Working people will be protected from unfair price rises with new plans set out by the government today to detect and crack down on companies if they exploit the crisis in the Middle East.
Ministers are concerned that some companies could exploit the crisis to carry out price gouging – when a company puts prices up to an unfair and unjustifiably high level during a crisis, knowing that customer have little choice but to pay.
To deal with this unfair practice, a new anti-profiteering framework is being brought in by the Government and regulators like the Competition and Markets Authority (CMA) to clamp down on price gouging if it takes place.
As part of that, the government will not hesitate to introduce new time-limited, targeted powers for the CMA and other key regulators if that is needed, and the exact powers are being worked through at pace.
The move will further strengthen our world-class competition and consumer protection regime, which is already protecting households, and comes as the CMA have stepped up their monitoring of fuel prices and accelerated their review of fuel margins made by businesses since the conflict began.
The announcement follows the Chancellor and Energy Secretary’s meeting with petrol retailers to discuss what more can be done to support motorists with the cost of living, and the Chancellor is expected to meet with supermarkets and banks to discuss how they can support consumers in the coming days.
A Government spokesperson said:“We are fighting your corner to keep the cost of living down in these uncertain times. We will not allow companies to exploit this crisis to hike their prices to unjustifiable levels.
“Whether at the fuel pump filling up your car or at the till paying for your groceries, we are working with regulators to make sure the price you pay is a fair one.”
The Chancellor will deliver more details later today.
CAMPAIGNERS have welcomed the news that the controversial two-child benefit cap limit is to be scrapped at last.
Poverty Alliance Chief Executive Peter Kelly said: “The Chancellor’s decision to fully scrap the unjust two-child limit is the right thing to do.
For eight years, this cruel policy has severed the link between what families across the country need and the support they are entitled to, pushing children into poverty and limiting their potential. Our children deserve better.
“Campaigners across Scotland have been unified in their demand to scrap the two-child limit and we are pleased that the UK Government has listened, sending a strong message that every child in this country matters.
“The end of this policy must be the starting point of reform which ensures that our social security system truly provides security.
“This decision also frees up money earmarked for the mitigation of the policy in the Scottish budget. Coupled with the additional £820 million allocated to the Scottish Government in this Budget, this will allow further investment in the action we know is needed to meet our child poverty targets, including increases to the Scottish Child Payment.
“Boosting the minimum wage will help low-paid workers who are struggling to cover basic costs. Many are already worried about heating bills.
“While steps to reduce energy costs are welcome, they fall short of a true social tariff that guarantees everyone has access to life’s essentials.
“Much needed investment in home energy efficiency must also be protected to improve homes and secure long-term saving for low-income households.
“The UK Government must raise revenue to invest in our shared national priorities, like tackling child poverty and increasing living standards. It’s right that the Chancellor has turned to those with the biggest assets to contribute more.
“This is a positive step towards building a fairer system of taxation, but we need to go much further, with a bold, renewed approach to tax that puts justice and compassion at its heart.”
Scottish families will benefit from a Budget to cut the cost-of-living, create more high skilled jobs and invest in public services, as the Chancellor reaffirmed her commitment to drive economic growth.
Chancellor announces fair deal for working families with removal of two-child benefit cap, energy bill saving and fuel duty freeze
Scottish industry backed by investments in Grangemouth, Greenock, Leith and Fife
Public services backed with extra £820 million for Scottish Government
Rachel Reeves recognised Scotland’s huge £204 billion annual contribution to the UK economy with investments in Grangemouth, Greenock, Leith and Kirkcaldy, and provided long-term certainty to the oil and gas industry to support North Sea jobs and investment.
Despite wages growing more in the first year of this government than at any point in the 2010s, the Chancellor was clear too many families are still struggling with the cost of living which is why the Budget included a range of measures to cut bills and boost pay packets.
Saying that the fairest way to help people with the cost-of-living was to cut inflation and increase wages, Reeves announced £150 off energy bills, a fuel duty freeze, and national minimum and living wage rises.
The Chancellor announced the removal of the two-child limit. 95,000 children in Scotland will benefit from this change. Funded by tackling welfare fraud and long-overdue reforms to the Motability scheme, it will result in the biggest reduction in child poverty at any Budget this century.
The Chancellor’s Budget also ensured that Scottish public services are fairly-funded, with an extra £820 million for public services in Scotland through the Barnett Formula, on top of a record settlement in June.
Secretary of State for Scotland, Douglas Alexander MP said: “This is a Budget which delivers for Scotland – raising children out of poverty and helping tackle the cost of living for working families with action on energy bills.
“Scrapping the two-child benefit cap will lift thousands of Scottish children out of poverty. Funded by raising online gambling taxes and tackling welfare fraud, it will result in the biggest reduction in child poverty at any Budget this century.
"This is a budget that we were determined to deliver and to make sure address the priorities and the needs of the people of Scotland."
“The UK Government has backed Scotland’s public services with an extra £820 million — on top of the extra annual £9.1 billion already committed at the Spending Review.
