Keir Starmer has confirmed that a Labour government would keep the Conservatives’ controversial two-child benefits cap, despite unease among his top team and leading academics over the policy, which has been blamed for pushing families into poverty.
Starmer said on Sunday that he was “not changing that policy”, when asked if he would scrap it if Labour wins the next election. His shadow work and pensions secretary, Jonathan Ashworth, had condemned it as “heinous” just last month.
Labour had come under fresh pressure to promise to scrap the cap after it emerged that one in four children in some of England and Wales’s poorest parliamentary constituencies live in families left at least £3,000 a year out of pocket as a result.
Starmer’s decision to rule out lifting the cap caused alarm among anti-poverty campaigners and despair in the Labour ranks. It would cost about £1.3bn but the shadow chancellor, Rachel Reeves, is said to have concluded it would be unaffordable due to the state of the economy.
The Labour leadership’s decision came as a major academic study into the effects of the two-child cap concluded the policy had been a “poverty-producing” initiative over the past six years, which had caused hardship and anxiety to tens of thousands of low-income families.
The research, published on Monday morning by academics from the Universities of York, Oxford and LSE found both the two-child limit and the benefit cap had failed to meet their own stated aims, having had no positive incentive effect on employment, nor produced a reduction in fertility among poorer families.
The benefit cap, first implemented in 2013, places a cap on the amount a household can receive in benefits if they have no, or low, earnings, with the average household losing £50 a week. The two-child limit was introduced in 2017 – an estimated 32,000 households containing 110,000 children were affected by both policies at the same time in March 2022.
Ethnic minority and larger families were disproportionately likely to be hit by the two-child limit and benefit cap, typically leaving them unable to afford essential items for their children, such as food, clothes and heating, with a consequent negative effect on children’s emotional and physical development, the study found.
Ruth Patrick from the University of York said: “Our research evidence makes clear that the two-child limit and benefit cap are poverty-producing policies, which fail to meet their stated aims. Both policies need to be removed urgently, as part of a broader commitment to addressing child poverty and investing in children and families.”
Alex Beer, welfare programme head at the Nuffield Foundation, which funded the research, said: “The two-child limit and the benefit cap are not incentivising families as the government intended and instead is leaving them unable to afford even basic necessities and affecting their mental health. These policies should be placed under review, and ideally removed.”
The stance is seen by some in the party as an indicator of the lack of strength of its determination to tackle child poverty. However, one party insider suggested Starmer could revisit the policy if the public finances improved.
In February 2020, Starmer said he wanted to scrap it in order to help “tackle the vast social injustice in our country”. But this month he hinted that Labour would stick to the Tory policy. His latest remarks to the BBC’s Sunday with Kuenssberg show appeared to confirm that position.
Senior Labour insiders said they agreed that the policy was “horrible” and would not exist “in a perfect world” but said the party was not making any spending commitments it was unable to deliver on. “I can see why colleagues might feel uncomfortable with this but we’ve got to be realistic about the state of the economy,” they said.
One shadow cabinet minister said Starmer had to be able to “slay shibboleths” over public spending but admitted it was a tough position for MPs with constituents in poverty to defend.
“These things are not easy for the MPs because they do genuinely hurt families in their constituencies,” they said. “But we can’t end child poverty unless we have more money to do it – and that’s not going to happen, frankly, in the first term of a Labour government.”
Concern over the policy has long been an issue within Labour ranks. Forty-eight MPs, just under a quarter of the parliamentary party, defied their whips and voted against the welfare bill at second reading in July 2015. They included three current shadow cabinet ministers and the mayor of London.
Later in his BBC interview, Starmer said that “of course” it was worth ruffling feathers within the party to win the next election, saying his “central promise” to members when he took over was to change the party to make it electorally viable.
“The Labour party was created to give working people not just representation in parliament but a government in parliament that can govern on their behalf and change the lives of millions of people for the better,” he said. “I have been changing the Labour party to put us in a position where we are now credible contenders for the next election.”
Starmer did not rule out lifting the freeze on housing benefit, which has been in place since 2020 even though rents have soared, saying he would wait until closer to the general election to decide. “I’m not committing to that here, I’m not writing our manifesto here,” he said.
Lynn Perry, the chief executive of Barnardo’s, said: “Even before the cost of living crisis intensified in 2022, more than one in four children in the UK were growing up in poverty. That just not acceptable in a country with the sixth largest economy in the world.
“Research shows that the two-child limit is one of the leading causes of child poverty. We urge the current government and the opposition to reverse this policy, focus on supporting families who are struggling, and restore hope to the next generation.”
Imran Hussain, the director of policy and campaigns at Action for Children, said: “Any government serious about tackling child poverty will eventually have to confront the cruel reality of a policy that is designed to actively stop poor children receiving assistance to meet their minimum needs.
“Any government serious about strengthening our society and our economy knows child poverty is hugely damaging to public services and public finances. Poverty drives huge costs in schools and the NHS and damages our nation’s skills base, which weakens our economy by many times more than the money saved by this policy.”
Starmer refused to commit to further spending under a Labour government, amid growing calls from unions for him to back more of their policy priorities. However, he said: “A Labour government will always want to invest in its public services.”
The leader has been emphatic about prioritising “financial responsibility” over reckless spending as the party seeks to reassure voters it can manage the economy. He suggested he was relaxed about being described as a fiscal conservative.
“I don’t mind what label people put on me,” he said. “I do want to make my argument. My argument is this: What was absolutely plain from last year’s mini-budget is if you lose control of the economy, it’s working people who pay.”
