UK to scrap two-child benefit cap from next April

The UK government will abolish the two-child benefit cap in full from April next year, Chancellor Rachel Reeves has announced, marking one of the most significant welfare policy changes since Labour took office. The cap, introduced by the Conservative government in 2017, restricts universal credit and tax credit payments to a family’s first two children, regardless of financial circumstances.

Reeves said the decision reflects Labour’s belief that children should not bear the consequences of a system that has struggled to protect the most vulnerable. She argued that the cap has done little to influence family size but has pushed hundreds of thousands of children into hardship. The measure is expected to cost about £3 billion a year by 2029 to 2030 and forms part of a wider effort to reduce child poverty across the country.

The announcement drew immediate political debate. Conservative leader Kemi Badenoch defended the original policy, saying it encouraged families receiving benefits to make the same financial considerations as others. She argued that removing the cap risks placing further strain on public finances and accused the government of raising taxes on workers and savers to fund what she described as unnecessary increases in welfare spending. Badenoch said the Conservatives viewed the cap as a fair balance between supporting vulnerable households and protecting taxpayers.

Reeves dismissed that criticism and told MPs the cap has caused more harm than any other modern welfare policy. She said the change is fully funded through measures including a crackdown on tax avoidance, reforms to gambling taxes and efforts to reduce fraud and error within the welfare system. According to government estimates, ending the cap will lift,t around 450,000 children out of poverty by the end of the decade.

Labour MPs welcomed the announcement with loud applause in the House of Commons. Many within the party, along with child welfare organisations, had been urging the government for months to remove the cap, arguing it is the most efficient way to reduce child poverty. Reeves said the cap’s original justification had not been borne out by evidence and that families have suffered as a result of a policy designed more for political messaging than genuine fiscal savings.

Child poverty campaigners praised the decision. Alison Garnham, chief executive of Child Poverty Action Group, described the move as transformational and said it represents a new phase in efforts to reduce hardship among young people. She noted that while more action will be needed, the reversal gives the government a stronger foundation to build on.

Senior Labour MPs Helen Hayes and Debbie Abrahams also welcomed the announcement. In a joint statement, they said removing the cap will have a clear and positive impact on children’s wellbeing, but added that the government’s forthcoming child poverty strategy will need to be ambitious to deliver long-lasting progress.

Reeves said the change forms part of what she described as the biggest reduction in child poverty achieved by any government over a single parliamentary term since records began. She said the policy shift shows Labour’s commitment to rebuilding the welfare system in a way that protects children and supports families facing rising living costs.