“The £14.5 million announced for Grangemouth is also vital investment in Scotland.”
Ms Reeves also announced reforms to modernise the tax system, asking those with broader shoulders to contribute more through long-overdue fair reforms.
Backing Scottish industry
£14.5 million will back Grangemouth’s transition to a hub for low carbon technologies as the UK Government cements Scotland’s place as the home of the UK’s clean energy revolution.
A further £20 million for Inchgreen near Greenock will upgrade the port’s dry dock, creating up to 1,750 jobs.
Up to £20 million will transform Kirkcaldy town centre and waterfront, including the creation of ‘Adam Smith Growth Works’, boosting local business and tourism.
£25 million will be released following the full sign-off of Forth Green Freeport – spanning Leith, Grangemouth and Fife.
To support oil and gas workers, the UK Government is introducing ‘Transitional Energy Certificates’ to manage existing North Sea fields for the entirety of their lifespan, and a new Jobs Brokerage Service – offering end-to-end career transition support.
Tackling child poverty, the cost-of-living and economic inactivity
95,000 children in Scotland will benefit from the removal of the two-child limit.
Raising the National Living Wage by 4.1% and the National Minimum Wage by 8.5% —building on April 2025 increases to the National Living Wage and National Minimum Wage that already directly benefitted 220,000 workers in Scotland.
Uprating Universal Credit Standard Allowance by 6.1%, the first ever permanent real terms increase.
Increasing the State Pension by 4.8% from April 2026, directly raising incomes for 1.1 million pensioners in Scotland.
Extending the fuel duty freeze and 5p cut, saving the average car driver £49 next year.
Unleashing talent and opportunity with a Youth Guarantee package. This will include ensuring every eligible 18-to-21-year-old who has been on Universal Credit and looking for work for 18 months in Great Britain will get a six-month paid work placement.
Public services investment
The Budget provides an extra £820 million for the Scottish Government to spend on its priorities such as education and tackling NHS waiting times— on top of the extra £9.1 billion already committed during the Spending Review.
The Scottish Government continues to receive over 20% more funding per person than equivalent UK Government spending across the rest of the UK reflecting the real costs of delivering services across Scotland’s diverse geography, from the Highlands to the central belt.
Holyrood: ‘Chaotic’ UK Budget fails to deliver for Scotland
Finance Secretary responds to Chancellor’s statement
The UK Budget “fails to deliver” for Scotland and will not move the dial on the cost of living for squeezed households, according to Holyrood’s Finance Secretary Shona Robison.
Responding to the Chancellor of the Exchequer’s statement, Ms Robison said: “This Budget has been absolute chaos from start to finish. Westminster has been consumed with leaks, briefings and out and out incompetence – with Scotland left as an afterthought and families left to pay the price.
“We needed a step change from the UK Government with investment in public services, support for jobs and industry in Scotland and serious action on energy bills. Instead, we got a chaotic mess and the increase in funding for the Scottish Government will not even cover half the cost of the employer’s national insurance contributions brought in this year.
“With UK energy bills £340 higher than the Prime Minister promised even after today’s announcement, the UK Government are not even trying to deliver on the their promises. It is insulting to see the UK Government stand up and trumpet a proposed reduction that does not even cover the increase since they came to office.
“It does not come close to meeting the Prime Minister’s pledge on energy bills – they have not even attempted to keep their promises.
“The electric vehicle tax is the wrong decision for motorists, the climate and for Scotland given its disproportionate impact on rural drivers.
“And there is no serious support for jobs and industry in Scotland. The Energy Profits Levy is to remain in place – risking thousands of jobs in Scotland and in the North East in particular. Yet again, Scotland is an afterthought.
“And while the moves on the two child cap are welcome, they are long overdue and the UK Government has been forced into this position by the Scottish Government and other campaigners. And without a simultaneous change to the benefit cap it falls well short of the bold anti-poverty measures we have been calling for from the UK Government.
“But the complete chaos around this Budget gets to the heart of the fact that we should not be leaving crucial decisions around the economy, public finances and household bills in the hands of a deeply incompetent Westminster UK government. We should take these decisions for ourselves with the fresh start of independence.”
The impact of the increase Employers National Insurance contributions on public services is forecast to cost the Scottish Government at least £2 billion over the next five years.
Responding to the UK Government’s Budget, Poverty Alliance Chief Executive Peter Kelly said: “The Chancellor’s decision to fully scrap the unjust two-child limit is the right thing to do.
“For eight years, this cruel policy has severed the link between what families across the country need and the support they are entitled to, pushing children into poverty and limiting their potential. Our children deserve better.
“Campaigners across Scotland have been unified in their demand to scrap the two-child limit and we are pleased that the UK Government has listened, sending a strong message that every child in this country matters. The end of this policy must be the starting point of reform which ensures that our social security system truly provides security.
“This decision also frees up money earmarked for the mitigation of the policy in the Scottish Budget. Coupled with the additional £820 million allocated to the Scottish Government in this UK Budget, this will allow further investment in the action we know is needed to meet our child poverty targets, including increases to the Scottish Child Payment.”
