Scottish Budget set to pass with Labour abstaining

The two-child benefits cap was originally introduced in 2017 by the UK Conservative government and has been kept in place by Sir Keir Starmer’s Labour administration.

It prevents parents from claiming universal credit or child tax credit for a third child, with a few exemptions.

The Scottish government said in its Budget announcement that it aimed to provide funding to families affected by the policy by April 2026.

Ministers did not commit funds to the pledge in the Budget, other than £3m in set-up costs. They also did not specify what mechanism would be used to mitigate the cap.

The Scottish Fiscal Commission (SFC) forecasts, external this policy would cost £155m in 2026-27, rising to almost £200m by 2029-30.

The SFC estimates that as of April 2024, there were about 32,000 children who would have been eligible for the proposed mitigation payment. It estimates this figure will rise to about 50,000 by 2029-30.

Sarwar also called for the government to replicate business rates relief provided to firms south of the border, and to bolster plans to clear NHS backlogs.