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

Potential Impacts

Introduction

The consultation document set out the requirement for Impact Assessments to be developed and considered in relation to the mitigation payments. These adopt an evidence-based process to consider the possible effects, outcomes and unintended consequences that the proposals and/or legislation will have on different groups of people, communities and businesses.

High level summary information was provided about each of the following Impact Assessments, with feedback and a request for additional information sought:

• Equality impact assessment - which pays particular attention to people with protected characteristics as identified in the Equality Act 2010^[8];
• Childs Rights and Wellbeing Impact Assessment - to ensure that policies and measures protect and promote the wellbeing of children and young people;
• Business and Regulatory Impact Assessment - to analyse the potential costs, benefits and risks of policy changes that may impact on the public, private or third sector;
• Fairer Scotland Duty Impact Assessment - to actively consider how inequalities of outcome caused by socio-economic disadvantage can be reduced, when making strategic decisions;
• Consumer Duty Impact Assessment - to consider the impact on consumers; and
• Island Communities Impact Assessment - to consider the unique needs of the Scottish islands when developing a new policy, strategy or service that may have a significantly different effect on island communities.

Q4. Do you have any information you wish to share about any additional potential impacts of the proposed approach outlined in this consultation?

No closed question element was included here, only free-text responses were invited. Overall, 146 respondents provided substantive feedback at this question, however, some respondents had also discussed impacts (especially equality impacts) at earlier questions. All feedback related to impacts was collated and is discussed below.

Overall, individuals again focused on their reasons for opposing removal of the two-child limit and introduction of mitigation payments, while organisations reiterated their general support for the proposals and sought clarity or reassurance over how the policy would be implemented and operate in practice. Very few respondents linked their answers to the specific impact assessments highlighted in the consultation document, instead discussing impacts in a more general and wider sense. As such, the following findings reflect the feedback provided rather than detailing findings against each of the impact assessments.

Impacts of the Two-Child Limit

Across the consultation questions much of the feedback (largely provided by organisations) related to the impacts of the two-child limit on families. It was argued that the policy perpetuated cycles of poverty and undermined efforts to reduce inequalities. Respondents highlighted the negative and often disproportionate impact this has on particular groups. A number of specific groups were identified by respondents as being negatively impacted by the two-child limit, which included some overlap with the priority family types outlined in the Scottish Governments Tackling Child Poverty Delivery Plan. The key groups highlighted by respondents included:

• women, who are often more reliant on social security, and because more single parent households are headed by women compared to men;
• minority ethnic families, who are more likely to have larger families, to experience insecure work, underemployment, and in-work poverty, and where those living in relative poverty are more likely to have three or more children compared to all families in relative poverty;
• families from particular religious backgrounds, who are more likely to have larger family sizes;
• refugees; and
• young parents, as they receive less via Universal Credit than other claimants in the same circumstances.

It was argued that the two-child limit, in combination with other cuts and restrictions on benefits impacted the adequacy and availability of social security. In addition, these issues were said to disproportionately impact certain vulnerable groups, and often those with protected characteristics:

“…we see shrinking and inadequate entitlements being acutely experienced by disabled, BME [black and minority ethnic] and refugee women, lone parents, unpaid carers and other marginalised groups who are at even greater risk of poverty and destitution.” (Third Sector Organisation, Engender)

The impact on women was specifically highlighted and discussed across the consultation by a few organisations. It was argued that the welfare system was inherently biased against women’s situations and circumstances, despite women often being more reliant on this. In relation to the two-child limit specifically, women were perceived as having to justify their reproductive choices and family/household circumstances in order to access social security:

“The current two-child limit systemically discriminates against women and is part of a wider, entrenched misogyny within the design and delivery of Universal Credit…The two-child limit does not account for women’s fundamental rights to reproductive autonomy, religious and conscientious views on the use of contraception, the fallibility of contraception, bereavement, family breakdown, new relationships and blended families, economic uncertainty and countless other factors that shape women’s lives. The policy also ignores realities about women’s choices in pregnancy, as domestic abuse commonly includes elements of reproductive coercion. Anecdotal evidence tells us that the two-child limit forces women to terminate wanted pregnancies, a serious affront to human rights. Meanwhile, international evidence shows that ‘family caps’ do not result in reducing the number of children born to recipients of social security but instead push families into deeper poverty.” (Third Sector Organisation, Engender)

