Rachel Reeves signals two-child benefit limit will be scrapped at Budget

Reeves says it’s not right that a ‘child is penalised because they are in a bigger family’

Chancellor Rachel Reeves will deliver the Budget on November 26

by Democrat reporter

Chancellor Rachel Reeves gave a clear signal today the government will get rid of the two-child benefit limit – otherwise known as family allowance – in full at the Budget.

Sir Keir Starmer and the Chancellor have been looking at the Tory-era policy which restricts Universal Credit to the first two children in a family and has been blamed by charities for trapping kids in poverty.

There have been reports from Westminster the government was considering watering down the policy to mitigate the impact, including moving to a three-child benefit limit.

However, Reeves appeared to suggest on Monday she favours full abolition as called for by former Labour Prime Minister, Gordon Brown, pictured right.

She said it was not right that a “child is penalised because they are in a bigger family” as she vowed to cut the number of kids in poverty.

Reeves told BBC Radio 5 Live it was important not to let the “costs to our economy in allowing child poverty to go unchecked”.

She said: “In the end, a child should not be penalised because their parents don’t have very much money.

“Now, in many cases you might have a mum and a dad who were both in work, but perhaps one of them has developed a chronic illness, perhaps one of them has passed away.

“There are plenty of reasons why people make decisions to have three, four children, but then find themselves in difficult times.”

She added: “Lots and lots of different reasons why families change shape and size over time, and 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.

“So, we will take action on child poverty. The last Labour government proudly reduced child poverty and we will reduce child poverty as well.”

A Treasury source suggested the comments were a clear signal of intent from the Chancellor.

TUC general secretary Paul Nowak said: “Rachel Reeves has a generational opportunity to turn the tide on child poverty and immediately improve the lives of hundreds of thousands of kids.

“As the chancellor said, all children are equal and all deserve a decent start in life. This is not just a moral duty – it’s an economic one too.

He added: “Child poverty is a national emergency, costing us now and for generations to come if we don’t act. The government has recognised this with its commitment to delivering a child poverty strategy and important action on free school meals, breakfast clubs and much more.

“We hope that the Chancellor takes the chance at the Budget to build on this good work by scrapping the two child limit for good.”

Last week Brown insisted there must be “total abolition” in order to deliver on Labour’s promise to reduce poverty by the end of the Parliament.

He added: “I am confident that the two-child rule will be addressed.”

Brown has suggested a hike in taxes for gambling firms could fund the reversal of the policy that was introduced by the Tories in 2017.

He said: “We’re waiting for Rachel Reeves’s Budget, which I think will mention this. Keir Starmer, I know is personally concerned and interested in this.

“So I’m hopeful that in the next few weeks we’ll see the kind of action that we’ve been talking about.”

Starmer has previously insisted he is committed to driving down levels of child poverty but insisted there is no “silver bullet”.

In September, he said: “The last Labour government got child poverty down and it’s one of the proudest things that we did – I am determined to do it under this government.”

Last month leading think-tank the Resolution Foundation said fully scrapping the two-child limit is an essential step to reducing grim child poverty rates. It warned half measures – such as moving to a three-child limit, or lower child elements for third and subsequent child – would still leave higher rates of child poverty by the end of the decade.