Labour step closer to removing two-child benefit cap as draft law clears Commons

Labour’s pledge to scrap the controversial two-child benefit cap is a step closer to law, after draft-legislation to axe the policy cleared the Commons.

First introduced by the Conservatives in 2017, the policy restricts child tax credit and universal credit (UC) to the first two children in most households.

MPs voted 361 to 84, majority 277, to pass the Universal Credit (Removal of Two Child Limit) Bill at third reading on Monday.

It will be further scrutinised by peers in the House of Lords before it can become law, but the Government has said it wants to ditch the two-child limit from April.

Work and pensions minister Sir Stephen Timms said the move “is a key step to tackling the structural drivers of child poverty”.

“This Bill, combined with other measures in our child poverty strategy, will lift over half a million children out of poverty,” he told the Commons.

About 400,000 fewer children will be living in poverty this April compared with 12 months earlier as a result of the change, according to analysis by the Joseph Rowntree Foundation (JRF).

But some Labour MPs criticised the Bill for not going far enough in tackling child poverty, calling for the Government to go further.

Former shadow chancellor John McDonnell said it was a “good Bill being ruined” by the Government not lifting the overall benefit cap, which limits the total amount of benefits a working-age household can receive.

“All we’re appealing for from the Government tonight is having introduced this excellent piece of legislation lifting 450,000 children out of poverty, please don’t leave the 150,000 behind,” he said.

“There is a sense of urgency, now, because I don’t want children in my constituency to continue to live in such poverty.”

Rebecca Long-Bailey, who is also a Labour former shadow cabinet member (Salford), said: “Alongside scrapping the two-child limit, we have got to address the wider benefit cap introduced in 2013, it’s bore down on the backs of many families, like a rucksack full of lead.”

She added: “If we’re serious about tackling structural poverty, we can’t remove one barrier while leaving one firmly in place.”

Labour had faced calls to scrap the policy since it came to power in summer 2024, but cited spending controls as a reason for not being able to ditch it immediately.

Seven Labour MPs were suspended by the party after backing an SNP motion to scrap the welfare measure in a vote in Parliament that year.

Following repeated calls from charities, campaigners and many of the party’s own MPs, Chancellor Rachel Reeves announced in the autumn budget last year that the Government would move to scrap the policy from April.

Responding to the debate, Sir Stephen said MPs were “right to urge the Government” to go further “but let’s recognise how big a change this will be”.

On the overall benefit cap, he said: “It is in the best interests of children to be in working households, and keeping the benefit cap in place does protect the incentive to work.”

The Conservatives have previously said they would re-instate the policy if they came back into power, with shadow work and pensions minister Rebecca Smith arguing it was introduced by her party “for one simple reason, fairness”.

She added: “We’re not suddenly lifting all these people out of poverty because we’re giving them more money. We don’t know what they’re going to spend that money on.”

The Office for Budget Responsibility (OBR) said the move will cost £3 billion a year by 2029-30.

Reform UK leader Nigel Farage previously said his party would abolish the policy, but later clarified that would only be for families where both parents were British and working full-time.

At committee stage, MPs voted 73 to 286, majority 213, to reject the Liberal Democrats’ bid to require the Government to review the impact of the change on child poverty, destitution, and wider social and economic outcomes.

Speaking from his party’s frontbench, Liberal Democrat MP Charlie Maynard said the Bill was “narrow in scope”, and there is much more that needs to be done.