The ‘rape clause’ was also highlighted repeatedly throughout the consultation as being particularly inappropriate, having a significant negative impact on women and potentially the children involved as well. It was stressed that this approach retraumatises applicants, removing their right to privacy in sensitive matters, and could also result in ‘outing’ them and the circumstances of the child’s conception to family, friends and others. It was also suggested that the definition of ‘non-consensual’ was inadequate and could result in inequitable delivery, while the evidence requirements (i.e. a criminal conviction, a criminal injuries compensation award, or the word of an ‘approved third party’) were perceived to act as barriers:

“The widely discredited ‘rape clause’ can re-traumatise victim-survivors by forcing them to disclose sexual violence at a time and in a context not of their own choosing, on pain of falling into deeper poverty.” (Third Sector Organisation, The Poverty Alliance)

Impact of the Mitigation Payments

Positive impacts

Support for families in poverty with immediate and long-term benefits

There was overlapping feedback from organisations in relation to impacts which would be relevant to the Fairer Scotland Duty/socio-economic assessment and the Equality Impact Assessment in respect of particular protected characteristics. For example, they argued that the mitigation payments would support children and families experiencing poverty and help to improve living standards for some of the poorest families in Scotland, which disproportionately include women, single parent households, BME families, etc. Organisations said the mitigation payments offered an opportunity to address child poverty, as well as the poverty experienced by their families.

The link between poverty, hunger and poor school attendance and educational outcomes was also highlighted by organisations. It was suggested that the mitigation payments would help families to afford food, heating, transport, clothing and childcare. This should, therefore, result in less reliance on foodbanks, less hunger at school, improved attendance, concentration and overall better educational outcomes, it was felt.

Several organisations and one individual also flagged the longer-term impacts for those children who will receive the mitigation payments, as well as wider societal benefits. It was noted that child poverty was a predictor of homelessness, physical and mental health issues, and other adverse childhood experiences (ACEs). Therefore, the payments should support better long-term outcomes as these children become adults. Similarly, it was argued that tackling poverty and securing better educational outcomes should lead to better employment opportunities, thus helping to break the cycle of poverty. Further, it was noted that lifting more families out of poverty or alleviating the effects of poverty would result in lowering the demand on public services.

Support for specific groups

Again, gender-based impacts were discussed by organisations. A few stressed the need for the new approach to be both gender compliant and domestic abuse competent, and stressed the need to include robust equality impact assessment of the mitigation payment’s design and delivery, and tackle the gendered impacts of the ‘rape clause’ on victim-survivors:

“As well as being gender competent, the approach to mitigating the two-child limit must be domestic abuse competent, including competence in economic abuse…The mechanism developed by Scottish Government to make payments must support and empower victim-survivors of domestic abuse…Scottish Government must put safeguards in place to ensure that the payment system cannot be manipulated or weaponised by perpetrators of domestic abuse.” (Third Sector Organisation, Scottish Women's Aid)

Key groups identified by respondents, which required consideration by the Scottish Government across the impact assessments included: women/gender issues; age (in relation to children and young parents); ethnicity, and particularly BME groups; families with certain religious beliefs/faiths; care experience (including care experienced parents, parents of care experienced children, and kinship households); refugees, asylum seekers and those with no recourse to public funds; carers; and people with disabilities. Some organisations highlighted issues for particular groups (typically women and BME families), others provided references to studies and further reading for the Scottish Government to inform the impact assessments, and others simply noted the groups that needed to be considered.

Consideration of Impact Assessments

A few organisations and individuals flagged the importance of the impact assessments, and were encouraged that either the full suite of assessments would be undertaken, and/or that specific ones were being included.

In relation to specific impact assessments, one organisation suggested that Article 12 from the UNCRC was important to consider, i.e. the right for children and young people to be heard and taken seriously in matters that affect them. It was stressed that those with lived experience should be engaged throughout the process, with feedback sought on experiences and impacts of the mitigation payments. Another organisation advised consideration of the human rights legal framework in general, as well as Conventions which include requirements to protect the rights of specific groups (such as disabled people, women and those from ethnic minority backgrounds). One individual also suggested that environmental, housing and educational impact assessments should be undertaken.

A few individuals, however, were critical of the Scottish Government’s competence in conducting impact assessments and developing new policies, with some citing previous controversial examples, such as the Deposit Return Scheme and the Gender Recognition Reform (Scotland) Bill (GRR).

Concerns to be addressed

Again, respondents took the opportunity at this question to outline their range of concerns or to flag issues for further consideration.

