Ministers push to scrap two-child benefit cap amid rising child poverty

Senior cabinet ministers are preparing to recommend that Prime Minister Keir Starmer lift the two-child benefit cap, arguing it is the most effective policy to reduce child poverty in the UK.

The proposal, which would cost approximately £3 billion per year, presents a significant financial challenge as the government attempts to close a £20–30 billion gap in public finances ahead of the Autumn Budget on 26 November.

A dedicated child poverty taskforce, established after Labour’s election victory, has concluded that removing the cap should be the government’s top priority in its child poverty strategy.

The group, co-chaired by Education Secretary Bridget Phillipson and Work and Pensions Secretary Pat McFadden, includes ministers and civil servants from across Whitehall.

They have taken evidence from charities and campaigners, and their findings are expected to be published in the coming weeks.

Bridget Phillipson has been outspoken in her opposition to the policy, telling the BBC: “Tackling child poverty is my number one priority… the two-child limit has to be on the table.”

She previously described the cap as “spiteful”, saying it had “punished and pushed children into hardship”.

Introduced in 2017 by then-Chancellor George Osborne, the two-child limit prevents families from claiming the child element of Universal Credit — currently £292.81 per month — for a third or subsequent child born after April 2017.

The policy affects around 400,000 families and is contributing to record child poverty levels, now standing at 4.5 million. According to the Institute for Fiscal Studies (IFS), scrapping the cap could lift half a million children out of poverty.

Pat McFadden did not rule out a potential announcement at Labour’s upcoming party conference, saying: “Everything has to be paid for, everything has to be budgeted.”

The Treasury has so far resisted the move, and sources have suggested it was previously considered unaffordable.

Alternative funding options are being explored, including a proposal from former Prime Minister Gordon Brown to raise revenue through higher taxes on online gambling.

Save the Children UK and the Child Poverty Action Group have strongly urged the government to act.

Dan Paskins, UK impact director at Save the Children, said: “The only way to reduce child poverty for the greatest number of children is by scrapping the two-child limit. It’s now time for ministers to act.”

Alison Garnham, Chief Executive of the Child Poverty Action Group, said: “Unless the policy goes in the autumn child poverty strategy, this government’s shameful legacy will be more children in poverty at the end of this parliament than when it took office.”

CARE supports scrapping the two-child benefit cap and has campaigned on this issue for many years.

We welcome this recommendation from senior ministers, not only because it will lift many children out of child poverty, but because the cap has been cited as a reason some families feel they cannot have another child and, in some cases, feel they have no option but to have an abortion.