Labour’s Rachel Reeves has pledged to scrap the two-child benefit cap as soon as they take power, in the next budget due in November. This very bold move would potentially cost the government more than £3 billion. This policy change is specifically aimed at lifting 350,000 more children out of poverty. It will give a heroic lift to families struggling in deep financial distress.
The move to remove the cap follows months of private debate between Labour lawmakers, including the party’s leader, Keir Starmer. Reeves and Starmer had originally agreed to exclude a pledge to scrap the cap from their election manifesto. They were right to worry about creating “unfunded promises.” Under tremendous pressure to act on child poverty, they’ve recently found themselves backtracking on that position.
Just this year, Starmer commissioned shadow education secretary Bridget Phillipson to lead a taskforce to cut child poverty. Phillipson is planning to publish her findings ahead of February’s budget announcement. This timing would provide an extremely important head start in establishing much-needed support for the proposed changes. Her preliminary findings suggest that completely removing the cap would be the most impactful approach to reducing child poverty.
Alison Garnham, chief executive of Child Poverty Action Group, underlined the seriousness of the matter. She stated that the two-child limit significantly contributes to rising child poverty in the UK and that scrapping it is essential for giving children a better start in life.
“The two-child limit is the biggest driver of rising child poverty in the UK and scrapping it in full is the right thing to do. All children are equally deserving of a good childhood and abolishing this cruel policy would give millions more kids a better start in life.” – Alison Garnham
Reeves highlighted the broader implications of child poverty on the economy, expressing concern about the long-term effects of neglecting this issue. She had discussed how children should not be punished for their parent’s lack of means, no matter the size of their family.
“I don’t think we can lose sight of the costs to our economy in allowing child poverty to go unchecked. In the end, a child should not be penalised because their parents don’t have very much money.” – Rachel Reeves
Change to removal of cap would align with Starmer’s hopes for top-down Labour. After all, he largely seems to be preparing for the next applicable general election. He aims to present a clear message: vote Labour and help lift children out of poverty.
Reeves’ new plan is still under discussion. A tricky proposal indeed. His other major priority is to increase income tax rates by 2p while reducing national insurance by 2p. Through this simple financial strategy we could raise £6 billion. While this is a welcome boost to fund their agenda and creates better protections for most workers, it poses a risk to pensioners and landlords.
“It would of course be possible to stick with the manifesto commitments, but that would require things like deep cuts in capital spending.” – Rachel Reeves
The announcement to scrap the two-child benefit cap represents real progress and a departure for Labour on family support policy. In fact, last year Starmer suspended seven of his own MPs for voting to support a Scottish National Party motion. This action further underscores the growing division within the party on the issue of the cap.
Reeves stressed the complexities families face today. In a subsequent panel, she stressed that parents’ situations can shift overnight. These transitions are most commonly initiated by unexpected circumstances like a medical emergency or death.
“In many cases you might have a mum and dad who were both in work, but perhaps one of them has developed a chronic illness or one of them has passed away.” – Rachel Reeves
She reiterated the fact that family structures can be altered due to a variety of life situations. These smart and necessary changes shouldn’t mean creating financial barriers for kids.
“There are plenty of reasons why people make decisions to have three, four children, but then find themselves in difficult times. But also you have things like adoption, or foster caring – lots and lots of different reasons why families change shape and size over time.” – Rachel Reeves