Commenting on the UK Government’s Budget response, Debbie Horne, Scotland Policy and Public Affairs Manager for Independent Age said: “The Autumn Budget was an opportunity to address pensioner poverty across the UK. However, the UK Government has sadly missed the chance to take action on an issue that now affects almost two million older people across the UK, including 160,000 pensioners in Scotland.
“While we welcome the retention of the Triple Lock, this measure alone does not go far enough for older people on the lowest incomes who are living across Scotland in cold homes and with not enough money to live on.
“We continue to call on the UK Government to increase the Warm Home Discount to ease the burden of escalating bills, to support older private renters by uprating Local Housing Allowance so no one has to make dangerous sacrifices to pay their rent, and to boost income through a comprehensive take-up strategy for entitlements, including Pension Credit.
“The absence of meaningful action to address later-life poverty will leave many older people on a low income in Scotland feeling forgottenand many will be worried about losing more of it in tax, because of the extension of the freeze on personal tax allowances to 2031, a year longer than was expected.
“We estimate that without decisive government intervention almost 190,000 pensioners in Scotland could be in poverty by 2040. Worryingly, nothing in this Budget suggests we are being steered away from this frightening outcome.”
Mary Glasgow, Chief Executive of Children First, Scotland’s national children’s charity said: “We welcome the UK Government’s decision to scrap the two-child limit as outlined in the Office for Budget Responsibility report. This is long overdue and frees up Scottish Government budget for other crucial support for children and families.
“Poverty has a devastating impact on children’s mental and physical health, development, happiness and ability to learn that can last a lifetime.
“Both governments must now work together to build on progress and meet the legal target to reduce child poverty in Scotland. Families need a stronger social security offer, for example, through the Scottish Child Payment and whole family support across Scotland to give every family the financial, practical and emotional help they need to tackle the root causes of poverty.
“Children can’t wait. The Scottish Government must use this opportunity to go further and faster in their stated mission to eradicate child poverty.”
Children First’s manifesto for the 2026 Holyrood elections calls on the next Scottish Government to deliver a comprehensive offer of whole family support to tackle child poverty and give every family the emotional, practical and financial support they need.
Helen Barnard, director of policy at Trussell, said: “Trussell is delighted to see the Chancellor take this bold step which will protect hundreds of thousands of children from growing up facing hunger and hardship. She has listened to the families and food banks across the UK who have been imploring her to act.
“The cruel two-child limit has driven countless families into hardship, forced to turn to food banks to survive. Today’s announcement of its full and swift removal will help ensure all our children have the best possible start in life, ease pressure on public services, and help to boost our economy.
“This government came to power promising to end the need for emergency food and reduce child poverty. Removing the two-child limit will make a vital and significant contribution towards delivering on those manifesto commitments.
“This move will pull 470,000 children out of severe hunger and hardship by 2027 and ease pressure on food banks throughout the UK.
“The government has built on positive steps in strengthening support for people facing severe hunger and hardship. But this cannot be the end. Food bank need remains well above levels five years ago and many people are still struggling to afford the essentials.
“We need more bold choices to transform lives across our communities.”
The Chancellor will deliver a Budget later today [26 November] that takes the fair and necessary choices to deliver on the Government’s mandate for change.
It will include action to cut NHS waiting lists, cut debt and borrowing, and cut the cost of living to secure a strong future for the country, built on fairness and fuelled by growth.
Action to keep prescription costs under £10 (in England – Ed.), freeze rail fares for the first time in 30 years and increase the National Minimum Wage and National Living Wage by £1,500 and £900 respectively has already been confirmed to put more money in people’s pockets at this Budget.
Investment for 250 Neighbourhood Health Centres (in England – Ed.) has also been confirmed as part of the Chancellor’s commitment to slash NHS waiting lists further and end the postcode lottery of healthcare access.
Ahead of her Budget speech, Rachel Reeves said:“Today I will take the fair and necessary choices to deliver on our promise of change.
“I will not return Britain back to austerity, nor will I lose control of public spending with reckless borrowing.
“I will take action to help families with the cost of living…cut hospital waiting lists…cut the national debt.
“And I will push ahead with the biggest drive for growth in a generation.
“Investment in roads, rail and energy. Investment in housing, security and defence. Investment in education, skills and training.
“So together, we can build a fairer, stronger, and more secure Britain.”
“GENERATION DEFINING” BUDGET MUST DELIVER FOR WORKERS
Scotland’s largest trade union body has issued a stark warning ahead of the Chancellor’s budget calling on Rachel Reeves to “deliver for workers” as the UK Government sets out, what the STUC call, a “generation defining” budget.
The Scottish Trades Union Congress (STUC) has set out five tax demands ahead of the statement, including actions on wealth taxes, bank profits and a “settling up” tax for those moving wealth and assets abroad.
The trade union body, as part of the wider Scotland Demands Better campaign, has also reiterated the call to scrap the two child-benefit cap in a move STUC General Secretary Roz Foyer said was “long overdue”.
