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Labour Budget Raises Universal Credit and Ends Two-Child Cap as Health Top-Up Is Cut for New Claimants

The package is funded by around £26bn of tax rises, drawing Conservative criticism.

Overview

  • Major Universal Credit changes take effect from April 6, 2026, as part of a welfare overhaul set out in the Budget.
  • The standard allowance rises by about 6% from £92 to £98 a week, worth roughly £295 a year for a single person over 25 and about £465 for eligible couples.
  • The two‑child limit on benefits will be abolished at an estimated recurring cost of £3bn a year, with ministers saying the move would lift 450,000 children out of poverty.
  • The LCWRA health element for new Universal Credit claimants will drop from about £94 to £50 a week, with Citizens Advice warning most people not already receiving it will see lower amounts.
  • The Chancellor’s plan is paired with substantial tax increases, which the Conservative leader Kemi Badenoch condemned as making ordinary people pay.