Chancellor Rachel Reeves is expected to announce the scrapping of the controversial two-child benefit cap in her November budget, after months of pressure from Labour MPs and campaigners.
The change, which would affect families receiving universal credit and child tax credit, has been described by campaigners as one of the most effective ways of lifting children out of poverty. The policy currently prevents parents from claiming support for more than two children.
Prime Minister Sir Keir Starmer dropped a strong hint at Labour’s conference in Liverpool, saying the government’s ambition was the “basic, ordinary hope of a better future for our children”. Reeves has also confirmed she will respond to recommendations from the child poverty taskforce in her budget.
Options Under Review
While full abolition is on the table, Treasury officials are also exploring alternatives to manage costs, which could reach £3.5bn a year if the cap were completely scrapped.
Ideas include:
- Limiting additional payments to three or four children
- Introducing a tapered rate (higher support for the first child, less for subsequent children)
- Restricting extra benefits to working parents only
Officials are concerned about costs for large families, as well as potential incentives to remain out of work. About 59% of families affected by the cap already have someone in employment.
Strong Pressure for Full Removal
Campaigners insist anything short of total abolition risks leaving hundreds of thousands of children in poverty.
The End Child Poverty Coalition said: “This policy must be scrapped in full for all. Otherwise some families will be forced to remain in poverty because of this government’s choices.”
The Resolution Foundation estimates a partial lifting could leave between 120,000 and 350,000 children in poverty compared to full abolition, though it would save between £900m and £2.3bn annually.
Former prime minister Gordon Brown has called the policy “cruel” and suggested funding its removal through higher taxes on the gambling industry.
Political Reactions
The proposed change has divided opinion across parties.
Labour MPs including education secretary Bridget Phillipson have branded the cap a “spiteful policy”.
Save the Children urged immediate action, calling abolition the “only logical next move”.
The Liberal Democrats said scrapping the limit should be at the heart of any child poverty strategy.
Reform UK has also backed abolition.
The Conservatives, however, signalled opposition. Shadow chancellor Mel Stride called the move “irresponsible and unfair”, warning it would mean “more debt or higher taxes”.
Budget Challenges Ahead
Reeves faces a difficult budget on 26 November, with the Treasury needing to plug an estimated £30bn shortfall caused by weaker productivity forecasts and U-turns on welfare and energy support.
Despite fiscal pressures, Reeves has insisted tackling child poverty remains central to Labour’s agenda. “I’m a Labour chancellor and I want to reduce child poverty,” she told The Times. “Of course I don’t want to see children growing up in poverty in Britain.”
