Labour has been warned that benefit claimants will “move from England to Scotland” to profit off the SNP’s decision to axe the two-child cap on Universal Credit.
An official report by The Scottish Fiscal Commission (SFC), which provides SNP ministers with their budget forecasts, has said that the finance minister’s decision to scrap the cap could lead to an exodus from the south.
The report said that for low-income families that have three or more children, the “incentives are large”.
The SFC that the SNP’s scrapping of the cap – which was introduced by the Conservative Government in 2017 – would be worth around £3,600 per child each year for eligible households if introduced in 2026-2027.
Labour has been warned that benefit claimants will “move from England to Scotland” after the SNP scapped the two-child cap
PA
The two-child cap prevents parents from claiming universal credit or child tax credit for a third child, with a few exemptions.
After coming to power in July, the Labour Government led by Sir Keir Starmer voted to maintain the cap, despite significant pressure from figures inside his party.
In April 2024, data from HM Revenue & Customs and the Department for Work and Pensions revealed that a record 1.6 million children in the UK were affected by the policy.
SNP’s plans to ditch the policy were first announced in last month’s Scottish Budget. Robinson estimated that by doing so, the taxpayer would have to pay an additional £100million per year.
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The two-child cap prevents parents from claiming universal credit or child tax credit for a third child
PA
However, the SFC said the cost was more likely to be £155million in 2026/27, rising to £198million in 2029/30.
Included in the 2029/30 estimate is £10million for people changing their lifestyles, including relocating within the UK.
By scrapping the cap, the SFC has estimated that payments will be made to an additional 43,000 by next year.
As some large families will qualify for multiple payments, the Scottish system could potentially affect “migration with the UK”, the report said.
The SNP’s Social Security Secretary Shirley-Anne Somerville has suggested that axing the cap could bring 150,000 children out of poverty.
Scotland’s benefits bill is now expected to rise from £6.9billion next year to £7.6billion in 2026-2027 and to almost £9billion in 2029-2030.
The SFC that the SNP’s scrapping of the cap would be worth around £3,600 per child each year for eligible households if introduced in 2026-2027
PA
Discussing the move, John Swinney said that the £644million paid out in benefits would “only be available in Scotland”.
He told MSPs: “One of the proposals that we have brought forward with determination is to take steps to remove the two-child limit, which has been a pernicious attack on some of the most vulnerable in our society. It is a budget of delivery and hope.”
Liz Smith, the Conservatives’ social security spokeswoman, said: “Social security must provide a safety net for those in need, but the system also needs to be fair to taxpayers who need to pay for it.
“Under the SNP, the benefits bill is rising rapidly to unsustainable levels.
“It will reach £9billion soon and that is simply not affordable considering the pressing need to invest in public services.”
She said that the Tories believe that the policy is fair to Scottish workers, who already pay higher taxes than others in the UK.
“As the Scottish Fiscal Commission has suggested, there is potential for some people to seek to move here to take advantage of the SNP’s policies, raising the risk of benefits tourism, which would cost Scottish taxpayers even more.”
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