Of the announcements made in last month’s Budget, the removal of the two-child benefit cap was, for many, the most welcome.

The cap currently means that parents do not receive child benefits for their third and any subsequent children. It was introduced in 2017 to incentivise parents to work. But, according to critics, the policy has instead kept around 450,000 children in poverty.

Many in education have long called for the abolition of the cap, and in September, a group including the NEU teaching union, the NAHT school leaders’ union, the Association of School and College Leaders, the NASUWT teaching union, Unison and the National Governance Association wrote to prime minister Keir Starmer saying it was “critical” to scrap it.

So, now that it is happening, what will be the effect on schools?

What effect will lifting two-child benefit cap have?

“Child poverty holds children back at school and limits opportunity,” says Kate Anstey, head of education policy at Child Poverty Action Group. “It also consumes staff time,” she says, citing a recent poll of NEU members, which found that teachers regularly support pupils by seeking food, clothes and learning resources for children and their families.

As such, lifting the two-child limit will “lighten the load on schools and school staff who have been plugging the gaps for too long”, Anstey says.

Sam Freedman, senior fellow at the Institute for Government and a senior adviser to Ark Schools, agrees, adding that lifting the cap should lead to more pupils being “properly fed, more likely to have access to a computer, less likely to be in very poor housing”, all of which would positively impact their readiness for school each morning.

He adds that this “significant cash boost” for low-income families - an extra £3,647 per year for those with three children - is especially notable when considered alongside the expansion of free school meal eligibility to all children in households in receipt of universal credit.

However, Vic Goddard, CEO of Passmores Cooperative Learning Community, says that while “schools will always welcome anything that reduces the pressures” on parents and carers, the change “does not address” the core financial challenges faced by schools.

“The policy improves the home environment for some children, but it doesn’t remove the pressures schools experience every day,” he adds.

Will lifting two-child benefit cap save schools money?

The removal of the cap does not necessarily bring with it a direct financial benefit to schools, explains Goddard. “It does not increase school funding, it does not improve SEND [special educational needs and disabilities] budgets and it does not reverse the years of local authorities’ top-slicing school budgets to cover their own SEND deficits.”

“So, while families benefit directly, schools still have to operate with real-terms cuts and increasing levels of need,” he says.

Tammy Campbell, co-director for early years and wellbeing at the Education Policy Institute, adds that “free school meals and pupil premium will not be affected because the lifting of the two-child limit does not change which families are entitled to universal credit. Rather, it impacts the amount of money they are entitled to”.

However, Anstey points to some more indirect financial benefits for schools.

“Many lower-income families are currently struggling to keep up with school costs such as uniforms, school meals and trips - and this is particularly challenging for families with multiple children,” she says. “Schools are often stepping in to help, but this can come at a cost to school budgets.”

If the additional child benefit allows families to meet these costs themselves, there will be less of a burden on schools. As such, says Campbell, “schools may be able to redirect some resources” that they were previously spending on supporting families towards other areas.

Sean Harris, director of people, learning and community engagement at Tees Valley Education, argues that this will give schools the “capacity to focus on other entrenched needs rather than firefighting poverty-driven crises”.

How long will it take for positive effects to be felt?

The two-child benefit cap is due to be lifted in full in April 2026, meaning affected families will see their monthly universal credit payments increase then, Anstey explains, “improving living standards immediately”.

But that’s still some wait, argues Harris, emphasising that “for families struggling to heat their homes or put food on the table this winter, six months is a very long time”.

Anstey’s future view is, however, more optimistic. “In the longer term, as children are lifted out of poverty and less deep poverty, they will be more likely to achieve at school, have better health outcomes and are more likely to earn more as adults,” she says.

Others are sceptical about how long it will take for schools to feel any impact, with Freedman saying that “it will take a while to know exactly how much things have changed”.

Meanwhile, Goddard says that “we should be honest that these benefits will be gradual and uneven”, adding: “Schools won’t suddenly see a dramatic improvement in the needs of their pupils. Poverty is multifaceted, and the cap was only one driver”.

“We may see a positive shift at the margins,” he says, “but not a transformative change in school experience.”

Harris concludes that while lifting the two-child benefit cap is “an important milestone...the real risk lies in assuming that this alone is a silver bullet”.

“It isn’t,” he adds.

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