Child Benefit and Guardian’s Allowance Up-rating Order 2026

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Child Benefit and Guardian’s Allowance Up-rating Order 2026.

These regulations are made each year to uprate child benefit and the guardian’s allowance and set the national insurance contribution rates, limits and thresholds.

First, the Child Benefit and Guardian’s Allowance Up-rating Order 2026 sets the rates for both child benefit and the guardian’s allowance, and will ensure that these benefits are uprated by inflation in April 2026. Secondly, the Social Security (Contributions) (Rates, Limits And Thresholds Amendments, National Insurance Funds Payments and Extension of Veteran’s Relief) Regulations 2026 set the rates of certain national insurance contributions classes and the level of certain thresholds for the 2026-27 tax year. The regulations also make provision for a Treasury grant to be paid into the National Insurance Fund if required, for the same tax year, through a transfer of wider government funds to the National Insurance Fund. Finally, they also extend the veterans’ employer NICs relief for two years until April 2028.

I turn first to the details of the Child Benefit and Guardian’s Allowance Up-rating Order 2026. The Government are committed to delivering a welfare system that is fair for taxpayers while providing support for those who need it. This order will ensure that the benefits for which Treasury Ministers are responsible and which HMRC delivers are uprated by inflation in April 2026. Child benefit and the guardian’s allowance will increase in line with the consumer prices index, which had inflation of 3.8% in the year to September 2025.

I turn now to the details of the Social Security (Contributions) (Rates, Limits and Thresholds Amendments, National Insurance Funds Payments and Extension of Veteran’s Relief) Regulations 2026. National insurance contributions, or NICs, allow people to make contributions when they are in work to receive contributory benefits when they are not working—for example, if they have retired or become unemployed.

National insurance contributions receipts fund these contributory benefits as well as helping to fund the NHS. The primary threshold and lower profit limits are the points at which employees and the self-employed start paying employee class 1 and self-employed class 4 NICs respectively. The primary threshold and lower profit limits will be maintained at their current levels until April 2031, and these regulations set the level for the 2026-27 year.

For employees, entitlement towards contributory benefits, such as the state pension, is determined by their earnings being at or above the lower earnings limit. For self-employed people, their entitlement is determined by their profits being at or above the small-profits threshold. These regulations uprate the lower earnings limit and small profits threshold. This is the usual process and maintains the real level of income where someone gains entitlement to contributory benefits.

In conclusion, these regulations increase the rates of child benefit and guardian’s allowance as well as the rates of class 2 and class 3 national insurance contributions, in line with prices. They also maintain most of the thresholds for national insurance contributions at their current levels for the 2026-27 tax year, except for the lower earnings limit and small profits threshold, which will be uprated by the September 2025 CPI of 3.8%. These regulations also make provision for a Treasury grant and extend the veterans’ employer NIC relief for a final two years. I beg to move.

My Lords, the Child Benefit and Guardian’s Allowance Up-rating Order 2026 sets the weekly rates from 6 April 2026. As the Committee will know, this instrument increases the weekly rates of child benefit and guardian’s allowance by 3.8%, in line with the rise in the consumer prices index between September 2024 and September 2025. As the Minister outlined, from 6 April 2026, child benefit for the eldest child will rise from £26.05 to £27.05, a rise of £1. For subsequent children, it will rise from £17.25 to £17.90, a rise of 65p per week. Guardian’s allowance will increase from £22.10 to £22.95, an 85p rise per week.

We do not oppose this order. It is standard practice to uprate these benefits in line with inflation, and it is right that families and guardians who rely on this support should see their payments maintain their value in real terms. However, uprating alone cannot substitute for a serious and coherent approach to welfare reform. Child benefit is paid to more than 6.9 million families, supporting 11.9 million children. These families are part of a substantial proportion of all households across the United Kingdom. This makes it one of the most widely accessed forms of benefit in the UK, and guardian’s allowance, while smaller in scale, plays a crucial role in supporting vulnerable children. Given that scale, the absence of a broader reform strategy is concerning. A system of this size must be sustainable, targeted and fair, both to those who depend on it and to the taxpayers who fund it. The Government’s retreat from broader welfare reform raises real concerns about long-term sustainability.

Turning to inflation, we must consider the economic climate in which this 3.8% uprating is taking place. Inflation has risen from 1.7% last year to 3.8%, a marked acceleration that is being felt in households across the country. Families are disproportionately exposed to increases in essential costs. Energy bills are an inescapable expense, particularly for larger households. Food prices inevitably carry greater weight where there are children to provide for. Clothing expenditure is cyclical and unavoidable as children grow.

I thank the noble Lord for his speech and for the points that he has raised on this order. A lot of his points are outside of the scope of these SIs, but I will address them.

First, on inflation, it is in fact on the way down. These upratings have been with CPI for many years now, since 2011. Using a consistent period for uprating each year means that, over time, the index balances out. The Government will review benefit rates for child benefit and guardian’s allowance next year to determine whether they have kept pace with inflation for the 2026-27 financial year. The noble Lord made some general points about welfare and essentially the cost of living and what more we are doing for people on low incomes. He is right that energy and food costs take up a greater percentage of their incomes. That is why we annually uprate these benefits.

The Government are committed to reducing child poverty. For example, the two-child limit in universal credit will be removed from April 2026 in Great Britain, lifting a projected 450,000 children out of poverty in the final year of this Parliament. Our interventions will lead to the largest expected reduction in child poverty across a single Parliament since comparable records began. I think it is fair to say that because of that, we have a strategy for welfare and what we are going to do to alleviate poverty.

What else are we doing to tackle the cost of living? The Government are committed to meeting the needs of the most vulnerable. In April 2025, the Government introduced a new fair repayment rate to help low-income families on universal credit. This means that approximately 1.2 million families will keep more of their universal credit award each month, with families expected to be better off by around £420. The Government also provided £1 billion, including Barnett impact, to extend the household support fund. We have removed the two-child benefit cap as well, as I said. Across England, we are expanding free breakfast clubs by launching the first phase of national rollout, with 2,000 new schools joining over 2026-27.

Motion agreed.