Chancellor Rachel Reeves is planning to fully remove the two-child benefit cap in the November budget, according to sources. The move would cost more than £3bn but could lift 350,000 children out of poverty.
Reeves had previously considered tapering the measure but is now understood to be preparing a complete reversal of the Conservative policy. The decision follows Prime Minister Keir Starmer's insistence that Labour should reduce child poverty before the next election.
Speaking to BBC Radio 5 Live on Monday, Reeves said: 'I don't think we can lose sight of the costs to our economy in allowing child poverty to go unchecked. In the end, a child should not be penalised because their parents don't have very much money.'
Allies said her comments signal an intention to scrap the cap entirely. The Resolution Foundation estimates full removal would cost about £3.5bn by 2029-30. Education Secretary Bridget Phillipson is due to publish findings from a child poverty taskforce around the time of the budget, having concluded that abolishing the cap is the best way to reduce child poverty.
Alison Garnham, chief executive of the Child Poverty Action Group, said: 'The two-child limit is the biggest driver of rising child poverty in the UK and scrapping it in full is the right thing to do.'
