Posted on by Michal Kfir
Chancellor of the Exchequer Rachel Reeves delivering her Budget in the House of Commons in London, on Wednesday
Rachel Reeves delivering her Budget in the House of Commons in London, on Wednesday. Photograph: House of Commons/PA Wire

Campaigners and Labour MPs hailed Chancellor Rachel Reeves yesterday after she confirmed the scrapping of the two-child benefit limit, which prevents parents from claiming universal credit or child tax credit for more than two children.

Labour MPs Helen Hayes and Debbie Abrahams, who chair the education committee and the work and pensions committee respectively, said in a joint statement that it was a “very welcome” move, but added that they would look closely at the details in the forthcoming wider strategy on tackling child poverty.

The Tribune Group of MPs, which includes former transport secretary Louise Haigh and former whip Vicky Foxcroft, expressed their support too. “We are pleased to see the decision to remove the two-child limit on benefits – a reform that is not only the right and moral choice, but also economically sensible”, the group said in a statement.

The two-child limit – was first announced in 2015 by the Conservatives and was brought into effect in 2017 – restricts universal credit (UC) and child tax credit to the first two children in most households. Organisations working in the sector say that 109 children across the UK are being pushed into poverty by the policy every day.

The change means that from April 2026 families will be able to receive the child component of UC for all children regardless of family size. The Office for Budget Responsibility (OBR) said this would lead to around 560,000 families receiving an increase in their UC grant, by an average of £5,310 per year.

The Child Poverty Action Group wrote on X in response: “This is a much-needed fresh start in our country’s efforts to eradicate child poverty, and while there is more to do, it gives us strong foundations to build on”.

The UK charity Mental Health Foundation posted: “Growing up in poverty is one of the key factors behind poor mental health. We welcome today’s decision to abolish the two-child benefit cap – it will be life-changing and reduces a significant barrier to good mental health.”

Abandoning the policy would reduce the number of children in poverty by an estimated 450,000 and would cost around £3 billion by the end of the current Parliament. However, a YouGov poll earlier this month of over 5,000 adults showed that 57% supported maintaining the policy.

Reeves said she would not “preside over a status quo that punishes children for the circumstances of their birth”, when she confirmed the scrapping of the two-child benefit limit on Wednesday.

The Department for Work and Pensions estimated that, after factoring in the policy change, there will be 4.3 million children in relative low income after housing costs in the last year of this Parliament.

The latest data, published by the Government earlier this year, estimated the number of children living in poverty in the UK had reached a record high of 4.45 million children in the year to March 2024.

It also showed that most children in poverty live in households with at least one adult in work. 35% of children in poverty live in households where all adults are in work, 37% live in households with at least one adult in work, and just over a quarter (28%) live in households where none of the adults work.