The STUC is further calling for increased investment in publicly owned energy as well as direct support for workers in carbon intensive sectors such as those in Grangemouth and Mosmorran.
Commenting, STUC General Secretary Roz Foyersaid: “The upcoming statement from the Chancellor is generation defining. It will signal to all whether the UK Government will continue to adhere to self-imposed financial rules and chaotic quick fixes, or whether they will invest in the public services and the industries and jobs of the future, delivering for workers with bold, radical policies to redistribute wealth.
“We’ve set out how the Chancellor can target those with wealth and assets and use it for the public good. For too long Labour Government policy has been about meeting self-imposed fiscal rules rather than setting out a bold plan for public sector-led growth.
“That must change. We must see, once and for all, the long overdue scrapping of the two-child benefit cap in addition to targeted action on reforming Capital Gains Tax. The Chancellor must also reign in the wild-west of banking profits, raising the surcharge from 3% to 35%, potentially netting £50 billion over four years.
“The people of Scotland and the wider United Kingdom voted for change. It’s high time it was delivered and the Chancellor simply cannot afford to waste this opportunity come Wednesday.”
The Chancellor is expected to announce that 13 million pensioners are set to benefit from an above inflation rise to the State Pension next April.
Those on the full rate of the new State Pension are set to receive over £550 a year more.
Pensions boost comes ahead of the Budget where the Chancellor will take the fair choices to cut NHS waiting lists, cut national debt and cut the cost of living.
13 million pensioners are set to see their State Pension increase faster than inflation next April thanks to the Government’s commitment to the Triple Lock.
From next April the rate of the full new State Pension is expected to increase to just over £240 a week.
This is an increase worth over £550 a year, an extra £120 compared to what it would have been if it had been uprated only by inflation. The full basic State Pension is expected to rise by around an extra £440 a year.
Tackling the cost of living is at the centre of this week’s Budget, and this announcement comes following government action to freeze rail fares and prescription fees next year saving working families millions of pounds. Government is also cracking down on ticket touts that will cut costs for music lovers across Britain.
At the Budget the Chancellor will go even further to bring down bills, tackle inflation, and grip the cost of living.
Chancellor of the Exchequer Rachel Reeves said:“Whether it’s our commitment to the Triple Lock or to rebuilding our NHS to cut waiting lists, we’re supporting pensioners to give them the security in retirement they deserve.
“At the Budget this week I will set out how we will take the fair choices to deliver on the country’s priorities to cut NHS waiting lists, cut national debt and cut the cost of living.”
The government ‘is committed to supporting pensioners’, and this boost will ensure the State Pension remains the foundation of a secure retirement. The Triple Lock guarantees that the State Pension increases annually by the highest of inflation, average earnings growth or 2.5 per cent.
This comes alongside other support for the most vulnerable pensioners through Pension Credit, worth on average £4,300 a year, and Winter Fuel Payments for nine million pensioners in England and Wales with an income of, or below, £35,000 a year.
Government to crackdown on those not paying employees National Minimum Wage
Set for more regular public naming and shaming employers breaking the rules
This comes after Government introduces the biggest upgrade to workers’ rights and enforcement for a generation
The Chancellor is expected to announce reforms to protect those on the National Minimum Wage, ensuring that no employer can exploit vulnerable workers.
As part of these plans, the Government will introduce more regular naming and shaming rounds – publicly naming employers found to have broken minimum wage rules and clearing the case backlog inherited by the previous government.
These changes will mean businesses breaking the rules will have no place to hide, and those on the minimum wage will be further protected by this Government.
This comes as the Chancellor is set to deliver a Budget that makes the fair choices to deliver on the country’s priorities to cut NHS waiting lists, cut national debt and cut the cost of living.
Last month 500 employers failed to pay the minimum wage to around 42,000 of the country’s lowest-paid workers. Big name brands were among those forced to reimburse employees and faced fines totalling £10.2 million for breaking the rules.
The Government is sending a clear message that it will not tolerate those who short-change their workers, regardless of their size or sector.
This action comes as the Government introduces the biggest upgrade to workers’ rights and enforcement for a generation through its Plan to Make Work Pay, which is set to directly benefit around 15 million workers – half of all UK employees.
An HMT source said: “This Government is cracking down on unscrupulous employers to protect the country’s lowest paid workers and ensure fair pay for hard work.
“We are sending a clear message – those who short-change their staff will not be allowed to hide.”
As part of the government’s drive to bring down the cost of living, the Chancellor has written to the Competition and Markets Authority (CMA) urging them to launch a market study into private dentistry costs and practices.
There are increasing concerns that patients are paying more than they should because of hidden costs, overtreatment and lack of information on price, ownership and quality of treatment.
It comes alongside reports of private practices offering to take on children of customers as NHS patients only if parents sign on as private patients.
The Chancellor also informed the CMA that following their investigation into petrol forecourts and recommendations to bring greater price transparency, Motorists will start to see data in their mapping apps, satnavs and price comparison websites which will let them know where to get the best price at the pump for fuel in their local area early next year.
