Rachel Reeves is expected to lift the two-child benefit cap in the November budget, according to government sources. The move would fulfil a key demand from Labour MPs and anti-poverty campaigners, with officials exploring options for a tapered system instead of a complete removal.
The chancellor and Prime Minister Keir Starmer have indicated they will respond to recommendations from the child poverty taskforce at the budget. The taskforce is expected to suggest that scrapping the limit for universal credit and child tax credit would be one of the most effective ways to lift hundreds of thousands of children out of poverty.
No final decision has been made on the exact form of the change. Officials are cautious about the escalating costs for very large families—those with more than six children could receive thousands of pounds more if the cap is lifted entirely. Alternatives under consideration include limiting additional benefits to three or four children, introducing a tapered rate, or lifting the cap only for working parents to encourage employment.
The two-child cap, introduced under the Conservatives, affected 1.7 million children in England, Wales and Scotland last year. Scrapping it entirely would cost about £3.5bn a year. However, any change short of full removal is likely to draw criticism from campaigners. The End Child Poverty Coalition stated: 'This policy must be scrapped in full for all. Otherwise some families will be forced to remain in poverty because of this government’s choices.'
The Resolution Foundation estimated that a three-child limit or tapered system would leave between 120,000 and 350,000 more children in poverty than full abolition, while saving between £900m and £2.3bn annually. About 59% of families affected by the cap have someone in work.
In his conference speech, Starmer hinted at further action, saying the government had already extended free school meals to those on universal credit as the 'first step on our journey to end child poverty'. Reeves told the Times: 'I’m a Labour chancellor and I want to reduce child poverty. I don’t want to see children growing up in poverty in Britain.'
