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

Lord Altrincham Excerpts

Wednesday 25th February 2026 Grand Committee

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.

[Lord Altrincham (Con)]

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.

When inflation is concentrated in essentials such as energy and food, the lived experience for families can feel far sharper than the aggregate CPI figure suggests. Uprating benefits preserves nominal value but does not necessarily ease the real pressure where cost increases are most acute. We must therefore ask whether the Government’s wider fiscal and regulatory decisions have contributed to the renewed inflationary pressures that families now face. Concerns remain about the cumulative impact of higher taxation and regulatory burdens, including those associated with energy policies, on businesses and households alike. When businesses face higher input costs, those costs are frequently passed on to consumers, and the result is sustained pressure on family finances.

In short, this order performs its narrow and necessary function: it uprates child benefit and guardian’s allowance in line with CPI. It does not alter policy, nor does it address the structural questions surrounding welfare reform or the economic environment in which families are living. With those observations, I conclude.

[Lord Wilson of Sedgefield (Lab)]

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.

In line with their commitment to maintain the triple lock for the duration of this Parliament, the Government will also uprate the basic and new state pension by 4.8% and will increase the national living wage from 1 April this year by 4.1% to £12.71. We are doing a lot to help a lot to help people on low incomes and those who rely on benefits, but our main focus is ultimately to get more people back into work.

As I set out in my opening remarks, the order we are considering will ensure that child benefit and guardian’s allowance increase in line with the September rate of the consumer prices index, which is 3.8%, thereby ensuring that these benefits keep their value in relation to prices.

The regulations on national insurance contributions set the limits and thresholds for the 2026-27 tax year. They allow for the collection of over £200 billion of national insurance contributions to fund contributory benefits, including the state pension, and to fund the NHS. These regulations will also extend the NICs relief for employers hiring qualifying veterans for a final two years up to April 2028. With that, I commend this order to the Committee.