This scheme was a recommendation made by the Competition and Markets Authority after they found that the amount retailers make in profit on every £1 spent on fuel has more than doubled at some supermarkets, with similar increases at other forecourts.
During this time, this government has kept fuel duty frozen to support households and businesses, which suggests that savings on fuel duty have not been passed onto customers
Fuel providers will have to report changes to fuel prices in near real time so that savvy drivers can compare to get the best price. Government officials estimate that this could knock £40 a year off a household’s annual fuel bill or up to 6p a litre.
With prices openly available, this is also an incentive for fuel providers to offer drivers more competitive prices.
The Chancellor also confirmed that the government is ready to act on the CMA’s recent investigation into the veterinary sector, with further details due to be set out in due course
This comes as the Chancellor prepares for the Budget next week of which tackling the cost of living is a key priority while also focusing on continuing to cut waiting lists and bring down the national debt.
Chancellor of the Exchequer Rachel Reeves said:“The scourge of hidden costs, lack of transparency and overtreatment has blighted families in need of dental treatment for too long.
“That’s why I want to see urgent action taken to help reduce prices, whilst the cost of living still puts pressure on families across the country.
“At next week’s Budget I’ll set out the fair choices I will take to deliver on the public’s priorities: cutting NHS waiting lists, cutting national debt and cutting the cost of living.”
One of the key decisions that UK Ministers will be making ahead of Rachel Reeves announcing the Budget later this month is what to do about the two-child limit (write Fraser of Allander Institute’s SPENCER THOMPSON and HANNAH RANDOLPH).
This policy, which limits Universal Credit to the first two children in a family, has been widely criticised for driving up child poverty rates. And given that the UK Government has pledged to reduce child poverty, with the publication of its child poverty strategy expected sometime around the Budget, the pressure is on to abolish the policy.
The Scottish Government has committed to mitigate the two-child limit by introducing a new benefit, the Two-Child Limit Payment (TCLP). If the two-child limit is abolished, this payment would no longer be needed, freeing up resource for the Scottish Government. The First Minister has pledged that the savings would be spent on additional measures to tackle child poverty, which he has stated is the Scottish Government’s top priority.
How much would the Scottish Government save?
The Scottish Fiscal Commission has forecast the TCLP will cost £155m in 2026-27. This represents the amount that the Scottish Government will directly save if the two-child limit is abolished.
There would however be some offsetting costs to the Scottish Government, coming through two main channels. First, removing the two-child limit would push more families onto the Benefit Cap – unless this was also abolished – which the Scottish Government mitigates through Discretionary Housing Payments.
And second, it would bring more families onto Universal Credit, namely those whose incomes are just too high to be entitled with the two-child limit in place.
These families would in turn become eligible for devolved benefits that are linked to receipt of Universal Credit, including the Scottish Child Payment, raising spend on these benefits.
We estimate that these spillovers would amount to around £34m in 2026-27.
Whether this cost is met from within the £155m pot or counted separately is a political question. The fiscal context, which will become even more challenging if the UK Government chooses to raise income tax in the rest of the UK, may encourage the former choice. But this would likely be seen by campaigners as penny pinching at a time when urgent, ambitious action is needed to tackle child poverty.
Even with the two-child limit abolished, we would still be a long way off meeting the statutory child poverty targets in 2030 – and these are approaching quickly, with the final Delivery Plan due in March.
How could the savings be spent?
If the spillover costs from the abolition of the two-child limit (£34m) were funded from within the TCLP budget (£155m), that would leave £121m to be spent on other policies. We have modelled the child poverty impacts of five illustrative policy options, all of which we estimate will cost about this much in 2026-27 assuming no changes in behaviour or administrative costs. Clearly, a £155m policy could go further than a £121m one, so this represents a conservative scenario.
Impacts of policy options on relative child poverty after housing costs, 2026-27
Option
Raising the Scottish Child Payment to…
…and…
… would reduce child poverty by about…
1
£35
–
1ppt
2
£31
extending Scottish Child Payment from children under 16 to include dependents aged 16-19
1ppt
3
£34
increasing Best Start Grants and Best Start Foods by the same proportion
1ppt
4
£30
extending universal Free School Meals from P1-P5 to include P6-P7
–
5
£34
increasing the maximum discount on water and sewerage charges from 35% to 100% for families with children
1ppt
Source: FAI modelling using UKMOD. Notes: Dash indicates that impact is too small to report. Scottish Child Payment is currently projected to be about £28 per child per week in 2026/27. Free School Meals count as income for purposes of measuring poverty. Technical details of modelling available on request.
The impacts of these policies would be over and above the impacts of the two-child limit being abolished, which we estimate to be around 1 percentage point in 2026-27. All else equal, each of the options would reduce relative child poverty after housing costs by a further 1 percentage point in 2026-27, representing an additional 10,000 children who would be kept out of poverty.
The exception is Option 4: extending universal Free School Meals to all primary school students would not have a measurable impact on aggregate child poverty levels, even when coupled with an increase to Scottish Child Payment of around £2 per child per week.
