Labour MPs have publicly backed Chancellor Rachel Reeves’s budget after she abolished the two-child benefit cap, a move widely celebrated by backbenchers. The decision to scrap the limit, which prevented parents from claiming child tax credit or universal credit for more than two children, is expected to lift hundreds of thousands of children out of poverty and will cost £3bn by the end of this parliament.
In a joint statement, Helen Hayes and Debbie Abrahams, chairs of the education and work and pensions select committees, said the move would “immediately lift hundreds of thousands of children out of poverty and stop even more being drawn into it”. Other Labour MPs, including Antonia Bance and Ruth Cadbury, praised the measure, with Cadbury noting it would lift nearly half a million children out of poverty “at the stroke of a pen”.
Reeves announced the decision in the Commons, stating she would not “preside over a status quo that punishes children for the circumstances of their birth”. Alongside abolishing the cap, the budget raised the minimum wage, introduced a gambling levy on online betting companies, and imposed a tax on homes worth over £2m. These measures have proven popular with backbenchers.
However, reactions within the parliamentary party were mixed. One Labour MP called the budget a “complete shambles” and “the worst budget I’ve seen”, criticising the decision to freeze income tax thresholds for another three years, which will generate £7.6bn by 2030 by dragging more people into higher tax bands. The budget also includes a tax raid on pension contributions and cuts to tax-free cash ISA limits for under-65s.
Conservative leader Kemi Badenoch condemned the budget, saying it delivered “higher taxes and out of control spending” and made Reeves’s position “untenable”. Green Party Treasury spokesperson Adrian Ramsay said Labour had “chosen to paper over the cracks with half measures”, while Reform UK leader Nigel Farage described the budget as doing nothing to help an economy “on the edge of a precipice”.
