exceptional schemes, rather than providing a blanket monetary payment as proposed by the consultation. One suggested introducing food vouchers, while a few advocated for greater provision of breakfast clubs and free school meal provision. More generally, several individuals advocated for the provision of support to families to mitigate the impacts of poverty, or to help raise them out of poverty, via existing services. This included improved education (including teaching parenting and budgeting skills), childcare provision, access to sports facilities, encouraging and supporting parents into work and improved employment opportunities. A few also stressed that greater consideration needed to be given to working families (including those who are not eligible for benefit payments) when considering poverty and child poverty mitigation policies.

One individual was supportive of greater flexibility being applied in relation to the current two-child limit, while another suggested that a short-term change may be sensible. They agreed there should be a cap in terms of the number of children where benefits payments would be made, with one suggesting this should be a maximum of four children while the other did not specify the appropriate limit. They also suggested that greater scrutiny of applicants was needed to avoid abuse of the system, and that payments for additional children should be made on a sliding scale.

A few disagreed with the Scottish Government or Social Security Scotland making mitigation payments as it was felt this was the responsibility of the UK Government. Such a provision was perceived as absolving the UK Parliament of their responsibilities. On a more practical level, a few individuals who appeared to support the mitigation payments in principle argued that the DWP should make these payments as they already have all the information relating to families financial needs and this would provide the most streamlined and seamless approach. One of these respondents also suggested that their second choice would be for local authorities (rather than SSS) to be responsible for making the mitigation payments as they already have the payment infrastructure and data sharing protocols with DWP in place, are familiar with DWP processes and how to challenge inaccuracies, and can signpost families to other support and assistance. They did note, however, that local authorities would need to be adequately funded to undertake this.

Organisational disagreement

Only one organisation expressed disagreement with the proposal for Social Security Scotland to deliver payments to mitigate the two-child cap in Scotland. However, their response collated views from various services and departments across their local authority area, and contained mixed feedback. They noted that 64% of their survey respondents disagreed with this proposal, 25% agreed with it, and 11% did not know. Those who disagreed gave similar reasons to the individuals above. They felt that the two-child limit was a fair and reasonable policy, and therefore families in Scotland should not receive more than that calculated by the Universal Credit system. It was also argued that the Scottish Government already provides significant additional support to low-income families through the Scottish Child Payment, free nursery hours, school meals, Best Start Grant and clothing grants. As such, they felt that parents should take personal responsibility for family size and that public resources should be focused elsewhere. There was also concern that these mitigation payments could encourage more families to move to Scotland in order to receive the benefit, thus placing greater pressure on public services, such as the NHS and schools.

Reasons for Agreeing

As noted in the table above, just under a quarter (24%, n=62) of all respondents who answered the question agreed that SSS should deliver payments to mitigate the two-child cap in Scotland. The majority of organisations, 30 out of the 35 who answered the question (86%) agreed, while 14% of individuals (n=32) supported this.

The reasons for supporting the proposal were largely split between those who agreed with the need for mitigation payments in principle and those who agreed that these should be made via SSS rather than other bodies.

Support for mitigation payments

Many of those who agreed at this question (including both individuals and organisations) were supportive of the introduction of mitigation payments, largely to tackle the impacts of child poverty and to support families on low incomes.

Key issues that were raised included:

• The negative impact of the two-child limit;
• That the mitigation payments could help to boost the effectiveness of other payments;
• That the approach aligned with other priorities;
• That the mitigation payments would fulfil the state’s responsibility to ensure access to a welfare system and support those most in need; and
• That the mitigation payments would support vulnerable children and families.

Each of these issues will be discussed in turn below.

Negative impacts of the two-child limit

Organisations discussed the negative impacts of the two-child limit at length, both in terms of impacts for families directly affected by the cap and for society more generally, with third sector organisations and others stressing the need for the UK Government to end the cap. Indeed, some noted that while they agreed with mitigation payments as an interim measure, they felt it was important to maintain pressure on the UK Government to drop the two-child limit (which would ultimately make mitigation payments unnecessary). Organisations and one individual highlighted that there was a wealth of research and evidence which shows the negative immediate and long-term impact of the two-child limit on children, families and communities. It was said that the policy had increased and deepened levels of poverty for households across the UK, and was widely criticised on human rights grounds:

