Budget 2025: Why is Rachel Reeves scrapping the two-child benefit cap and how much will it cost?
Why Rachel Reeves is set to scrap the two-child benefit cap
- Labour is reportedly planning to announce the scrapping of the two-child benefit cap at Wednesday's Budget, following significant pressure from various groups.
- The policy, introduced by the Conservatives in April 2017, prevents parents from claiming Universal Credit or tax credit for their third or subsequent child.
- Chancellor Rachel Reeves has previously indicated that Labour believes children should not be 'penalised' for being part of larger families.
- Government insiders suggest that while a full scrap is considered, the Treasury is also exploring options to tweak the limit, such as increasing it to three or four children or introducing a taper rate.
- Currently, 1.6 million children are affected by the cap, with campaigners estimating it pulls 109 children into poverty daily and that its removal could lift 350,000 children out of poverty.