Labour is reportedly considering scrapping the two-child benefit cap following pressure from backbenchers, campaign groups and political opponents.
Ahead of the Budget on 26 November, Rachel Reeves has given the strongest hint yet that Labour could abolish the controversial policy, saying she does not think it is right that children are “penalised” for being part of large families.
Speaking on BBC 5Live, the chancellor said it was important not to let the “costs to our economy in allowing child poverty to go unchecked”. She added: “In the end, a child should not be penalised because their parents don’t have very much money.”
The chancellor’s comments suggest that action will be taken on the cap, likely either at the Budget or as part of the government’s delayed child poverty strategy, which is due before the end of the year.
However, it is understood that the Treasury is considering ways to tweak the limit, rather than removing it completely – a move former prime minister Gordon Brown recently warned against.
This could be done by increasing the limit to three or four children, or by introducing a taper rate that would see parents receive higher entitlement for their first child and less for subsequent children.
Here’s everything you need to know about the policy:
What is the two-child cap?
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 place in April 2017. It only applies to children who were born after 6 April 2017.
The measure was announced by then-chancellor George Osborne alongside a raft of other changes to the benefits system. The Conservatives said the measures were designed to encourage benefit recipients “to make the same choices as those supporting themselves solely through work”.