“Families affected by the two-child limit report not being able to provide for their children’s basic needs, including food, clothing and heating… There is now overwhelming evidence that shows the two-child limit policy has directly contributed to rising child poverty over the last decade…We witness the effect it has on children’s physical health, on parents’ mental health and the hopelessness that families feel…Quite simply the two-child policy has pushed families to breaking point. This in turn only serves to exacerbate the additional challenges in families’ lives and creates more pressure and demand on our social work, housing and health services. The majority of families affected by the two-child limit have a parent either in work, who is disabled or is caring for younger children. The effect of ending the two-child limit would be to put more money in families’ pockets. Families would be less reliant on food banks and charities. It would bring economic and social benefit.” (Other Organisation, Wheatley Group)

Individuals and third sector organisations described the current two-child limit policy as “cruel”, “damaging”, “unfair” and “unjust and unjustifiable”. Meanwhile, organisations highlighted that poverty rates were higher for large families in Scotland, and that the poverty gap had increased between smaller and larger families. They also noted that the impacts of poverty include poorer health outcomes, poorer mental health, poorer educational attainment, poorer employment opportunities, substance abuse issues, and fewer opportunities generally (i.e. many of the areas which individuals above argued should be strengthened). In addition to being harmful to children and their families, it was said this weakens the economy and places greater pressure on public services.

Organisations also highlighted that the two-child limit had not achieved the policy aims that were intended, including reducing family sizes and encouraging people into work. Third sector organisations noted that there had only been a tiny decrease in the number of households with three or more children since the introduction of the policy and that it was not generally impacting on parental decisions around family size. It was felt that the two-child limit did not take into account family circumstances, noting that often people apply for benefits at a time of distress or due to significant life changes (e.g. death of a partner, relationship breakdowns, escaping domestic abuse, due to illness or disability, etc.). Organisations also stressed that many Universal Credit claimants and those impacted by the two-child limit were in work, with one third sector organisation indicating that three quarters of children in poverty in Scotland live in a working household^[5], and another indicating that 59% of those impacted by the two-child limit were in work. As such, it was argued that, while initiatives to encourage parents into work were important, this alone would not alleviate child poverty due to the prevalence of low-paid and part-time working, as well as difficulties in accessing affordable and appropriate childcare, and the possible need to commute long distances to access work opportunities - contrary to the arguments put forward by individuals who opposed mitigation payments. A few organisations also noted that the introduction of the two-child limit had been shown to have had no positive impact on parental employment, citing research/evidence which highlighted this^[6]. It was, therefore, argued that mitigation was unlikely to reduce levels of employment - again, contrary to the concerns above from individuals that the mitigation payments would encourage worklessness and a reliance on benefits. Ultimately, third sector organisations suggested that the two-child limit had been shown to pull children and families into poverty and trap them there.

Boosting the effectiveness of other payments

A few organisations also highlighted that the two-child limit makes the Scottish Child Payment and Best Start Grant payments less effective. For large families, these payments help to offset the loss of income due to the two-child limit in other benefits payments. Dedicated mitigation payments, however, would make these other Scottish payments more effective at reducing poverty. One third sector organisation also suggested that some families do not claim the Scottish Child Payment for third and subsequent children as they mistakenly believe that the two-child limit applies across all benefits. Therefore, introducing mitigation payments could encourage greater uptake of other benefits and payments that families are entitled to.

Align with other priorities

A few respondents (including organisations and one individual) also highlighted that the new policy would align with key Scottish Government and local authority priorities for reducing child poverty and maximising the uptake of social security entitlement. It would also align with wider human rights commitments, such as the UN Convention on the Rights of the Child (UNCRC) and the European Convention on Human Rights (ECHR):

“Since July 2024, the United Nations Convention on the Rights of the Child has been incorporated directly into Scots law albeit in a limited way following the enactment of the United Nations Convention on the Rights of the Child (Incorporation) (Scotland) Act 2024 (the Act). Mitigating the two-child cap impacts aligns with Scotland’s human rights commitments, including the UN Convention on the Rights of the Child (UNCRC) and the Scottish Government’s broader child poverty reduction targets.” (Membership Body, Law Society of Scotland)

“We agree that the Scottish Government is bound by its duties under the United Nations Convention on Rights of the Child to address the causes and effects of child poverty. We also believe that it is possible the Scottish Government may be uniquely duty bound under the European Convention on Human Rights to take steps necessary to end the direct and indirect discrimination exerted by the policy against the 'six priority families'.” (National Representative Body, National Association of Welfare Rights Advisers (NAWRA))

