Keir Starmer hints he could scrap two-child benefit cap in Budget
Sir Keir Starmer has hinted he could scrap the two-child benefit cap in the Budget, saying he is “committed” to reducing child poverty.
The Prime Minister said the government would “take a range of measures” to tackle the problem, amid speculation that the limit would be changed or removed altogether after pressure from Labor MPs.
This is the latest hint that the cap could be lifted after Rachel Reeves said on Monday that “letting child poverty go unchecked will cost our economy”.
In a clip broadcast on ITV Lorraine On Tuesday’s programme, the prime minister said: “I can tell you unequivocally that I am committed to reducing child poverty. That’s what the last Labor government did and it’s one of the things we’re most proud of.”
“Personally, I’m determined that we will do this. You won’t have to wait any longer to see what the measures are.”
Asked whether this would include getting rid of the cap, the Prime Minister added: “We won’t have to wait any longer. But I wouldn’t be telling you we would reduce child poverty if I wasn’t sure we would take a range of measures to do that.”
The Chancellor will present his budget on 26 November. He told BBC 5 live on Monday: “After all, a child shouldn’t be punished just because their parents don’t have a lot of money.
“In many cases, you may have a mother and a father who are both working, but perhaps one of them has a chronic illness, perhaps one of them has passed away. There are many reasons why people decide to have three, four children but then find themselves in difficult times.”
He continued: “So we will take action against child poverty. The last Labor government proudly reduced child poverty, and we will reduce child poverty too.”
The two-child limit, first announced by the Conservatives in 2015 and introduced in 2017, limits child tax credits and universal credit (UC) to the first two children in most households.
The Institute for Fiscal Studies estimates that removing the cap would cost around £3.6bn, which would lift around 630,000 children out of poverty.
The statement comes after former prime minister Gordon Brown said he was confident the two-child rule would be resolved.
“We’re waiting for Rachel Reeves’ budget, where I think she’ll talk about it,” he told Sky News.
The chancellor also gave his biggest signal yet that the government will fail to deliver on its tax return promises in the budget. He said it would be “possible” for ministers to stick to election promises but warned this would mean “deep cuts” in other areas of spending.
Speculation has been rife in recent days that the chancellor is preparing to increase income tax in the Budget to balance the country’s budget.
Labour’s manifesto for the 2024 general election campaign promised that the party would not increase income tax, VAT or workers’ national insurance contributions.
When Ms Reeves wrote the Labor manifesto, “it was embedded in our spending commitments and the tax changes needed to pay for them… the reality is that what we inherited is much worse.”
Pressed on the party’s commitment to the manifesto, the chancellor told the BBC: “I will set out the options in the budget. It would of course be possible to stick to the commitments in the manifesto, but that would require things like big cuts in capital spending.”
