What is the two-child benefit cap? The controversial policy explained as Reeves hints at changes
Labor is set to announce the end of the two-child benefit cap in Wednesday’s Budget, after months of intense pressure from backbenchers, campaign groups and political opponents.
Ahead of the fiscal event on November 26, government officials said: Independent He said the chancellor would scrap the controversial policy in a bid to appease disgruntled MPs and boost poor poll results.
Rachel Reeves hinted Labor could scrap the controversial policy earlier this month, saying it was not right for children to be “punished” for being part of extended families.
Speaking on BBC Radio 5Live, the chancellor said it was important not to allow “the cost to our economy of allowing child poverty to go unchecked”. He added: “After all, a child shouldn’t be punished just because their parents don’t have a lot of money.”
However, the Treasury is also reportedly considering ways to fine-tune the limit rather than removing it completely; It was a move that former prime minister Gordon Brown had recently warned against.
This could be done by increasing the limit to three or four children, or by introducing a reduction rate that would ensure parents receive higher rights for their first child and fewer rights for subsequent children.
Everything you need to know about the policy:
What is the two child limit?
The two-child benefit cap prevents parents from claiming universal credit or tax credit for their third child. It was introduced by the Conservatives and came into force in April 2017. Only valid for children born after April 6, 2017.
The measure was announced by then-Chancellor George Osborne, alongside a number of other changes to the benefits system. The Conservatives said the measures were designed to encourage welfare recipients “to make the same choices as those who support themselves solely by working”.
Latest official figures show 1.6 million children live in families affected by the policy. Campaigners, charities and politicians from across the spectrum have called on the government to scrap the measure.
This is a separate policy on the benefit cap, which was also introduced under the then Conservative and Liberal Democrat coalition government, under which the amount of benefit a household receives will be reduced to ensure that beneficiaries do not receive more than the limit.
What is the impact of two child titles?
Organizations working in the sector claim that 109 children across the UK are driven into poverty every day due to this policy.
The number of children living in poor households has been increasing steadily over the past decade; 4.5 million children (about one-third) currently live in poverty.
Poverty can be defined in a variety of ways, but the Department for Work and Pensions (DWP) uses “relative low income” as an indicator, referring to people in households earning below 60 per cent of the median income of £36,700 or £22,020 in 2024.
Some of these children are deprived of basic needs such as food, warmth, clothing or basic toiletries, according to the Joseph Rowntree Foundation.
Removing the two-child benefit limit could lift 350,000 people out of poverty, according to analysis by researchers at the Child Poverty Action Group (CPAG).
What would it cost the government to scrap this?
The estimated cost of removing the two-child limit, expanding the three-child limit, or eliminating the household limit varies.
According to estimates by the think tank Solution Foundation at the beginning of this year, getting rid of the cap could cost the government £3.5 billion in 2029-2030. Meanwhile, CPAG claims the move will cost £2bn.
IndependentIts own calculations suggest extending the limit to three children could cost at least £1.3bn a year, assuming 370,000 households claim an extra £3,513 of UC each year.
Successive governments have refused to commit to lifting the cap, despite it being unpopular with voters.
Last year Sir Keir imposed the whip on seven Labor MPs who voted against their party to oppose the two-child benefit cap.
The current Labor government has consistently maintained that it will not move to remove the cap due to limited resources in the budget, but recent reports strongly suggest a U-turn is possible.
