Problems with the Scottish Government’s 2 child limit consultation

On Friday 21st February the Scottish Government published its consultation on plans to mitigate the 2 child limit in universal credit.

The two child limit was introduced in 2017, over seven years ago. Since then there have been calls on the UK Government to scrap it and the Scottish Government to mitigate it. Both have declined but then rather abruptly and out of the blue in December 2024 the Scottish Government announced that it would finally mitigate the two child limit. Not only that but it is now very urgent that they do so as quickly as possible. A cynic might wonder why a benefit cut that’s been in place for over seven years suddenly demands urgent attention, and they might look to the political advantage over Labour this seems to have achieved, and also the looming Scottish Parliamentary elections which are just over a year away.

But whatever the motivation, the announcement is welcome. The two child limit directly causes poverty and mitigating or abolishing it will improve lives. I am delighted it’s happening.

To that aim the Scottish Government sets out in its consultation the three options it considered to deliver the mitigation. One is to use discretionary housing payments which is a silly idea and is quickly dismissed. It is given some brief consideration because that’s how the bedroom tax and benefit cap are mitigated, but it clearly isn’t an appropriate way to mitigate the two child limit. 

The only real two choices are to scrap it at source through universal credit, or introduce a new payment a bit like the Scottish Child Payment.

The consultation shows that in policy terms mitigation at source through UC would be better, but comes down on the side of introducing a new benefit payment instead, mainly because the Scottish Government can have more control over that process and get it done quickly.

My concern is that the consultation leads the reader to this conclusion. It glosses over the problems with their preferred approach and doesn’t demonstrate adequately that the reasons they are abandoning the “at source” option are fully evidenced. Basically they say asking the DWP to mitigate it at source through universal credit would take too long, but they don’t back that up with any hard evidence. For example they don’t appear to have asked the uk government if that is indeed the case.

Specific Issues with the consultation 

I’ll be responding to the consultation to say that they should mitigate at source, and not only that but they should take the opportunity to mitigate the bedroom tax and benefit cap at source too, but just now I wanted to set out some concerns with the consultation.

The Scottish Government has set aside £3million in next year’s budget to deliver the new payment. That’s a lot of money to spend on a sub optimal solution. 

The proposal is for a payment equal to the UC child element for each third and subsequent child in Scotland impacted by the two-child cap – currently £287.92 each month, rising to £292.81 in April.

The consultation makes the point that the Scottish Child Payment took 18 months to deliver and that this was “unprecedented”. The implication is then that it will take a similar amount of time to deliver this new payment. To my mind, that’s the timescale against which the alternative approach, mitigation at source through universal credit, should be judged. Can it be delivered by June 2026? The Scottish Government don’t appear to know the answer to this question but they suspect not. To be fair the DWP took over TEN YEARS to deliver universal credit, so they may have a point. I still think due diligence means they should check though, since timing is so fundamental to their options appraisal.

The consultation document references 2 of the 8 social security principles:

  • the Scottish social security system is to contribute to reducing poverty in Scotland, and
  • the Scottish social security system is to be efficient and deliver value for money.

Clearly mitigating the 2 child limit however it is done will reduce poverty. Not just child poverty either, because of course in every household that contains a child in poverty there is also at least one adult in poverty too.

But in terms of value for money and efficiency it is really hard to make the case for creating a brand new benefit, setting up the administration of that, making thousands of payments every month, employing all of the extra staff needed, requiring people to apply for the assistance etc etc. when the alternative is making tweaks to an existing system that already administers payments to nearly everyone, and will deliver the support to all of those affected completely automatically.

The consultation neglects to mention a couple of other relevant social security principles. One says that the system should be designed on the basis of evidence. As I’ve said above, I don’t see the evidence underpinning the assumption that mitigation at source would take longer than creating a new benefit.

The other says the system should put the needs of those who require assistance first, and advance equality and non discrimination. Which option does those things better, one which makes the additional payments seamlessly and automatically, or one which requires the claimant to make a separate application for a new benefit? Who is most likely to be disadvantaged by the additional complexity of the Scottish Government’s preferred approach?

A legal point 

I am not a lawyer, I would love it if someone would check this, but I think the consultation makes a mistake. It says “ DWP removing the two-child cap in Scotland would require extensive work. It would require the UKGovernment to introduce legislation and make system changes in order to remove the two-child cap from Universal Credit calculations for families in Scotland. The introduction of the these payments would depend on the UK Parliamentary process, as well as DWP’s timescales for making the necessary technical changes, which could mean slower progress toward delivering payments.”

But I don’t think there does need to be a uk parliamentary process. I think that changing universal credit in Scotland can be done with Scottish Regulations. I have a couple of reasons to think this. 

Firstly, under the social security Scotland act there are “top up” powers. These allow extra money to be paid to people in receipt of a uk benefit like universal credit. That’s the power used to make the Scottish Child Payment and it is also the power the Scottish Government intends to use to make the new 2 child mitigation payment. But although these powers can clearly be used to make new benefits, I don’t think there’s anything in the social security act that says that’s the only way they can be used. I think they could be used to make extra money available through a dwp administered benefit. Ie they could be used to top up universal credit directly.

Secondly the consultation document refers to the Smith commission whose recommendations were implemented in the social security act 2016. They refer to the fact that the smith commission recommended that the Scottish government be able to increase the amount of the housing element in universal credit directly. This was to allow the bedroom tax to be mitigated at source. I’ve looked at the relevant section of the social security act and it does indeed allow the Scottish government to make regulations that will provide extra money for housing costs. But nowhere in the act does it say these payments need to be made through universal credit directly. It seems then that just giving Scotland the power to provide extra money for housing is all the legal cover required to allow Scottish regulations to add extra money to a universal credit award.

Now if you look at the top up powers in the social security act, they look the same as the housing powers. The only difference is what they are for (paying someone for housing costs vs paying someone extra for receiving a uk benefit.)

If the housing powers can be used to add money into a UC award then so can the top up powers. And if this is true then there would be no need for uk parliamentary processes to mitigate the 2 child limit at source. It could be delivered entirely by Scottish regulations. 

To my mind this fatally undermines one of the reasons the consultation document gives for rejecting the mitigation at source option. I really hope a lawyer out there picks this up and checks to see if I am correct.

This has been a long post already so I’ll leave it there. Fundamentally my point is the Scottish Government have hastily and prematurely rejected the best way to mitigate the 2 child limit based on assumptions about delivery (rather than facts) and using incorrect legal assumptions.

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