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Powered by Guardian.co.ukThis article titled “Kinship carer benefits policy scrapped after court ruling” was written by Patrick Butler Social policy editor, for theguardian.com on Friday 27th April 2018 14.59 UTC

The government has scrapped its policy of withholding benefits from kinship carers who fall foul of the two-child limit after having a child of their own.

The U-turn by the work and pensions secretary, Esther McVey, on Friday comes a week after a high court judge ruled that the policy as it applied to carers who look after younger siblings to prevent them from being taken into care was “perverse and unlawful”.

The decision was welcomed by campaigners, who said ministers had “seen sense” after resisting for more than two years calls to exempt all kinship carers from the two-child limit.

Ministers promised in 2016, after a defeat in the House of Lords, that kinship carers would not be penalised by the two-child limit. However, in practice it emerged that the exemption was only for carers who had children first and then became guardian to a third child, not the other way around.

Since the two-child limit came into force in April 2017, growing numbers of low-income carers – who have been praised in the past by ministers as “unsung heroes” – have lost more than £3,000 in tax credits and maternity grant entitlements as a result of the policy.

Cathy Ashley, the chief executive of Family Rights Group, said: “This is extremely welcome news. Kinship carers and adopters should never have been affected by the two-child limit on child tax credit and it’s a great shame that the government wasted money fighting this in the courts. I’m very pleased that they have now seen sense.”

McVey said she had decided to extend support to all kinship carers after “reviewing the issue carefully” for several months. “Adoptive parents and non-parental carers, known as ‘kinship carers’, have often stepped in to help a family member or close friend in times of need. They have provided support and provided a home for a child in need.

“The role these parents play in helping to bring up these children is invaluable, and I want to reassure such parents that this change ensures support will be made available to you, and this government is backing you.”

The Labour MP Melanie Onn said: “The government has been brought kicking and screaming to act in accordance with its own legislation by last Friday’s ruling from the high court. Despite eight months of my campaigning in parliament, the government had deaf ears and McVey had to be forced to this U-turn. She had no intention of doing the right thing.”

Despite the change, the same partial exemption rules remain in place for women who had a first or second child as a result of rape. They will be deemed to have breached the two-child limit and be denied benefits if they have a third child.

Alison Garnham, the chief executive of the Child Poverty Action Group, welcomed the kinship care decision but said she hoped it would be followed by a decision to exempt all children conceived as a result of non-consensual sex.

Last week’s ruling by Mr Justice Ouseley said the way the exemption was applied differentially to kinship carer households defeated its purpose, which was “to encourage, or at least avoid discouraging, a family from looking after a child who would otherwise be in local authority care”.

Making the exemption available only if the cared-for child was not the first or second child was, he said, “not rationally connected with the purposes of the legislation, and indeed it is in conflict with them”.

Kinship carers continue to fall foul of other welfare reforms, including the benefit cap and the bedroom tax, and do not receive the same rights and allowances due to foster carers and adoptive parents, including paid employment leave while the child is settling in.

Children move into kinship care for a variety of reasons, including parents’ death or illness, addiction or imprisonment. An estimated 200,000 children in the UK are raised by kinship carers, saving the taxpayer billions of pounds that would otherwise be spent on care home or fostering fees.

Last year the Guardian highlighted the case of Alyssa Vessey, then 22, of Grimsby, who was 18 when she agreed with social services to give up college to formally raise her three younger siblings after the sudden death of their mother.

Vessey was denied child tax credits worth £2,750 a year and a £500 SureStart maternity grant when she conceived a child of her own last year because the DWP ruled that her siblings counted towards the household two-child limit.

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