Universal Credit: Two-child Limit

Debate between Baroness Sherlock and Lord Farmer

Wednesday 10th December 2025 Lords Chamber

[Lord Farmer]

To ask His Majesty’s Government what assessment they have made of the impact on work incentives of lifting the two-child limit in Universal Credit.

[The Minister of State at the Department for Work and Pensions (Baroness Sherlock) (Lab)]

My Lords, this Government are determined to lift children out of poverty, and removing the two-child limit is the fastest and most cost-effective way to do so. The benefit cap is still in place, encouraging parents to take responsibility and work towards financial independence. Our approach balances fairness and provides a strong safety net without undermining the incentives to work.

[Lord Farmer (Con)]

My Lords, recent international evidence found that unconditional cash transfers increase fertility. Families claiming health-related benefits are not capped, so even these workless families will get UC for every child, again affecting work incentives. Research by the Institute for Fiscal Studies found that money-per-child tax credits increased births by 15% and decreased contraceptive use among beneficiaries. Have the Government assessed whether lifting the two-child limit will incentivise more births in benefit-dependent households, and whether many of the 450,000 children this measure intends to lift out of poverty would not otherwise have been born?

[Baroness Sherlock (Lab)]

My Lords, the Government have seen no evidence that the two-child limit had an impact on family size. For example, 47% of households affected by the two-child limit were not claiming universal credit when any of their children were born. In other words, things happen; people set out, they have children and something happens. Maybe someone loses their job, they are bereaved, their spouse leaves them, or they get sick and cannot work. The welfare state should be there to support people, both into work and in work, but it is also there to support them when they cannot work. We already know that some 60% of households affected by this are in work. Our strategy is to make sure we do all we can to get people into work, get them to develop in work and support them, but we are there as a safety net when they cannot do so.