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Universal Credit rule change confirmed but DWP urged to axe benefit cap to ‘lift children out of poverty’
Labour has confirmed a major rule change to Universal Credit, which is set to impact 500,000 pupils in schools, but economists are suggesting the Department for Work and Pensions (DWP) takes further action to end child poverty.
The Institute of Fiscal Studies (IFS) has noted that scrapping the current benefit cap on payements would be more beneficial in reaching this goal as it is “lower cost per child”.
Earlier this week, the Government unveiled plans to extend free school meal eligibility to all children in England whose families claim Universal Credit, scrapping the existing £7,400 household income threshold.
The expansion represents a significant shift in policy, following Labour’s proposed cuts to benefit payments, that will ultimately provide meals worth £490 annually per child.
The DWP has confirmed a rule change to Universal Credit
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However, the immediate impact will be considerably smaller than the long-term projections. Due to transitional protections introduced in 2018, which allow children to retain their free meal entitlement even when family circumstances change, only around 500,000 pupils will benefit when the policy takes effect.
The short-term cost is estimated at £250million, substantially less than the eventual £1billion price tag.The transitional protections, which formally ended in April this year, continue to shield existing recipients until they complete their current phase of education.
As a result, this means children already receiving free meals in primary school retain eligibility until Year 6, whilst secondary pupils keep their entitlement through Year 11.
These arrangements have significantly inflated current recipient numbers beyond what standard eligibility criteria would permit. Consequently, the government’s expansion will reach far fewer families initially than its ultimate scope suggests.
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The policy will primarily benefit families with children aged eight to 16, as pupils in Reception through Year 2 already receive universal infant free school meals.
When fully implemented, the scheme will extend free meals to 1.7 million children between Year 3 and Year 11.
The long-term impact is projected to lift approximately 100,000 children out of poverty. The policy’s scope includes school-based nurseries and further education provision, though these affect relatively small numbers of young people.
Additional funding of around £50million may be allocated to devolved governments, depending on specific funding arrangements.
The DWP is making dramatic changes to its services, including to Jobcentres PA
The expansion targets families on low incomes who previously fell just above the eligibility threshold. Each benefiting child will gain support worth approximately £500 annually, providing meaningful financial relief to households struggling with living costs.
Christine Farquharson, an associate director at IFS, noted that whilst the long-term benefits are substantial, “in the short run, today’s announcement will both cost considerably less (around £250million a year) and benefit considerably fewer pupils (the government’s estimate is 500,000 children).”
She emphasised that “today’s announcement will not see anything like 100,000 children lifted out of poverty next year”.
Farquharson acknowledged the policy’s merits, stating it “will be both cheaper and more targeted towards poorer families” compared to universal provision. However, she suggested that “if the Government’s main interest is to reduce child poverty, there are other measures – such as lifting the two-child limit – that would have a lower cost per child lifted out of poverty.”
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