Chancellor Rachel Reeves is poised to announce the scrapping of the controversial two-child benefit cap in this week's Budget, delivering a significant financial boost to larger families on Universal Credit.
Financial Boost for Families
The policy change, confirmed for Wednesday's Budget announcement, will allow parents claiming Universal Credit to receive support for all their children, rather than being restricted to just the first two.
Currently, the two-child limit means that larger families must stretch their budgets to cover additional children, with the child element of Universal Credit worth £292.81 per child per month for children born after April 2017.
For a family with four young children, removing this restriction would mean an additional £586 every month under current payment levels, providing substantial relief to households struggling with the cost of living.
Political Divide and Rationale
The two-child benefit cap has long been a contentious issue between Labour and the Conservatives, representing a fundamental difference in approach to welfare policy.
Labour MPs have consistently argued that the policy penalises children for circumstances beyond their control, with Ms Reeves telling the BBC: "I don't think we can lose sight of the costs to our economy in allowing child poverty to go unchecked."
She emphasised that "a child should not be penalised because their parents don't have very much money" and highlighted various circumstances where families might find themselves in financial difficulty after having children, including parental illness or bereavement.
Conversely, Conservative politicians have maintained that it's unfair for families receiving benefits to get additional state support for having more children, arguing that people should only have as many children as they can afford to support.
Impact and Implementation
The Chancellor has faced significant pressure from within her own party to abolish the cap, and Wednesday's Budget will deliver on this key demand from Labour backbenchers.
This policy reversal is expected to make a substantial difference to low-income families with three or more children, potentially lifting many out of poverty and improving children's life chances.
Ms Reeves reinforced her position, stating: "I don't think that it's right that a child is penalised because they are in a bigger family, through no fault of their own."
The announcement forms part of Labour's broader strategy to address child poverty and support working families during ongoing economic challenges.
