Chancellor Rachel Reeves announced the lifting of the two-child benefit cap, the controversial measure that prevented families on benefits from claiming support for more than two children.
The move was greeted with cheers by Labour MPs who have long opposed the cap, that was introduced by the Conservative government in 2017.
The removal of the cap will allow a benefit claim for every child in a family, providing a financial boost to larger low-income families but increasing government welfare spending.
“We are lifting 450,000 children out of poverty,” Reeves said as she delivered the announcement.
“This will support low-income families across Great Britain. 95,000 children in Scotland and 69,000 in Wales will benefit from this change. The Government will fund the Northern Ireland Executive to remove the two-child limit for families in Northern Ireland should it choose to do so, as welfare is devolved”, as explained in the budget published today.
Expanding the benefits comes with the costs.
The Office for Budget Responsibility (OBR) estimates removal of the two-child limit within universal credit will cost up to £3bn by 2029-30 and increase benefits for 560,000 families by an average of £5,310.
Added welfare costs were the main point of criticism coming from the Conservative side.
Opposition leader Kemi Badenoch told Parliament that the government has “lost control of welfare”, arguing that scrapping the two-child cap adds a further £3bn to the welfare bill.
The Institute for Fiscal Studies, however, backed the change, describing it as an important step in reducing child poverty.
As the Institute explained previously, two-child cap was an important driver of income poverty for families with children. Reversing it would, in the long run, bring more children out of absolute poverty.
The Chancellor also announced the scrapping of the “rape clause”, which obliged women to provide evidence that a child was conceived non-consensually to qualify for support beyond the two-child cap. The chancellor condemned the provision as “vile”.
When it comes to public services that are aimed at children, Reeves promised to fix “crumbling classrooms”. She promised £5m for libraries in secondary schools and £18m for improving and upgrading playgrounds across England.
