Labour MPs have publicly backed Chancellor Rachel Reeves’s budget after she abolished the two-child benefit cap and introduced a mansion tax. The decision to scrap the limit, which prevented parents from claiming child tax credit or universal credit for more than two children, was celebrated by dozens of backbenchers who had pushed for the measure. It will cost £3bn by the end of this parliament.
Helen Hayes and Debbie Abrahams, chairs of the education and work and pensions select committees, said in a joint statement that the move would “immediately lift hundreds of thousands of children out of poverty”. Antonia Bance, Labour MP for Tipton and Wednesbury, said she had “worked to end the two-child limit ever since the day I was elected”. Ruth Cadbury, MP for Brentford and Isleworth, said Reeves was lifting nearly half a million children out of poverty “at the stroke of a pen”.
Announcing the decision in the Commons, Reeves said she would not “preside over a status quo that punishes children for the circumstances of their birth”. One Labour frontbencher said the budget had bought the chancellor “time and respect – the question is what she and the PM now do with it”. Starmer and Reeves have embarked on a charm offensive to shore up their position with their fractious parliamentary party.
Other popular measures include raising the minimum wage, introducing a gambling levy on online betting companies, and a tax on homes worth over £2m. However, some Labour MPs expressed mixed reactions. One called it a “complete shambles” and “worst budget I’ve seen”, criticising the decision to freeze income tax thresholds for another three years, which will generate £7.6bn by 2030 through fiscal drag.
Conservative leader Kemi Badenoch told the Commons the budget delivered “higher taxes and out of control spending”, making Reeves’s position “untenable”. Green Party Treasury spokesperson Adrian Ramsay said Labour had “chosen to paper over the cracks with half measures”. Reform UK leader Nigel Farage condemned the budget as doing nothing to help an economy “on the edge of a precipice”.
