Scottish Government has made one of its most significant welfare decisions in years — officially confirming the end of the controversial two-child benefit cap. But while this move has been praised as a major step towards tackling child poverty, Scots are also being warned to prepare for higher council tax bills as the government looks to fund the changes.
This announcement marks a defining moment in Scotland’s welfare and taxation landscape, promising support for struggling families but also sparking debate about fairness, affordability, and long-term fiscal responsibility. Here’s what the policy shift means for households, how it will be funded, and what experts are saying about its broader economic impact.
What Is the Two-Child Benefit Cap?
The two-child benefit cap was introduced by the UK Government in 2017 as part of a wider effort to cut welfare spending. Under this policy, families could only claim child-related benefits — such as Universal Credit or Child Tax Credit — for their first two children. Any additional children born after April 2017 were excluded from these payments, except in specific cases such as multiple births or adoption.
Critics argued that the policy unfairly punished larger families and pushed thousands of children into poverty. The measure was particularly controversial in Scotland, where the SNP government consistently opposed the cap but lacked full control over the welfare system to remove it.
SNP’s Historic Move to Scrap the Cap
After years of campaigning, the SNP Government has now announced that the two-child cap will be scrapped for families receiving devolved benefits in Scotland. First Minister John Swinney confirmed that the change will be introduced as part of the upcoming Scottish Budget, describing it as “a landmark decision rooted in compassion and fairness.”
According to government estimates, around 80,000 Scottish children will directly benefit from the policy change, and thousands of families will see their household incomes rise by £3,000 to £4,000 per year.
The move aligns with the SNP’s broader anti-poverty agenda and its aim to create a “fairer Scotland.” However, it also presents a major financial challenge — one that the government plans to offset through new tax measures.
How the Scottish Government Plans to Fund the Change
To finance the removal of the two-child cap, the SNP Government has confirmed that council tax bills across Scotland will rise from next year. The exact rate increase will vary by local authority, but officials suggest that higher-value properties and wealthier households will bear the brunt of the rise.
Finance Secretary Shona Robison stated that “those with the broadest shoulders must contribute more” to ensure that essential welfare improvements remain affordable.
The Scottish Government expects the policy to cost around £250 million annually, and council tax hikes are projected to cover a significant portion of that expenditure.
Reactions from Across Scotland
Public reaction to the dual announcement has been mixed. Anti-poverty campaigners and social charities have hailed the end of the two-child cap as a “moral victory,” calling it a bold move that restores fairness to the welfare system.
The Child Poverty Action Group (CPAG) in Scotland described it as “a huge win for families who have struggled for too long under an unjust policy.” Similarly, Save the Children Scotland welcomed the news, saying it would have “life-changing impacts” for thousands of children.
However, many homeowners and local councils are expressing concern about the rising cost of council tax. Some argue that the tax system is already stretched, and further increases could burden middle-income families still grappling with high living costs, inflation, and mortgage pressures.
Political Fallout and Opposition Criticism
Opposition parties at Holyrood have responded sharply to the SNP’s announcement. The Scottish Conservatives criticised the government for “using hardworking homeowners to pay for political grandstanding,” claiming that the tax hikes would hit ordinary families hardest.
Meanwhile, Scottish Labour cautiously welcomed the end of the two-child cap but questioned the SNP’s fiscal strategy. Labour’s finance spokesperson said, “This policy is morally right but economically reckless unless it’s paired with a credible funding plan.”
Economists have also pointed out that the council tax increase could vary dramatically between areas, creating potential inequalities between richer and poorer councils.
The Economic Balancing Act
Ending the two-child benefit cap is expected to inject millions of pounds directly into household spending power, which could help stimulate local economies. However, the accompanying council tax rise might offset some of that benefit, especially for working families who earn too much to qualify for welfare support but not enough to absorb higher living costs comfortably.
Economic analysts say the move represents a “redistribution of wealth” within Scotland — taking more from high earners and homeowners to provide relief to low-income families.
Dr. Fraser Allan from the University of Strathclyde’s Fraser of Allander Institute commented, “While this policy is socially progressive, it puts pressure on public budgets at a time when the Scottish economy is already facing headwinds. The challenge will be maintaining financial stability while delivering on social justice promises.”
Impact on Families and Poverty Rates
The Scottish Government’s modelling suggests that removing the cap could lift 40,000 children out of poverty over the next five years. Families with three or more children are likely to feel the greatest benefit, as they will once again receive full entitlement to Child Benefit and Universal Credit top-ups.
For example, a family with three children could see an annual income boost of around £3,200, depending on their specific circumstances. This extra money could help with essentials such as housing, energy, and childcare costs — all of which have risen sharply since the cost-of-living crisis began.
What It Means for Council Tax Payers
While low-income households will welcome the reform, many middle-class Scots are bracing for higher tax bills. Council tax rates have been frozen for the past two years, so the upcoming rise marks the first major increase in recent memory.
Under the new plan, homes in Band E to H could see their annual bills increase by up to 10%, while lower bands may face smaller rises or, in some cases, be protected altogether.
Local authorities have been given flexibility to adjust rates, but most councils are expected to follow the Scottish Government’s recommendation to raise funds for social spending.
Wider Political Implications
The SNP’s decision comes at a crucial time politically. With a general election looming, the move underscores the government’s desire to distinguish Scotland’s welfare model from Westminster’s.
By ending the two-child cap, the SNP is reinforcing its image as a party focused on equality and social justice, contrasting itself with what it calls “cruel Tory austerity policies.”
However, critics argue that the announcement is also a calculated political move to regain voter confidence amid falling poll numbers and public frustration with local services.
Expert Analysis on Long-Term Impact
Policy experts believe the long-term success of this reform will depend on how efficiently the new welfare payments are managed and how sustainable the funding model proves to be.
Some economists caution that council tax, being a regressive system based on property value rather than income, may not be the fairest tool to fund welfare expansion. They suggest exploring progressive income tax measures or wealth taxes instead.
Others argue that the short-term fiscal pain is worth the long-term gain if child poverty rates fall significantly and public health outcomes improve as a result.
What Scots Should Do Now
For families affected by the two-child cap, it’s important to check eligibility and update benefit claims once the new rules take effect. The Scottish Government has promised clear communication and a dedicated helpline to assist claimants.
Homeowners, on the other hand, should prepare for higher council tax bills in the next financial year. Local councils will issue updated tax notices early in the year, so households should budget accordingly.
Financial advisers recommend reviewing monthly expenses now and considering direct debit plans to spread the cost of higher council tax payments.
Conclusion
The SNP Government’s decision to abolish the two-child benefit cap marks a historic moment for social policy in Scotland. It signals a renewed focus on compassion and equality — values that lie at the heart of Scottish politics.
However, the accompanying rise in council tax highlights the difficult trade-offs involved in welfare reform. Balancing social progress with fiscal responsibility will be the defining test for Scotland’s leaders in the years ahead.