Gaps in eligibility

Organisations were consistently concerned about the gaps in eligibility for the mitigation payments, including families who do not receive Universal Credit because of the effects of two-child limit on the income threshold, and those who may have intermittent eligibility (due to fluctuating income or receiving weekly wages). Again, respondents were keen to ensure some mechanism was designed/introduced to ensure these families were not excluded, and to make sure they could be identified and supported to apply:

“…there are some families who will miss out on support because they are not in receipt of UC but would be if they were not subject to the two-child limit. To achieve maximum impact in reducing child poverty in Scotland the Scottish Government should investigate how these families may be supported through other means to ensure they are in receipt of the maximum amount of social security entitlements, representative of the number of children in the household.” (Third Sector Organisation, includem)

“…some of the families facing the greatest hardship will miss out on vital support, unless Scottish and local Government work together to strengthen parallel and local lifeline support. With record numbers of families with children trapped in temporary accommodation…we are particularly concerned about those families who are at greatest risk of missing out on support for low-income families because they are ineligible (for example, migrant families) or find it difficult to claim (those who cycle in and out of UC eligibility due to fluctuating earnings and/or those living and/or working in expensive temporary accommodation)...[We] urge the Scottish Government to explore all alternative mechanisms to ensure an equivalent level of support can be given, as a matter of principle and urgency.” (Third Sector Organisation, Joseph Rowntree Foundation)

Interaction with exceptions

A few organisations were also concerned about how the mitigation payments would interact with exceptions. One cautioned that fairness was needed between those claiming the mitigation payments and those who qualify for exceptions, and stated that there needed to be consistency in calculations, for example, in Council Tax Reductions. Another suggested that mitigation payments may be more risky for some families. They argued that it may be better for some families to apply for an exception (where applicable) rather than mitigation payments, as the exception would raise their earnings threshold for Universal Credit eligibility whereas the mitigation payments would not. As such, they felt it would be important to promote and inform families about exceptions and any risks of opting for a mitigation payment rather than an exception.

Consideration of ‘cliff-edges’

Again, a few organisations felt that further consideration was needed in relation to ‘cliff-edges’, how these might impact families, and how they could best be managed. A range of situations and/or suggestions were provided in this respect, including:

• supporting families to understand how changes in their income could impact their Universal Credit and mitigation payments;
• understanding that increased earnings mean families are taken above the Universal Credit threshold, which would result in the loss of payments compounded by the loss of mitigation payments and also the loss of the Scottish Child Payment; and
• looking at the age at which young people ‘age out’ of eligibility for the child element payments.

Impact on public finances

A few organisations and individuals who generally supported the proposals, nevertheless raised concerns that the introduction of mitigation payments could stretch public finances and impact on other poverty related interventions or other policy commitments/areas. They sought reassurances that funding for the mitigation payments would be robust and sustainable over the long-term, but also that funding would not be taken from or limit other key initiatives or sectors. Indeed, it was stressed that other measures would also be needed to ensure the Scottish Government reaches its child poverty targets:

“It must also be considered that this does not negate the need to continue to address other issues that affect people in areas of deprivation the most, such as, lack of affordable housing, cold/damp/mouldy homes, targeted interventions in areas of deprivation for employability, smoking cessation and rural transport issues, for example. Although lifting families out of poverty financially is a key first step, there is a long way to mitigate and undo the legacy of poor outcomes now ingrained into communities that still would need to be addressed in tandem with the rise in household income to really reverse the true impact of decades of austerity and deprivation. We urge the Scottish Government to recognise that any funds allocated to this work should not be taken from any such Community or Health and Social Care budget to mitigate the spending.” (Health/Mental Health Body)

“I am entirely in favour of these actions. However, an impact assessment should take into account the impacts of such payments on the monies then available to Councils to make other payments and deliver services. For example, if Councils lack the funds and services to support children with disability, or home care for the elderly, they cannot fully carry out these statutory duties. Decisions to mitigate the two-child cap or pay the Scottish Child Payment are not without consequences and I think the Scottish Government needs to be more open and honest about this.” (Individual)

How the mitigation payments would interact with and impact on the Scottish Welfare Fund was also highlighted by a few organisations. It was suggested that demand for the Scottish Welfare Fund should reduce among those eligible for mitigation payments. However, as families get used to this new payment, respondents wondered whether additional need for the Scottish Welfare Fund could be created among families that have fluctuating eligibility for Universal Credit.

