Two-Child Benefit Cap May Be Scrapped - Could Ordinary Families Gain £20,000 More Each Year?
- TBA
- Oct 15
- 4 min read
In 2025, global population growth has entered a new stage of observation – many countries are seeing a marked decline in fertility rates, and the world is stepping into a ‘low fertility era’.
As the demographic dividend gradually fades, numerous countries are now introducing new policies to encourage childbirth.
Global fertility rates continue to decline
According to the latest analysis from Pew Research, the global average total fertility rate (TFR) has fallen from about 5.8 in 1950 to 2.24 in 2025, meaning women give birth to an average of 2.24 children. By 2050, this figure is expected to drop below 2.1, which would lead to population growth stagnating or even turning negative.
In North America, Europe, and other developed regions, fertility rates remain persistently low. South Korea has seen a slight rebound to 0.75, yet it remains the lowest in the world.
A United Nations Population Fund survey shows the main reasons why people of childbearing age choose not to have children include:
Economic pressure: 39%
Housing pressure: 19%
Work-related stress: 21%
In other words, the issue is not only not wanting to have more children, but also ‘wanting to but not being able to afford it’ or ‘wanting to raise them, but lacking the right conditions’.
This highlights that low fertility rates are not just a matter of population policy, but also reflect wider social structures.
Compare and contrast - childbirth incentive policies in China vs the UK
China: Direct Child-Rearing Subsidies
From 1 January 2025, families legally eligible to give birth, with children under the age of three, can receive an annual allowance of CNY 3,600 per child for up to three years, totalling CNY 10,800.
This policy covers not only babies born after 2025 but also children born earlier who are still under three, with payments calculated on a pro-rata basis. It is expected to benefit over 20 million families, who will receive this ‘child-rearing red packet’.
United Kingdom: Plans to Scrap the Two-Child Benefit Cap
To boost fertility rates, the UK set up an independent commission three years ago, which ultimately proposed scrapping the two-child benefit cap in order to reduce poverty and improve life chances for the poorest children.
The cap, introduced in 2017, means that families claiming Universal Credit do not receive the annual benefit of around £3,500 for a third or subsequent child.
Although Labour backbenchers and anti-poverty campaigners widely opposed the cap, the government at the time repeatedly argued that the financial burden – estimated at about £3 billion a year – was too high to justify removing it.
Despite continuing controversy, Britain’s system of family benefits still ranks at a medium-to-high level globally.
Unlike China’s direct subsidies, the UK has designed a package of measures that aim to provide layered and targeted support, including:
Maternity Leave and Pay
Up to 52 weeks’ maternity leave, with 39 weeks paid. The first 6 weeks are at 90% of the mother’s average earnings, followed by 33 weeks at either £187.18 per week or 90% of earnings, whichever is lower. Those not meeting eligibility for statutory maternity pay may claim Maternity Allowance, ranging from £27 to £187.18 per week.
Child Benefit
£26.05 per week for the first child, £17.25 for each subsequent child, paid directly into the household account (subject to income and personal circumstances).
One-Off Maternity Grant
Families with newborns can apply for a £500 Sure Start Maternity Grant (in Scotland, the equivalent is the Best Start Grant).
Parental and Neonatal Leave
Fathers and partners receive two weeks of paid paternity leave. Parents can also share leave through shared parental leave.
From 6 April 2025, if a baby requires neonatal intensive care, parents will be entitled to up to 12 weeks’ paid leave, available from the first day of employment.
Childcare and Support Services
Eligible working parents with children aged nine months and above can access a set number of free childcare/early education hours per week. Low-income families may also qualify for extra childcare support and vouchers.
Broader Demographic Concerns
No matter how governments expand benefits, it seems increasingly difficult to change the modern trend choosing not to have children.
Falling fertility rates, combined with longer lifespans, mean each working-age person faces a heavier financial burden in supporting retirees.
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