Although most of the policies are similar in terms of their aggregate impacts, under the surface there are some important differences:
Option 1 is the simplest, but does involve steepening the so-called ‘cliff edge’, whereby households lose their entire Scottish Child Payment award if their incomes increase beyond the point at which they are entitled to Universal Credit – which could incentivise them to forego opportunities to earn more. This option also increases Scottish Child Payment for recipients who are not in poverty, including those kept out of poverty by the payment at its current rate.
Option 2 is arguably preferrable in these respects, since it extends Scottish Child Payment to families who are not currently eligible while also benefitting many multi-child families who currently are, with the overall cliff edge not steepening as much. However, it does favour older children, when families with young children have been identified as a priority group.
Option 3 targets younger children specifically – Best Start Foods is available until the child turns three, while Best Start Grants are paid to children at various points until the child starts school. This option would also channel some of the TCLP savings into one-off grants as opposed to recurring payments, which may be less distortionary when it comes to work incentives even though they have similar eligibility criteria as the Scottish Child Payment. By the same token, their one-off, targeted nature limits their direct impacts on overall levels of child poverty.
Option 4 removes a cliff edge of sorts in the form of the means test for Free School Meals that applies to children in Primary 6 and 7, who are typically between 10 and 11 years old. Although this policy would benefit some households that lie just above current eligibility, it would primarily benefit those with higher incomes. On the other hand, the distributional impacts would depend on take-up, and there could be wider benefits such as a reduction in stigma.
Finally, Option 5 is unique in featuring a gradient across households – both because discounts on water and sewerage charges are proportionately linked to Council Tax Reduction, which tapers with income, and because these charges themselves vary by council tax band. Other changes to Council Tax Reduction would also be possible, but these will tend to extend entitlement to higher-income households rather than just benefitting current recipients, most of whom already receive a 100% reduction.
These are by no means the only options available, but they highlight some of the factors that the Scottish Government will need to weigh up when reallocating the TCLP budget, along with the potential impacts of doing so, in a scenario where the two-child limit is abolished.
Time will tell
Whether or not that that scenario will transpire remains unclear. It is possible that the UK Government will take an intermediate approach by relaxing the two-child limit in some way without abolishing it entirely – for example by exempting certain groups, moving to a three-child limit, or introducing a taper.
Mitigating the remainder of the limit would cost less than the planned TCLP – meaning there would still be some savings – but may require more time to be designed and implemented. It is also possible that the Budget will include a commitment to eventually abolish the two-child limit, but not in the coming year, meaning the TCLP would be needed temporarily.
For now, all eyes are on Rachel Reeves – but the focus will quickly turn to the Scottish Government. Keep an eye on our website and social media for more analysis of the UK and Scottish Budgets over the next few months!
Social Justice Secretary urges Chancellor to remove two-child limit and benefit cap
Ahead of a series of meetings in London today with child poverty charities, Social Justice Secretary Shirley-Anne Somerville has urged the UK Government to take action to tackle child poverty in its forthcoming Budget, including immediately scrapping the two-child limit and the benefit cap.
Ms Somerville has called on the UK Government to fully scrap the two-child limit on benefits, which pulls 109 children into poverty every day, while also removing the benefit cap at the same time, which limits the total amount of benefit a person can receive.
Subject to parliamentary approval, the Scottish Government plans to mitigate the two-child limit from March next year, through a new Two-Child Limit Payment worth £292.81 a month for eligible recipients. Estimates show this will keep 20,000 children out of relative poverty next year.
The Scottish Government is spending £100 million this financial year, through the Discretionary Housing Payment scheme, to mitigate the benefits cap as far as possible within devolved powers.
Ms Somerville said: “Once again, I am making it clear that the UK Government must fully scrap the two-child limit and the benefit cap as soon as possible. These policies should be confined to the darkest days of austerity and the UK Budget must bring this period to an end.
“In a country as rich as ours, no child should have to live in poverty. The UK social security system is supposed to be there to ensure a basic standard of living, reduce poverty and inequality and help people through the toughest of times.
“That is why the Scottish Government has made bold decisions – like introducing the Scottish Child Payment and investing in our devolved social security system. Child poverty rates are now lower in Scotland than the rest of the UK and relative child poverty rates in Scotland are at their lowest level in almost a decade.
“I call on the Chancellor to follow our example by scrapping the caps, match the Scottish Child Payment and introduce an essentials guarantee, which would ensure Universal Credit actually covers the costs of life’s essentials, such as food and fuel.”
There have been strong indications that the Chancellor will indeed scrap the Two Child Linit when she announces her Budget later this month.
TODAY (Tuesday 4 November), the Chancellor, Rachel Reeves, will ‘vow to take the fair choices to deliver strong foundations for our economy and secure our country’s future’.
In a speech delivered in Downing Street this morning, the Chancellor will address the country as she lays out the economic choices she will take at the Budget later this month to cut hospital waiting lists, cut the national debt and cut the cost of living.
The Chancellor is expected to say: “Later this month, I will deliver my second Budget as Chancellor.
