Rachel Reeves has announced an end to the two-child benefit cap at today’s Budget, following months of intense pressure from backbenchers, campaign groups and political opponents.
The move will increase the benefits for 560,000 families by an average of £5,310, the Office for Budget Responsibility’s (OBR) fiscal outlook has calculated.
Set to come into effect from April 2026, the government estimates that the change will reduce the number of children living in poverty by 450,000 by 2029/30.
It will cost the Exchequer £3bn by this time, according to the OBR.
This will be partly offset by reforms to gambling taxation, set to raise £1.1bn, mirroring a recommendation made by Gordon Brown in the build-up to the fiscal event.
Writing in the New Statesman following the announcement, the former Labour prime minister said: “In one short Budget intervention this afternoon, Chancellor Rachel Reeves has done more to transform the lives of 450,000 of Britain’s poorest children than any of the seven previous Conservative chancellors, who, in 14 long years, did nothing but harm to the lives of vulnerable children.”
“It is time for every party to realise that the country’s future depends on investing in the potential not just of some of our children, but all of our children,” he added.
The decision will come as a relief for child poverty campaigners who had urged the chancellor to fully scrap the policy, rather than tweak it.
It marks a major U-turn for Labour, with ministers previously refusing to listen to critics on the measure. Last year, the prime minister enforced the whip on seven Labour MPs who voted against their party to oppose the two-child benefit cap.
Here’s everything you need to know about the policy and what the scrap will mean for families:
What is the two-child cap on benefits?
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”.
