Scottish Government to end two-child benefit cap

The Scottish Government will end the two-child benefit cap, the country’s finance secretary has said.

The Scottish Budget is one “filled with hope for Scotland’s future,” said Shona Robison, and will “scrap the cap”.

She said that the “pernicious” cap on benefits, which prevents parents from claiming child tax credit or universal credit for more than two children, will be scrapped in Scotland by 2026.

Robison urged the UK Government to provide the necessary data to allow for the change to be made.

“Be in no doubt that the cap will be scrapped,” she told MSPs.

Scotland

Key points from Scottish Budget: Council tax rise and record NHS funding

Scotland’s finance secretary has unveiled her Budget for 2025/26.

“My challenge to Labour is to work with us – join us in ending the cap in Scotland, give us the information that we need.

“But either way, let me be crystal clear, this Government is to end the two-child cap and in doing so will lift over 15,000 Scottish children out of poverty.”

The Budget, which is the first since John Swinney took office, comes against a backdrop of dire public finances, somewhat alleviated by a £3.4bn increase in the next financial year caused by the UK Government’s spending decisions outlined in October.

Publishing the Scottish Government’s proposals on Wednesday, Shona Robison said the country had faced “unprecedented” challenges, but added: “Today, we can show that we understand the pressures people are facing.”

Scotland’s public spending watchdog had warned the NHS needs “urgent reform”, councils said they needed more money to continue providing essential services, and unions want thousands more teachers in the country’s schools.

Council tax is set to increase next year, after the finance secretary did not announce a continuation of the cap.

There is “no reason” for big increases in council tax, the finance secretary has said.

Robison announced a more than £1bn uplift for local authorities, but warned that levies should be kept low, after a council tax freeze in the last 12 months.

“While it will be for councils to make their own decisions with record funding, there is no reason for big increases in council tax next year,” she said.

The Scottish NHS will receive a record funding settlement of £21bn next financial year, Robison said.

She told MSPs this was her “biggest commitment”, saying: “An increase of £2bn for frontline NHS Boards – a record uplift.”

She said this extra funding would mean no one will wait longer than 12 months for elective treatment in the NHS by March 2026.

Free school meals will be extended to primaries 6 and 7 in Scotland for “low-income families”.

The Scottish Government came under attack after rowing back its 2021 manifesto pledge to provide all primary school pupils free school meals.

But the finance secretary announced the extension of the policy to older primary pupils, but not on a universal basis, while extra funding for breakfast clubs will be introduced.

Robison said her Budget would contain an additional £800m in social security benefits in 2025/26.

Income tax rates in Scotland have been frozen until 2026. Robison announced that there would be no change in this Parliament to the rates, nor would any more bands be introduced.

Meanwhile, the amount at which the basic and intermediate rates – 20% and 21% – is paid will increase by 3.5% in the next financial year, which Ms Robison has said will see more paying the lower 19% rate due to increasing wages.

Public sector will see a flexible increase of 9% above inflation over the next three years – Robison said she wanted to put it on a “sustainable footing”.

Funding from the ScotWind leasing round will not be used in this financial year, Robison said. Earlier this year, she said the hundreds of millions from the leasing of the country’s seabeds for offshore wind may have to be used to plug a black hole.

Prior to the budget taking place it had already been announced that a devolved pension age winter heating payment, which will give all pensioners at least £100 and see those worse off receive up to £300, would be put in place next year.

Praise and criticism: Reaction to Scottish Budget

The Child Poverty Action Group said the Scottish Government had made the “right decision” by promising to mitigate the two-child cap, with chief executive Alison Garnham adding: “Westminster must now step-up and scrap the two-child limit UK-wide.

“There can be no justification now for Westminster dragging its feet and continuing to roll out poverty to more and more children through this policy from the austerity era.”

Chris Birt, association director for Scotland at the Joseph Rowntree Foundation, said the Budget shows “positive signs of investing in the right things”.

He added: “Committing to the eliminating of the two-child limit by investing in social security is a positive recognition that political choices can reduce poverty.

“Reversing the huge cuts to affordable house building is also welcome while we’re in the jaws of a housing emergency.”

The minority Scottish Government needs at least one other party to back the Budget for it to pass, but none has yet committed to supporting it.

Scottish Green finance spokesman Ross Greer said “significant further changes” will be needed before his party can vote the Budget through.

Scottish Liberal Democrat leader Alex Cole-Hamilton welcomed measures such as funding for GPs, dentists and mental health.

But he said: “Let me be clear, this does not guarantee our support. As with all budgets, the devil will be in the detail and we will be looking closely at that.”

Scottish Conservative finance spokesman Craig Hoy said the Budget fails to fix 17 years of “economic mismanagement” under the SNP.

He claimed: “This Budget is just more of the same. Inputs, not outputs, half-hearted attempts to fix the problems that they themselves have created.

“The era of high tax, free spending is far from over and once against people in Scotland will pay more and get less.”

Scottish Labour finance spokesman Michael Marra said the Budget contains “no reform, no vision, no plan”, and he declared: “Scotland is going in the wrong direction because of the SNP.

“Almost one in six Scots are on an NHS waiting list, schools falling further behind, a national housing emergency, growth lagging behind the rest of the UK. Every Scottish institution is weaker.

“It is not enough just to try and correct the mistakes made last year by putting back the money that was slashed in the budget itself, or in the cuts chaos of the now annual SNP emergency budget.

“This Budget amounts to more of the same, sending Scotland ever faster in the wrong direction.”

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