“At that Budget, I will make the choices necessary to deliver strong foundations for our economy – for this year, and years to come.
“It will be a budget led by this government’s values, of fairness and opportunity and focused squarely on the priorities of the British people:
“Protecting our NHS, reducing our national debt and improving the cost of living.
“You will all have heard a lot of speculation about the choices I will make.
“I understand that – these are important choices that will shape our economy for years to come.
“But it is important that people understand the circumstances we are facing, the principles guiding my choices – and why I believe they will be the right choices for the country.“
Chancellor’s ‘Scene Setter’ speech ahead of Budget 2025
Later this month, I will deliver my second Budget as Chancellor of the Exchequer.
At that Budget, I will make the choices necessary to deliver strong foundations for our economy.
My Budget led by this government’s values of fairness and opportunity…
…and focused entirely on the priorities of the British people:
Protecting our NHS,
reducing our national debt,
and improving the cost of living.
There is a lot of speculation about the choices that I will make.
I understand that – these are the important choices that will shape the future of our country for years to come
I want people to understand the circumstances we are facing,
the principles guiding my choices,
and why I believe they will be the right choices for our country.
We are a country with considerable economic strengths:
An open, trading economy,
A global hub for cutting-edge industries from AI to Biotech,
With world-leading universities and scientific institutions,
and a talented and a committed workforce.
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At the Budget last year, I fixed the foundations:
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I put the public finances back on a firm footing,
Provided an urgent cash injection into our faltering public services,
And began rebuilding our economy.
But since that Budget,
The world has thrown even more challenges our way.
The continual threat of tariffs has dragged on global confidence –
Deterring business investment, and dampening growth.
Inflation has been too slow to come down as supply chains continue to be volatile –
Meaning that the cost of everyday essentials remains too high.
And the cost of government borrowing has increased around the world –
A shift that Britain – [political redaction] – has been particularly exposed to.
And in an uncertain world, we also face pressure to increase our defence spending – and it is right that we do that…
…protecting ourselves from hostile actors and supporting our allies.
And there are other pressures on the public finances.
The Prime Minister, the Secretary of Work and Pensions and this whole government are committed to reforming our welfare state…
…so that it is not a system that counts the cost of failure…
…but one that invests in success and protects those who need it most.
There is nothing progressive about refusing to reform a system that is leaving one in eight young people out of education or employment.
So, we have begun the job of creating a system that protects people who cannot work and empowers those who can.
And there are longer-term challenges too:
That feeling, shared by millions of people across the country that the economy isn’t working as it should.
Alongside the Budget this month,
The Office for Budget Responsibility – the UK’s public finance watchdog – will set out the conclusions of their review of the supply side of the UK economy.
I will not pre-empt those conclusions…
…but it is already clear that the productivity performance [political redaction] is weaker than previously thought.
A less productive economy is one that produces less output per hour worked.
That has consequences for working people – for their jobs and for their wages…
…and it has consequences for the public finances too, in lower tax receipts.
It’s not a question of how hard people work –
Poor productivity means we are putting in more and getting less out.
It means too many businesses and workers don’t have the tools they need:
Trains that run on time,
Broadband that’s fast and reliable,
Access to new technologies,
Or proper training so people have the right skills for the job.
For a long time, commentators have talked about Britain’s ‘productivity puzzle’.
But it’s not a puzzle.
The causes of our economic underperformance are well understood.
The chronic stop-go cycle of public investment has left us with roads full of potholes, high energy prices and unstable conditions for vital business investment in skills and technology…
…and long-term failure to invest in our regions has built growth on a narrow base – with some parts of the country forging ahead while others fall behind.
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All this meant that when the pandemic arrived our country was under-prepared…
…our public services weakened and our economy fragile.
And we finished the pandemic with higher death rates and higher debt than our peers.
This isn’t about relitigating old choices.
It’s about being honest with people about the consequences those choices have had.
It is my job to deal with the world as we find it…
…not the world as I would wish it to be.
Not to commentate or speculate,
But to act.
In my Mais lecture last year, I set out our plan for solving our productivity problem through a programme of stability, investment and reform,
And when I became Chancellor, I began to put that plan into action.
Stabilising our public finances –
Making the tax and spending decisions to get debt down and to fund our public services sustainably.
Changing the fiscal rules to increase public investment by £120bn over the course of this Parliament…
…and crowding in private investment too…
For road and for rail, for housing and nuclear power.
And reforming our economy:
Ripping up the planning rules so we can build housing and infrastructure across the country…
Bringing the brightest and best to our shores with a new visa regime…
And signing trade deals with the EU, the US and India to help our businesses export around the world.
We have begun to see the results of those plans…
…in falling interest rates and falling NHS waiting lists…
…in rising wages and rising investment.
But I know that real progress takes time.
Our growth was the fastest in the G7 in the first half of this year – but I don’t expect anyone to be satisfied with growth of 1%.
I’m not – and I know there is more to do.
The first part of our planning reforms will add an additional £6.8bn to the size of our economy in the next five years,
But the next part – our planning bill – must complete its passage through Parliament before it can make a difference.
