Labour leader Keir Starmer is under growing pressure to scrap the controversial two-child benefit cap, despite defeating a King's Speech amendment on Tuesday evening that called for the limit to be removed.
The cap, which was introduced previously by the Conservatives, has been criticised for worsening child poverty, with the policy restricting child welfare payments to just the first two children born to most families.
Many Labour backbenchers had hoped the Prime Minister was going to announce the removal of the cap in last week’s King’s Speech but it was notably absent from the 40 bills that were put forward.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
An amendment was later tabled by SNP Westminster leader Stephen Flynn to remove the cap but the House of Commons voted 363 to 103 to reject it on Tuesday, although seven Labour MPs were suspended for voting in favour of the amendment.
Chancellor Rachel Reeves has said she would not pledge to remove the limit “without being able to say where the money was going to come from” to fund the move. She suggests it would cost £3bn to scrap the policy.
Campaigners are hoping its removal could still be announced in the upcoming Autumn Budget.
What is the two-child benefit cap?
The two-child benefit cap stops parents from claiming universal credit or tax credit for their third child. It was introduced by the then-Conservative chancellor George Osborne and applies to children born after 6 April 2017.
The two-child cap does not apply to child benefit, which is a weekly payment and is made for every child someone has.
At the time of its introduction, Osborne said that the benefits being paid to larger families were too costly and that the implementation of the cap would “ensure that families in receipt of benefits faced the same financial choices about having children as those supporting themselves solely in work”.
How has the two-child benefit cap affected families?
Official figures show that 1.6 million children are living in families impacted by the child benefit limit. The Child Poverty Action Group says the cap is the “biggest driver of rising child poverty”.
They add: “Delaying its abolition will harm many more young lives and undercut the government’s poverty-reduction plans.”
In response to the seven Labour MPs being suspended on Tuesday, Matt Wrack, general secretary of the Fire Brigades Union, said: "1.6 million children are affected by the two-child cap, and 300,000 children live in poverty as a result of it. The UK is a rich country with ample resources for everyone to live a decent life.
"The seven MPs who voted to scrap the cap spoke for millions of trade union members and many Labour Party members."
-
Renewable investing: who is paying for the green revolution?Investors in renewables have not been rewarded, says Bruce Packard. Will they fund the government’s plans?
-
UK house prices rose 4.6% last year – where did property prices grow most?House prices increased by 4.6% in 2024, giving an average property price of £268,000. Where did property prices grow the most and will they continue to rise this year?
