Labor Shadow Chancellor Signals end to Two-Child Benefit Cap in November Budget
London – Rachel Reeves, Labour’s Shadow Chancellor, has indicated plans to scrap the two-child benefit cap as part of her first budget announcement in November, possibly offering relief to 1.7 million children currently affected by the policy. Reeves told The Times she will respond to the findings of a recent child poverty taskforce report at the budget, stating, “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. Of course I don’t. We’ve got the child poverty taskforce report coming out shortly and we’ll respond to that at the budget.”
The existing cap limits the amount of child tax credit or global credit parents can claim to the first two children. While Labour leader Keir Starmer has previously expressed a desire to abolish the limit, the move is expected to come with a notable price tag – approximately £3.5bn annually, according to government figures. Potential adjustments to eligibility criteria could reduce this cost.
The policy has drawn criticism from figures like former Prime Minister Gordon Brown, who labelled the cap ”cruel” and recently suggested funding its removal through increased taxes on the gambling industry. however, sources within the Treasury have indicated that revenue from thes taxes is already factored into plans to address a projected £30bn shortfall caused by a productivity downgrade from the Office for Budget responsibility and reversals of previous welfare and winter fuel allowance policies.
Dan Paskins, Director of UK Impact at Save the Children, urged swift action, stating, “We agree with the prime minister that action they have taken so far on child poverty is the ‘first step’. The only logical next move is to scrap the two-child limit to benefits in full at the autumn budget. Time is ticking for Britain’s children.”
The Conservative party has signaled opposition to the change. Shadow Chancellor Mel Stride argued that removing the cap would be “irresponsible” and ”unfair,” questioning the source of funding and accusing labour of contributing to the cost-of-living crisis.
The government maintains its commitment to supporting families, pointing to a £500m investment in family hubs, expanded free school meals, and a £1bn crisis support package.The budget announcement on November 26th will reveal the specifics of Reeves’ plan and its potential impact on child poverty across the UK.
