I had not got my head around the two children rules until I heard from my friend Gareth Morgan at our webinar and from Alan Chaplin who highlighted this wondrous piece on social media.

This piece is by Gareth Morgan on December 1, 2025  The original can be read here does not have the formatting issue annoyingly on this one – apologies for the loss of the last word of the line from time to time!

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The abolition of the two-child benefit limit in the budget attracted a lot of comment. From the Government and its supporters came a stream of articles and postings lauding the action at the number of families and children that it will lift out of poverty. From their opposition, a similar spate of outpourings criticising the action and decrying its cost.

The reality is, of course, somewhat different. For those larger families where someone is working, and earning more than 16 times the National Living Wage, it will provide substantial gains. The gains will be even more welcome where families are paying for childcare and the, barely mentioned, increases in childcare support take effect. For those families not working that much and paying rent, it is unlikely they will see any benefit at all. They are already likely to be hit by the Overall Benefits Cap and see no benefit of any notional increase. They will in fact be worse off in real terms as there is no inflation matching increase in the OBC for 2026 to 2027.

That change, and the slight increase in standard Universal Credit rates, being introduced in April wouldn’t seem to justify the dramatic headline in the Telegraph at the weekend. For the last decade and more the message for benefit claimants has been ‘You will always be better off in work’. So when did that change?

“Parent would need £71k wage to match jobless household’s income under Reeves’s system, research finds”

Ah! This is somebody’s research.  An objective, critical piece of work has exposed the flaws in the design of the system and in the implementation and presentation of the system’s delivery.

Families on modest incomes will be £18,000 worse off than jobless parents claiming benefits following Rachel Reeves’s abolition of the two-child cap in the Budget, an analysis has found.

Even better, it’s a rigorous piece of analysis, produced by the Centre for Social Justice and therefore, unquestioningly, adopted by the Telegraph. Nonetheless this figure is surprising and its justification, presumably, clear and accurate.

So, let’s have a look at their comparison.

“For example, an out-of-work family with three children receiving the average Universal Credit housing element, health benefits and PIP is projected to take home around £46,000 a year by 2026/27. For the smaller number of families with five children, that figure rises to £55,000. These households are insulated from the overall benefit cap because two in five families previously subject to the limit are in receipt of health-related payments. That compares with the £28,000 take-home earnings of a family where one adult is working full-time, and another part-time, on the national living wage.”

Here, we assume, are two families identical in every respect except that one family is working and one family is not.  The working family is paid at National Living Wage levels and so is not amongst the highest paid.

That’s a dramatic difference and seems to justify their criticism of the benefits system.

After all, these are families in the same circumstances which is why the comparison is justified.

The same circumstances … except …

… the family on benefits have three children

… the family on benefits have disabilities

… the family on benefits are paying rent.

Perhaps not the most obvious comparison.

The report does not provide much detail about the way in which their figures have been produced, so I’ve had to try to reproduce the basis underlying those to make sense of their ‘comparison’.

(My apologies for the detail below about but I felt that I, at least, wanted to demonstrate the justification for results in case of any challenge. The figures all use the proposed tax, NI and benefit rules and rates for 26/27.)

First, I looked at the figures for the working household.  Their figures say “£28,000 take-home earnings of a family where one adult is working full-time, and another part-time, on the national living wage”.  In the CSJ report, part-time is said to mean 16 hours a week and full time 35.

Their total net earnings will be £30,753.99, rather than the lower £28,000 quoted.  I assume that they have made some deductions for, probably, pension contributions but not mentioned this.

Things were a little more difficult in generating the benefits income for the other family.

Basic Universal Credit, assuming a couple, is straightforward, using the slightly better than CPI increased rates for 26/27. I add Child Benefit on as well at this stage.

Still a long way to go to get to £46,000 a year. The description talks about housing, PIP and health benefits.  To avoid a long description of various combinations of these, I finally managed to get there by using the highest level of PIP daily living, PIP mobility component, the limited capability for work and work-related activities (LCWRA) element in Universal Credit and £220 a week rent at, an extremely fortunate, if unlikely, for them, Local Housing Allowance (LHA) level. I’ve ignored Carer’s Allowance as the overall income would not be affected.

To generate the dramatic figures they use, they have found a way of avoiding the overall benefit cap by making someone severely disabled.  By doing so, they have not only done that but made the out of work income even higher and the comparison even more invidious.

Otherwise, this family would have seen their benefit capped at £22,020 a year, £1,835 a month.

This family, that they have used to compare with the financial resources of a healthy couple, can now be seen to have a member who is not merely severely disabled in need of care but also in receipt of the highest level of help with their mobility needs. They have three children and are paying rent of almost £1,000 a month.

It doesn’t seem fair to leave the comparison at that.  What would the situation be if the working couple were in the same position? PIP, remember, is a benefit that can be received by working people; it’s not a benefit for people who can’t work.

In a surprise, no doubt to the readers of the Telegraph, whose over 3.500 comments on this article are largely united in attacking the generosity of the benefits system, these hardworking people would also qualify for help from the benefits system, despite their earnings.

Their situation, with three children, rent and disability support makes a very different comparison.

In exactly the same circumstances, apart from having earnings, they will get help from the benefits system worth almost £2,700 a month or over £32,000 a year.  They benefit from work by over £16,000 a year so the £18,000 implied disincentive of in the article looks rather different.

Are we going to see a new headline…

“Working families £16k better off than benefit claimants after Budget”

Answers on a postcard, please.

I haven’t carried out the same exercise for the five children example, with even fewer details, given in the article as the results would, broadly, be similar.

The, much more than misleading, figures given in the ‘research’ and enlarged in the article are a sad indictment of a political assault masquerading as accurate reporting.

No doubt, it will have achieved its aim as the message that the benefits system is too generous and workers are punished will be repeated, again by those who believe what they are told and the perpetrators go unchallenged, in the main.

Perhaps, this piece will enlighten a few of those.

Gareth Morgan

Gareth Morgan

December 1^st 2025.