MITIGATING the UK Government’s two-child benefit cap in Scotland will cost £155 million in the first year and help 43,000 children, a new report from the Scottish Fiscal Commission has said.
A non-ministerial government body tasked with providing independent economic forecasts, the commission on Tuesday published its report into the projected cost of the SNP’s stated aim of "mitigating the two-child limit" for people in Scotland.
It found that ending the cap would add £155m onto the Scottish benefits bill in 2026/27, rising to £198m in 2029/2030.
It further projected that around 43,000 children would be impacted by the mitigation payments in 2026, rising to 50,000 by 2030.
However, the report warned that other spending would likely have to be "constrained" in order to continue mitigating the benefit cap.
"The additional spending on the proposed mitigation payments in 2026‑27 leads to overall social security spending being £1.6 billion higher than the Block Grant Adjustment funding provided by the UK Government," the SFC said.
The UK’s two-child benefit cap limits the social security payments a person can claim for third or subsequent children, unless they can meet certain conditions such as proving that the child is a product of rape.
It was brought in by the Tory government and firmly opposed by Labour. The now-Deputy Prime Minister Angela Rayner previously called it “obscene”.
However, since taking power, Keir Starmer’s Labour Government has refused to lift the cap, instead saying that economic growth must come before anything else.
The SNP Government in Scotland has pledged to work towards lifting the cap in 2026, saying that it needs data held by the UK Government to do so.
The Scottish Fiscal Commission's (SFC) report states: "By 2029-30 the additional spending on the proposed mitigation payments would account for 0.3 per cent of the Scottish Government’s total resource funding.
"This would increase the share spent on social security to 14.9 per cent, with a corresponding reduction in the amount available to fund other public services.
"This reflects the Scottish Government’s approach to disability payments and its priorities to use the devolved social security system to support those on low incomes and pensioners and tackle child poverty, but it does mean that spending in other areas is constrained."
The report further states that the impact of the cap on the Budget was not included in their initial projections as the SNP Government did not add it to their plans until "very late in the Budget process and a week and a day after the deadline for final policy measures".
"At this point it was too late for us to produce a full costing that took account of behavioural responses and other factors," the SFC said.
It projects that this influence on behaviour will impact the cost of mitigating the benefit cap.
In 2026/27, the policy will be costing £2m more than it would without behavioural factors, the SFC report states, projecting this to rise to £10m by 2030.
The report said: “As the financial incentives facing the families potentially receiving a mitigation payment are large, and could generate material costs even if only a small number of families are involved, we have still made a small behavioural adjustment to the costing.”
