Campaigners and Labour MPs hail Reeves’ decision to scrap two-child limit

Chancellor Rachel Reeves insisted she will not “preside over a status quo that punishes children for the circumstances of their birth” as she confirmed the scrapping of the controversial two-child benefits limit.

Ditching the policy will result in an estimated reduction of child poverty by 450,000 and cost around £3 billion at the end of this Parliament.

Labour had been under increasing pressure from anti-poverty campaigners, as well as many MPs within its own party, to end a policy introduced under the Conservatives.

Labour MPs Helen Hayes and Debbie Abrahams, who chair the education and work and pensions committees respectively, said it was a “very welcome” move and a “positive start”, but indicated their intention to keep the pressure up by adding they will “keep watch” for the detail in the forthcoming wider strategy on tackling child poverty.

Despite the repeated calls from campaigners and some Labour MPs, YouGov polling earlier this month of just over 5,000 adults suggested 57% were in favour of keeping the policy.

The two-child limit – first announced in 2015 by the Conservatives and which came into effect in 2017 – restricts child tax credit and universal credit to the first two children in most households.

Ms Reeves and Prime Minister Sir Keir Starmer had both hinted in the lead-up to the Budget that the cap could go.

Ahead of her speech on Wednesday, confirmation the policy will be scrapped from April came from the Office for Budget Responsibility (OBR), which apologised for a “technical error” which led to its economic and fiscal document being published early.

The document said the removal of the policy will cost £2.3 billion in 2026-27 and £3 billion in 2029-30.

It said the Government estimates the change will reduce child poverty by 450,000 by 2029-30 “relative to the level had the two-child limit remained in place”.

Organisations working in the sector argue 109 children across the UK are pulled into poverty by the policy every day.

Addressing the House of Commons, Ms Reeves said children had “paid the price for the policies of a party which opted for cynical gimmicks over real savings in our welfare system”.

She told MPs: “I don’t intend to preside over a status quo that punishes children for the circumstances of their birth.”

She said moves to reform gambling taxes, fraud in the welfare system and tax avoidance would all go towards funding the policy change.

She told Parliament: “Because I am tackling fraud and error in our welfare system, because I am cracking down on tax avoidance, because I am reforming gambling taxation, I can announce today – fully costed and fully funded – the removal of the two-child limit in full from April.”

She said Labour “do not believe that the solution to a broken welfare system is to punish the most vulnerable”, adding that the party “is achieving the biggest reduction in child poverty over a parliament since records began”.

Former Labour prime minister Gordon Brown, who was among the loudest voices urging the limit to be removed, thanked Ms Reeves “for her decisive stand in favour of childhood equality”.

He described the move as an “invest-now-save-later policy” which will result in improved educational outcomes, greater adult earnings and “which will ultimately pay for itself with higher tax receipts”.

The confirmation the cap will be scrapped was immediately welcomed by organisations which have long campaigned for it to go.

The Child Poverty Action Group said the change “will be transformational for children” and is a “much-needed fresh start in our country’s efforts to eradicate child poverty”, while Unicef UK described it as a “major, necessary decision to tackle record levels of child poverty in the UK”, adding: “No child should be punished for the number of siblings they have.”

Helen Barnard, director of policy at foodbank network Trussell, branded it a “bold step which will protect hundreds of thousands of children from growing up facing hunger and hardship”, and said the Chancellor had “listened to the families and foodbanks across the UK who have been imploring her to act”.

Action for Children said the move “marks a turning point for struggling families” and is “long overdue and a vital first step towards ending child poverty” while Barnardo’s hailed a “landmark moment” which “could transform life chances for a generation of children”.

The Government has previously said it will publish its wider child poverty strategy this autumn, having been delayed from an initial deadline of spring.

The latest data, published by the Government earlier this year, estimated the number of children living in poverty in the UK reached a record high of 4.45 million children in the year to March 2024.

The Children’s Commissioner for Wales, Rocio Cifuentes MBE, has responded to the 2-child limit announcement today: “A long-standing call of a huge number of children’s rights organisations, including Children’s Commissioners across the UK, has finally been heeded. Child poverty is the biggest issue affecting children and young people; it touches every single aspect of their lives and can be truly devastating. Today’s announcement is a significant and welcome development that will improve the lives of thousands of children in Wales.”

“The call of a large number of children’s rights organisations, including Children’s Commissioners across the UK, is finally a reality. Poverty is the biggest issue affecting children and young people; it touches every aspect of their lives and can be truly devastating. Today’s announcement is a significant and positive development that will improve the lives of thousands of children in Wales.”

Melanie Simmonds, head of Save the Children Cymru said: “We welcome this bold action by the Chancellor to scrap the two-child limit which will be life-changing for around 75,000 children impacted by this policy in Wales.

“Every child deserves a childhood free of poverty. For too long, children have been penalised by this pernicious policy, through no fault of their own.

“This announcement sends a clear signal that all our children’s lives are valued regardless of the circumstances of their birth and that the UK Government is committed to giving every child the best start in life. This is a moment of hope for hard up families.

“Equally the choices the next Welsh Government makes will shape whether Wales further addresses the issues of child poverty and builds a better future for every child.

“In our Senedd Election 2026 manifesto we are also calling for a Welsh benefit system that works for all which can remove barriers and provide further financial security to thousands of families.”