Chancellor Rachel Reeves has announced the abolition of the two-child benefit cap in today's Budget, following sustained pressure from backbenchers, campaigners, and political opponents. The policy, introduced by the Conservatives in April 2017, prevented parents from claiming universal credit or tax credit for a third child born after 6 April 2017.
The Office for Budget Responsibility (OBR) estimates that 560,000 families will benefit by an average of £5,310 per year. The change, effective from April 2026, is projected to lift 450,000 children out of poverty by 2029/30, at a cost of £3 billion to the Exchequer. This will be partly offset by £1.1 billion raised through reforms to gambling taxation, a recommendation from former Labour prime minister Gordon Brown.
Gordon Brown wrote in the New Statesman: 'In one short Budget intervention this afternoon, Chancellor Rachel Reeves has done more to transform the lives of 450,000 of Britain’s poorest children than any of the seven previous Conservative chancellors, who, in 14 long years, did nothing but harm to the lives of vulnerable children.' He added: 'It is time for every party to realise that the country’s future depends on investing in the potential not just of some of our children, but all of our children.'
The decision marks a significant U-turn for Labour, which previously enforced the whip on seven MPs who voted against the cap last year. Campaigners, including the Child Poverty Action Group, welcomed the move. Chief executive Alison Garnham said: 'Scrapping the two-child limit will be transformational for children. This is a much-needed fresh start in our country’s efforts to eradicate child poverty.'
Official figures show 1.6 million children live in families affected by the cap, with 109 children pulled into poverty each day. The Joseph Rowntree Foundation reports some children go without essentials such as food, heating, or clothing. Parents like Shauna, who has three children, said the extra money would help cover debts and buy a new mattress for her children. Jo, a mother of four, said it would allow her to afford childcare and work extra shifts.
