With the dust now settled since the government’s 2025 Budget was announced on 26 November, many families caring for seriously ill children may be wondering what it means for them. In this blog, we explain the changes and the impact these could have on seriously ill children, their families, and the professionals and services that support them.
Removal of the two-child benefit cap
The removal of the two-child benefit cap will be a major relief for many larger families who, since April 2017, have only received payments for their first two children. The government have said removing the cap will lift 450,000 children out of poverty.
This policy change is particularly significant for families with disabled children, who often face additional costs. Research from the Department for Work and Pensions (DWP) shows that around 40% of households impacted by the two-child limit include at least one claimant or child receiving health or disability-related benefits (such as the health element or disabled child element of Universal Credit, Disability Living Allowance or Personal Independent Payment).
While removing the cap is a positive step, we share the concerns raised by Contact that some families on Universal Credit may not see the full benefit. This is because higher payments for a third or subsequent child could be offset by deductions from transitional protection payments.
Transitional protection is a temporary top-up provided to some claimants when they move to Universal Credit, ensuring they don’t lose out compared to their previous benefits. If their entitlement increases (for example, due to the removal of the cap), this top-up is reduced, meaning some families may not feel the full impact of the policy change.
Support with energy bills
Families caring for seriously ill children often face much higher energy costs. Research by Contact shows these families spend an average of £74 per month running essential equipment such as adjustable beds, ceiling track hoists, wheelchair chargers, and feeding or suction pumps. Over a year, this can mean paying up to £600 more than the average household.
The government’s decision to remove certain levies that fund environmental and social programmes is expected to reduce average household energy bills by around £150, which is welcome news. However, as part of this change, the government will end the Energy Company Obligation (ECO) scheme, meaning energy suppliers will no longer provide efficiency upgrades such as insulation or new boiler installations. These changes will take effect from 31 March 2026.
Despite this potential saving, we know many families will still struggle with high energy costs. That’s why we continue to offer support. If you live in the Southern Gas Network area and care for a child with a life-limiting condition, you can apply for a one-off payment to help with your energy bills by completing this form. To check if you’re in the Southern Gas Network area, use the postcode checker here.
Increases to National Living and Minimum Wage
The government has announced that from 1 April 2026, the National Living Wage will rise by 4.1% to £12.71 per hour, while the National Minimum Wage for 18–20-year-olds will increase by 8.5% to £10.85 per hour.
This is welcome news for many families, particularly those on low incomes, as it will provide greater financial security at a time when the cost of living remains high.
However, these increases also bring challenges for organisations providing children’s palliative care, including hospices. Higher wage costs will add to the financial pressures these services already face, further illustrating the pressing need for additional government support. Without it, there is a real risk that hospices and other providers will struggle to sustain the specialist staff and services that families depend on.
Changes to the Motability Scheme
From 1 July 2026, significant changes will be introduced to the Motability Scheme. These include the removal of the VAT exemption for vehicles with advance payments and the addition of insurance premium tax on Motability vehicle insurance.
Motability Operations, the company that runs the scheme, has warned these tax changes will make the scheme ‘more expensive for disabled people,’ with the average advance payment expected to rise by around £400.
For families caring for seriously ill children—already coping with rising living costs, higher energy bills, and stretched budgets—making essential mobility support more expensive risks pushing them further into hardship. Access to affordable, adapted vehicles is not a luxury; it is a lifeline that enables children to attend hospital appointments, access education, and take part in everyday family life.
Other relevant announcements
- The government has announced investment for 250 new neighbourhood health centres, in an effort to improve patient access to care. The aim is for 120 of these to be operational by 2030.
- The Chancellor has also announced £300 million of additional capital investment in NHS technology; through this, the government is seeking to boost productivity, support staff and improve patient outcomes.
- The government has decided to freeze personal income tax and national insurance contributions thresholds for a further three years from 2028/29.
