Swinney urged to increase spending on benefits as Chancellor lifts two-child cap

Scottish ministers are facing calls to hike spending on social security in the wake of Chancellor Rachel Reeves’s “transformational” commitment to end the two-child cap.

Ms Reeves said the policy, which means families can only claim some benefits for their first two children, will end in April.

With the Scottish Government already having announced plans to mitigate the impact of the cap, the Chancellor’s decision – which she said is “fully costed and fully funded” – will free up funds in the Scottish budget for next year.

The announcement came as part of a UK Budget which Ms Reeves said would see an extra £820 million go to the Scottish Government over the spending review period.

Speaking afterwards, Scottish Labour leader Anas Sarwar said: “I demanded a Labour Budget rooted in Labour values and that is what the Chancellor has delivered today.”

The Budget also included a rise in the minimum wage and action on energy bills – which will see the average household bill fall by £150 next year – and Mr Sarwar insisted: “This Budget means child poverty down, energy bills down, wages up and austerity rejected.”

Overall he said the UK Government’s actions will result in “thousands of Scottish children lifted out of poverty, £150 off energy bills, £300 for those most in need, increases in the living wage and £820 million extra for the Scottish Government”.

Elsewhere in the Budget, the Chancellor pledged “over £14 million for low-carbon technologies in Grangemouth”, where the community was hit by the closure of the oil refinery earlier this year.

Mr Reeves also promised £20 million for the Inchgreen marine park in Inverclyde to help deliver jobs in the area, and £20 million towards redeveloping Kirkcaldy town centre and sea front in Fife, with construction due to start next year.

After the Chancellor’s headline announcement on scrapping the two-child cap, John Dickie, director of Child Poverty Action Group (CPAG) in Scotland, said SNP ministers must now use the extra cash this will free up to “further boost Scottish social security for families”.

He suggested the money could be used to increase the Scottish child payment “toward the £40 a week that is needed”, as he said ending the cap will be “transformational for children” and provide a “much-needed fresh start in efforts to eradicate child poverty across the UK”.

Speaking on behalf of members of End Child Poverty in Scotland, Mr Dickie said: “The UK Chancellor’s decision to scrap the cruel two-child limit is absolutely the right thing to do.

“The Scottish Government has committed to mitigating the two-child limit so the very welcome decision to abolish the policy at source frees up over £150 million in the 2026-27 Scottish budget.

“Ministers have already promised to use this money to tackle child poverty and we urge them to use it to further boost Scottish social security for families.

“It is vital that the money freed up today is spent on increased social security support and that it adds to existing commitments to fund the childcare, whole-family support, employment and housing that are also crucial to families.”

Chris Birt of the Joseph Rowntree Foundation in Scotland challenged the First Minister to “come good” on previous commitments to use the money earmarked for mitigating the two-child cap on tackling child poverty.

He welcomed Ms Reeve’s decision to end the “cruel and unfair” policy and said John Swinney now has the option to further increase the Scottish child payment.

This would be the “most direct way of putting money in the pockets of struggling families”, Mr Birt said, as he urged SNP ministers to use the cash to “take bold action targeted at those who need help the most”.

Scottish Finance Secretary Shona Robison said while the move to end the two child cap was welcome, it was also “long overdue” – insisting that the “UK Government has been forced into this position by the Scottish Government and other campaigners”.

Ms Robison also said that without a simultaneous change to the benefit cap  – which limits the overall amount claimants can receive – the Chancellor’s action “falls well short of the bold anti-poverty measures we have been calling for from the UK Government”.

She said the Scottish Government had wanted to see a “step change” in the Budget, with support for public services, jobs and industry.

But Ms Robison added: “Instead, we got a chaotic mess and the increase in funding for the Scottish Government will not even cover half the cost of the employers’ national insurance contributions brought in this year.”

While the Chancellor promised action on energy bills, Ms Robison said under Labour, energy bills were £340 higher than the Prime Minister promised even after today’s announcement.

She also said Budget contained “no serious support for jobs and industry in Scotland”, adding that keeping the Energy Profits Levy in place is “risking thousands of jobs in Scotland and in the North East in particular”.