Similarly, many individuals who were against the proposals were also concerned about the overall cost of the mitigation payments, and remained unconvinced that the scheme was affordable. Individuals also stressed that the impact on other services, the taxpayer, working families, and those not eligible for benefits needed to be considered. This included reflecting on fairness to families with working parents and taxpayers, as well as the total cost of setting up the system and funding these payments, whether this was affordable, provided value for money, and whether this was a good use/the best use of public funds. Many individuals commented that abolishing the two-child cap would have a direct effect on the taxpayer, either through increased taxation or reduced provision of other public services. Several also questioned why households who either do not have any children, or who make the choice to delay starting a family and/or not to have more than one or two children, should be taxed to support what they perceived to be “irresponsible” families who choose to have more children than they can afford to support:

“Implementation of the proposal would presumably lead to either increased taxation or a reduction in public services to the detriment of some members of the population i.e. childless couples or those who for economic reasons had limited the size of their own families. This has not been considered…Increasing benefit payments means increased taxation for all or a reduction in services. It is not equitable to place this additional cost on those who have perhaps decided to limit the size of their own families to a number they themselves are able to support.” (Individual)

Other perceived negative impacts

There was also concern among many individuals and one organisation (who reported wider survey findings) that the mitigation payments may encourage worklessness, promote reliance on benefits, and lead to parents/families not tackling the root-cause of their problems. It was suggested that focusing on initiatives to improve financial literacy, teaching budgeting and self-sufficiency skills, improving training and employment opportunities, and providing wraparound childcare would be more effective in the long-term. Similarly, individuals wanted to see funding being prioritised for other policy areas, such as the NHS, education, policing, housing, the economy and other public services, etc. but felt that the cost of mitigation payments would have a further negative impact on these:

“More people shunning work as benefits are too attractive.” (Individual)

“I don't believe this cap should be removed. Families on benefits or lower incomes already receive the Scottish Child Payment. I have two children and both my partner and me work full-time but there are families who rely solely on benefits who are better off than us. Attractive benefits already disincentives people to go in to work. Funds should be used to train people and encourage them in to good paying employment.” (Individual)

Several individuals were also concerned that the mitigation or removal of the two-child limit would encourage families on benefits to have more children simply to claim higher/additional benefit payments. Most considered this as a negative impact, as it would be unsustainable for the public purse, unfair to taxpayers and working families, and further encourage reliance upon the state rather than personal responsibility. However, a few respondents (both individuals and one organisation) considered it positive to encourage higher birth rates as this would help to address Scotland’s declining population challenges.

Several individuals were also concerned about the impact the policy could have on migration, both into and out of Scotland. A few felt that the policy could lead to more large families to move to Scotland in order to take advantage of the more generous benefits on offer. Others, however, cautioned that any further increase in the tax burden (as expected to be required to fund this policy) would result in taxpayers moving out of Scotland.

Other Comments

A range of other, more general comments were provided, as outlined below.

A few organisations reiterated that the new mitigation payment system would need to be fast and easy for families to navigate. They also stressed that it would need to be well advertised and signposted to ensure families were aware of it and how to access it. The importance of local authorities, benefits/welfare advice organisations and other third sector support organisations was also highlighted as a source of information and support for families. As such, it was stressed that clear information, guidance and engagement for/with these organisations was vital, (as well as adequate funding and resourcing), to allow them to support and promote this provision if/when introduced:

“Would also stress the importance of clear, uniform national and local messaging, that local authorities and third sector/community stakeholders can use too; to ensure people, who would be entitled to receive UC due to this change but not currently in receipt of it, are identified.” (Local Authority)

In addition, there were calls among organisations for adequate and sustainable funding for those providing community-based family support which help to mitigate the impacts of poverty, as well as for those that facilitate engagement with families with lived experience for monitoring and evaluation purposes.

A few organisations called for robust reviews to be undertaken, and for the results to be published and promoted. In particular, it was hoped that positive impacts on uptake and on children’s lives could be useful in pressuring the UK Government to remove the two-child limit for all families across the UK.

Several organisations, while supportive of the mitigation payments as an option for Scottish families and/or as an interim measure, stressed that they would continue to advocate for the removal of the two-child limit by the UK Government, and urged the Scottish Government to do the same. Mitigating, or more ideally, removing the two-child limit entirely at source was considered the most desirable and effective approach. Further, one organisation highlighted that various United Nations Committees have called for the two-child limit to be reversed, including the United Nations Committee on Economic, Social and Cultural Rights (2025), the United Nations Committee on the Rights of the Child (2023), and the United Nations Committee on Elimination of Discrimination Against Women (2019). They stated that failing to action these recommendations meant continued non-compliance and individual rights violations, both at the Scotland and UK level.