Interest rates, which rose from 0.1% to 5.25% in the last Parliament, have now been cut five times…
…but at 4% they are still a constraint on business borrowing and a burden on family finances.
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…and the choices I make in the Budget this month will be focused on getting inflation falling…
…and creating the conditions for interest rate cuts to support economic growth and improve the cost of living.
I understand the urge for easy answers.
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The UK’s national debt now stands at £2.9trillion:
Equivalent to 95% of GDP.
[political redaction] our borrowing costs were in the middle of the pack compared to other advanced economies…
…but now, we have the highest borrowing costs of any G7 country.
Today, 1 in every £10 of taxpayer’s money is spent on debt interest.
Not on paying that debt down…
…but just paying the interest to our creditors.
At the Budget last year, I changed the fiscal rules to strike a careful balance:
To invest more in capital alongside a credible plan to grow our economy and bring debt down within this Parliament.
That was the right decision to break the cycle of low productivity and low growth.
But that additional investment can only be delivered because markets know that my commitment to the fiscal rules is ironclad.
Some people say we should just sidestep those rules…
…that we can borrow more without consequences by simply reclassifying areas like defence or education.
But no accounting trick can change the basic fact that government debt is sold on financial markets.
There are limits on the price that banks, hedge funds and pension funds are willing to pay for our debt…
…and we are competing constantly with other countries also selling debt .
The more we try and sell, the more it will cost us.
It is important that everyone – the public and politicians – understands that reality.
The less we spend on debt interest, the more we can spend on the priorities of working people…
…our NHS, our schools, our national security…
…the public services essential to a decent society and a strong economy.
At the Budget last year, I provided our public services with a vital cash injection…
…and I’m proud of that choice:
Proud that it [political redaction] that is providing record investment in our NHS getting waiting lists down by over 200,000 since the election,
Proud that it [political redaction] that is investing in our children through the rollout of free breakfast clubs and free school meals,
And proud that it [political redaction] that is funding our armed forces and remains resolute in our NATO commitments.
The alternative is to row back on those investments:
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Stifling our economic growth,
And weakening Britain’s foundations in an unstable world.
I will not repeat those mistakes.
But if we want strong public services in the decades to come, then we must recognise that productivity and efficiency are not only a challenge for business, but they are a challenge for our public sector too.
At the Spending Review I announced £14bn of efficiencies per year to be delivered by 2029:
Cutting government spend on consultancies,
Getting rid of bureaucratic quangos and regulators,
And driving efficiency through AI and digital technologies.
But I know that there is more to do,
In the Budget and beyond, I will continue to drive for more productive and more efficient public services, right across government…
…making savings and rooting out waste wherever I find it.
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When I was appointed Chancellor, people put their faith in me to take our country forward…
…not to be swayed by political convenience…
…not to always do what is popular, but to do what is right.
At the Budget, I will continue to deliver on the priorities of the British people:
Cutting NHS waiting lists, cutting the national debt and cutting the cost of living.
And in the context of the long-term challenges on our productivity and heightened global uncertainty…
…any Chancellor of any party would be standing here today, facing the choices that I face.
The difference is in the priorities – and the values – that will guide those choices:
Mine will be a Budget for growth with fairness at its heart…
…and a Budget that supports businesses – to create jobs and to innovate.
As I take my decisions on both tax and spend…
…I will do what is necessary to protect families from high inflation and interest rates…
…to protect our public services from a return to austerity…
…and to ensure that the economy that we hand down to future generations is secure, with debt under control.
If we are to build the future of Britain together, we will all have to contribute to that effort…
…each of us must do our bit for the security of our country and the brightness of its future.
There is a reward for getting these decisions right,
To build more resilient public finances – with the headroom to withstand global turbulence…
…giving business the confidence to invest and leaving government freer to act when the situation calls for it,
To continue to invest in our infrastructure and our industry to build a stronger economy,
And to get the cost of borrowing down – spending less on debt interest, and more on schools and our health service.
The Office for Budget Responsibility will make their forecasts at the end of this month…
…but let’s be clear about what forecasts are:
They are not visions of the future…
…they are a look in the rear-view mirror.
The OBR rightly make their predictions based on the data that has gone before…
…but I do not believe that our past has to determine our future…
…or that a stuttering economy, poor productivity and falling living standards is somehow Britain’s destiny.
A brighter future is within our grasp.
We were elected to break with the cycle of decline…
…and this government is determined to see that through.
So we will go further and faster, on planning, on the industrial strategy, on reforming to regulation…
…all to deliver growth throughout our economy, in all parts of our country.
We will bear down on waiting lists, on the cost of living, and on the national debt which compound these challenges…
…and when that requires hard choices, we will act – guided by the interests of working people.
We were elected on a commitment to put country before party; the national interest before political calculation…
…and, whatever challenges come our way – whatever challenges come my way – we will not be swayed from that.
At the Budget this year, I will continue to build the strong foundations to secure Britain’s future.
For a fairer Britain
A more prosperous Britain
A Britain with an economy that works for everyone.