Fulfilling state responsibilities

In contrast to many of the comments provided by individuals who opposed the introduction of mitigation payments, a few individuals and organisations argued that the state did have a responsibility towards all children and young people. Indeed, one organisation highlighted that Scotland recognised that social security was a human right, and essential to the realisation of other rights. As such, it was felt that the government and welfare system should step in to support families/children and young people when parents were unable to provide:

“If for whatever reason the parents are unable to provide economic stability for the children then it is the state’s duty to step in and do so.” (Individual)

“Our social security system is a public service and a basic human right that should secure the wellbeing of everyone in society…Strengthening our social safety net by addressing the inadequacies and insecurity of our current social security system must therefore be a priority. The decision to implement the two-child limit has removed support from many of the families who need it most [and] unjustly severs the link between what children need and what they are entitled to.” (Third Sector Organisation, The Poverty Alliance)

Support for vulnerable children and families

Respondents argued that mitigation payments would help the most vulnerable families during the current cost of living crisis and with the increasing cost of food, heating, fuel and other essentials; that all children would receive equal support and have the best start in life; and that families would not be ‘penalised’ or ‘punished’ due to the size of their family. One individual also hoped that the introduction of mitigation payments in Scotland may also result in pressure on the UK Government to abolish the two-child limit across the UK.

A number of impacts of the two-child limit were identified specific to equality groups and those with protected characteristics. This included views that the current policy disproportionately affects minority ethnic families; families with certain religious beliefs; immigrants, refugees and asylum seekers; women (as most single parent households are led by women); young parents (those aged under 25); those with disabilities; and unpaid carers. These issues are explored in more detail at Q4 below, which asked specifically about the impacts of the proposals.

Support for Social Security Scotland to make mitigation payments

Several respondents (again both individuals and organisations) supported the assessment that the mitigation payment should or would need to be made by SSS. Of the three options that were set out in the consultation paper (i.e. for the Scottish Government to pay DWP to ‘disapply’ the two-child cap for Scottish families, for local authorities to administer the payments in the same way as they make Discretionary Housing Payments (DHPs), or for SSS to make the mitigation payments) it was felt that SSS was the only realistic option. One individual argued that DWP was focused on implementing the two-child cap on benefit payments, while organisations felt that it would take too long for the Scottish Government, the UK Government and DWP to agree and set up suitable systems to support the ‘disapplication’ of the two-child limit for Scottish families. Respondents also argued that local authorities did not have the capacity or resources to take on the administration of such payments, with organisations also highlighting that those eligible for the mitigation payments did not match the cohort of recipients for DHPs and so families could be missed using such an approach.

More pro-active support for SSS to make these payments (rather than a lack of alternative options) was also provided by several respondents (again including both individuals and organisations from across different sectors). This included perceptions that:

• making the payments via SSS would be the easiest, fastest, cheapest and most efficient and realistic way to implement such support;
• SSS have the networks, mechanisms and delivery systems required, and operate a rights-based approach;
• SSS already administer the Scottish Child Payment, which could provide valuable data to allow the identification of eligible families and provide possible overlaps in delivery options;
• delivery via SSS would offer a consistent, national approach and reduce the risk of regional variations that might arise from local delivery models. This would be more straightforward and reduce complexity for both claimants and advisers;
• SSS are experienced in reaching those who may be entitled to benefits but are not claiming;
• this would allow the Scottish Government and Scottish Ministers to retain ownership of the policy, implementation and administration; and
• a system designed and operated in Scotland and for Scotland would be better:

“Social Security Scotland is the right vehicle for delivering this support - consistently, efficiently, and with dignity. A nationally delivered payment avoids postcode lotteries, reaches families quickly, and builds on existing systems such as the Scottish Child Payment, which is already reducing hardship. A single, clear mechanism will be easy for families to access and understand, reduce stigma, and ensure every child receives the same support - no matter where they live.” (Third Sector Organisation)

It should be noted that most local authorities agreed that the mitigation payments should be made by SSS (rather than through them delivering the payments in an equivalent way to Discretionary Housing Payments (DHPs)). Consistent with the views above, they generally perceived SSS as having the existing infrastructure and resources to manage this, and noted that they already held relevant information via the Scottish Child Payments which could help support the mitigation payments. It was felt that having the payments administered by one central organisation would also provide consistency and a single point of contact for claimants. Local authorities also identified difficulties with the suggestion that they could implement the payments. It was highlighted that DHPs require households to be in receipt of Housing Benefit or the housing element of Universal Credit, but many families that would be eligible for the mitigation payments do not claim these housing benefits - therefore, many families could be missed if mitigation payments were to be paid by local authorities and/or linked to DHPs. Again, there were also concerns around capacity and resourcing to deliver such a requirement within local authorities.

