Chancellor Rachel Reeves will announce a crackdown on benefit fraud in the upcoming Budget, aiming to save an additional £1.2bn by 2031, while also scrapping the two-child limit for universal credit at a cost of £3bn. The move is designed to head off criticism over rising welfare spending.
The decision to fully remove the two-child cap has been welcomed by Labour MPs who have long argued it increases child poverty. However, the Conservatives and Reform UK have criticised the Chancellor for increasing the welfare bill while raising taxes on working people. Conservative leader Kemi Badenoch said: “On Wednesday, Starmer and Reeves are going to increase your taxes to fund more welfare.”
Reeves faces pressure from both sides: the Liberal Democrats warned that freezing income tax thresholds until 2030 would drag 9 million earners into higher tax bands, while the Green Party and Unite union urged a more substantial wealth tax. Unite general secretary Sharon Graham said neither Reeves nor Starmer should remain in post if the Budget fails to target the richest.
The Treasury confirmed that the Budget will include a rise in state pensions of over £550 a year due to the triple lock, and will freeze rail fares and prescription fees. Other measures reportedly include a pay-per-mile scheme for electric cars, higher taxes on properties worth over £2m, and less generous salary sacrifice schemes.
Reeves has signalled further welfare reform will follow recommendations from reviews by Labour minister Stephen Timms and former cabinet minister Alan Milburn, due next year. A Treasury source said: “We will never tolerate fraud, error or waste in the welfare system… extending targeted case reviews to save taxpayers billions.”
