Charities have welcomed a decision by Chancellor of the Exchequer Rachel Reeves to scrap the two-child benefit cap.

Reeves has made the move after extensive lobbying by charities about the cap’s impact on child poverty. The cap within Universal Credit will be removed from April next year, Reeves has confirmed.

Mary Glasgow, chief executive of Scotland based children’s charity Children First said the cap’s scrapping “is long overdue”.

“Poverty has a devastating impact on children’s mental and physical health, development, happiness and ability to learn that can last a lifetime,” she said.

Action for Children’s director of influencing Lucy Schonegevel said that Reeves’ decision over the two-child limit “marks a turning point for struggling families across the UK”.

“We strongly welcome the government’s decision to put children first at this Budget,” she added.

“Scrapping the two-child limit will mean fewer children growing up in cold homes without enough food to eat, warm clothes to wear or a bed to sleep in.”

Meanwhile, King’s Fund chief executive Sarah Woolnough said the lifting of the cap “could be significant in tackling deep health inequalities”.

“It will take hundreds of thousands of children out of poverty, a key driver of health conditions from obesity to asthma,” she added.

“Conditions like these can lead to lifelong struggles with health, affecting quality and ultimately length of life as well as long-term pressure on NHS budgets.”

Another charity to welcome the move is the National Children's Bureau.

It said: "Scrapping the two-child limit shows this government is serious about starting to tackle child poverty, lifting 350,000 children above the poverty line overnight.

"Poverty can affect every aspect of a child’s present and future life, and hundreds of thousands of lives have been changed for the better today.

"Along with scores of organisations across different sectors, campaigners, and members of the public, we’ve long called for the two-child limit to be scrapped, and we thank the Chancellor for listening."

However, concerns have raised in the sector that measures in Reeves’ budget could adversely impact charity's finances.

Minimum wage increase

This includes a hike in the minimum wage for workers over 21 by 4.1% from April.

Raya Wexler, co-founder of CharityJob. warned: “Charities want to pay fairly, but these rises hit smaller organisations hardest when funding doesn't keep pace.

“The sector risks wage inflation without corresponding grant uplifts. The result of this is that we will see upward pressure on salaries across all levels, possible compression of pay bands, and loss of entry-level roles to stay within budgets.”

Income tax thresholds frozen

Wexler is also concerned with a freezing of income tax thresholds until 2031, which will reduce people’s disposable income to give to good causes.

“Delaying income tax thresholds could have disastrous implications for charities,” she said.

“As workers’ take-home pay grows more slowly, disposable income for donations shrinks.
“Charitable giving, especially small regular donations may plateau or fall. Charities may see drops in small-to-medium individual giving and regular supporter income.”

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