Caveats to Support and Other Issues

Several respondents outlined caveats to their support of mitigation payments, and/or offered other comments or concerns.

One individual suggested that it would be important to ensure that any increase in funding needed to support mitigation payments should not be detrimental to other services and supports that families rely upon. Similarly, a few organisations stressed that funding mitigation payments should not done at the expense of other national and local initiatives to tackle child poverty, as it was felt that a variety of approaches were necessary to meet the Scottish Government’s child poverty targets.

Other caveats were also offered by organisations. A few considered it important to ensure that data sharing between SSS and DWP was robust, fast, and effective. A few organisations (here and at later questions) favoured an approach where entitlement could be established automatically (e.g. via existing data and data sharing processes) so that families would not need to apply - it was considered important to remove potential barriers and ensure the system is as simple as possible for families. There were also concerns (among both organisations and individuals) that the mitigation payments may be treated as income by DWP and therefore limit/impact other benefit payments. One organisation echoed concerns from those who disagreed with the mitigation payments, in that they wanted more to be done for those on low incomes but earning just above the benefits threshold and who were therefore not eligible for any financial assistance currently.

A few organisations also sought clarity over how the Scottish Government’s mitigation payments will work in practice and interact with the current DWP exceptions and, in particular, the ‘rape clause’. Typically, this clause was considered to be inappropriate and traumatising, and so respondents were keen to avoid any mitigation system which required such disclosures.

Finally, one organisation felt they did not have enough information to make an informed decision and sought clarity over how different factors would impact the payment and how the mitigation payments might impact receipt of other benefits. Meanwhile one individual wanted additional safeguards to ensure that children benefited from the payments as they were intended, while another was unsure about the overall cost of the payments and whether the scheme would be affordable.

Lived Experience Workshop

Attendees at the workshop event were asked the same question as those who completed the written consultation document. These attendees all had lived experience of the two-child limit cap.

Generally, attendees supported the proposal to introduce mitigation payments and for this to be administered via SSS, although some mixed views were provided.

Attendees stressed that the current payments received via Universal Credit were not enough. This resulted in parents/families struggling to afford or going without basic things, having to borrow money, and not being able to afford activities. They stressed that their children fell behind others in terms of quality of life. The mitigation payments, therefore, would have a positive impact by supporting families to meet their basic and essential costs:

“For me it has not been easy. I had to borrow money and then I struggle to pay it back. I feel like I need to buy things and I have to buy things second-hand to save money. It has never been enough. You skip things that you think are necessary but you can’t afford. Food is necessary, we need to do that first. If we had more money I could afford to take them out. There are activities that they could do. They will be behind others who have access to that.” (Lived Experience Workshop Attendee)

In terms of which organisation should make the payments, most preferred the proposal that SSS should be responsible for this. A few attendees noted that SSS already had most of the information needed due to existing payments administered by them, with one suggesting that it would therefore not require a new application. It was also felt that this would be the quickest route to setting up the scheme. Further, it was stated that SSS was a kinder and more helpful organisation compared to DWP:

“…seems like the process would be faster and easier than if DWP did it.” (Lived Experience Workshop Attendee)

“Like idea of it going through Social Security Scotland as [they] have most of the information already. It should cut down time to receive the payment as I already get payments from now. Without having to apply for a new benefit.” (Lived Experience Workshop Attendee)

“If it can’t be something added on to Universal Credit as they are being awkward, my preference as a user would be Social Security Scotland. When I had an issue with my Scottish Child Payment someone was really helpful and sorted it within the day. The organisation feels kinder and more helpful.” (Lived Experience Workshop Attendee)

While a few felt that DWP should make the payments, ideally attendees wanted DWP to drop the two-child limit policy entirely. Should barriers exist to DWP undertaking this, for example if it was not possible, if DWP were unwilling, or if it would take too long, then these attendees also typically supported SSS as the next best option. One attendee also suggested that SSS could make the payments in the short-term as this would be faster to set-up, but that work should continue in the background to encourage DWP to make the payments:

“Is it possible the top way initially and continue working in the background to get it done by Department of Work and Pensions between two government issues. So many families don’t feel seen. It would be great to make them feel seen.” (Lived Experience Workshop Attendee)