A few individuals advised that the Scottish Government needed to have facts and figures available to defend the policy if it went ahead, and to stress the realities of the scheme (i.e. it is linked to Universal Credit so all requirements related to that continue to apply, such as means testing and the requirement to seek employment, etc.).

Consistent with their responses throughout the consultation, many individuals simply reiterated their support for the two-child limit, perceiving this as appropriate and necessary, or outlined their opposition to attempts to mitigate the policy within Scotland. In addition to the feedback outlined above in relation to being unfair on the taxpayer, and concerns about the affordability of the policy or that it may encourage reliance on benefits/ worklessness, individuals again outlined a range of other reasons for opposing mitigation payments. They stressed that people should not have more children than they can afford, and that parents should be personally responsible for their children and choices around family size rather than the state or the taxpayer. Several also remained unconvinced that the money would benefit the children or reduce the level of poverty. Some also expressed more general negative perceptions about the Scottish Government or the SNP, indicating either disapproval or a lack of trust in their leadership or priorities. In particular, it was suggested that the mitigation payments were an attempt to secure votes, that impact assessments wouldn’t be robust enough, and that the policy would not be properly costed.

Finally, a few individuals appeared to potentially misunderstand the proposals and which benefits they related to - appearing to link the mitigation payments to Child Benefit rather than the Child Payment element of Universal Credit.

Lived Experience Workshop Event

As outlined at Q1 above, some lived experience workshop attendees outlined the impact of the two-child limit and the insufficiency of their current benefit payments. This impacted on their ability to afford the basics, which included struggling to feed the children and getting into debt over heating and energy bills. One attendee highlighted that the money is treated as a fund for the total household, so all children in a household receive less overall if one or more child[ren] do not qualify for a child payment.

“To get the benefit for the children would be helpful, school holidays are coming I could use it for that. I give my son dinner money each week for school. He is in high school. Sometimes I don’t have money to give him. Last month UC gave me £400 for 4 kids. I have to stretch my money to feed them so it is really hard.” (Lived Experience Workshop Attendee)

“I have been living in a temporary flat for the past two years and I haven’t been paying electricity bill. I have now been asked to pay £300 a month. Every time I look at it I don’t know how I am going to cope.” (Lived Experience Workshop Attendee)

One attendee also highlighted the challenges of juggling work and the impact on benefits payments. They noted that they needed to try to increase their hours at work to ensure a high enough total income to cover the shortfall for one or more children not receiving child payments. Any increase in the hours worked though, resulting in higher earnings, resulted in reductions in their benefit payments, meaning they were never really better off or able to address the gap:

“I have 6 kids and I was claiming for 5 before I moved on to UC. My youngest I only get Child Benefit and SCP. To top up the money I don’t get for having an extra child I am having to get more hours at work which then drops my UC. There is no way of getting round that. The more I earn the less UC I get. I can earn £50 and they will take £25 away. There is not anything at all that can be done to try to earn that money so all the kids have the same if that makes sense.” (Lived Experience Workshop Attendee)

The impact of the mitigation payments was considered in positive terms by most attendees. They noted it would help to support them through the school holidays, help with childcare costs, and would help to stabilise incomes at a level suitable to cover all children in the home. The mitigation payments would provide ‘hope’ and relieve a certain level of stress and anxiety for parents and families in difficult situations:

“It would less stress to try to find childcare to cover the hours I work. I work nights and for childcare for 5 children when I return from maternity leave I was looking at £800 a month, and I only earn £850 a month. I’d be working just to cover childcare. Having that extra money would take the pressure off me.” (Lived Experience Workshop Attendee)

“If I know I am going to get a mitigation payment then I will have hope. I won’t be thinking how will I cope, how will I pay for everything for my kids. I have 2 kids that I don’t receive money for and it would be a relief.” (Lived Experience Workshop Attendee)

Finally, a few attendees were concerned about how the introduction of mitigation payments would be received by the public and how it may be portrayed by the press. They were conscious that some people may say that families would have additional children simply to access the extra payments, and sought clarity from the Scottish Government about how the promotion of this would be dealt with and the policy would be protected from attack:

“You’re also going to get the people who will say you’re having extra children to get more money.” (Lived Experience Workshop Attendee)

“When the two-child limit got put in…and celebrating it as it would stop babies for benefits. Bad press and negatively, how does the government plan to protect this payment without it being an attack of people getting the new payment?” (Lived Experience Workshop Attendee)