Rachel Reeves, the UK’s Chancellor of the Exchequer, has ignited fresh debate over the future of the country’s two-child benefit cap, hinting in a BBC interview on November 10, 2025, that she favors removing the controversial limit in the upcoming Budget. The policy, introduced by the Conservative government in 2017, restricts working-age benefits—specifically child tax credit and universal credit—to the first two children in most households. It does not apply to Child Benefit, which is paid to families where the highest-earning parent earns less than £80,000.
“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,” Reeves told BBC Radio 5 Live, signaling a potential break from the policy that has drawn criticism from across the political spectrum and from children’s charities. She added, “And so we will take action on child poverty. The last Labour government proudly reduced child poverty, and we will reduce child poverty as well.”
The two-child cap has long been a lightning rod for campaigners and Labour MPs, who argue that it unfairly drags children into poverty. According to campaigners, 109 children across the UK are pulled into poverty every day by the policy. The Institute for Fiscal Studies (IFS) estimates that fully reversing the cap could lift 630,000 children out of absolute poverty—defined as households with an income below 60% of the median average—at an annual cost of £3.6 billion. The Resolution Foundation has offered similar figures, estimating that abolishing the two-child limit would be the most cost-effective way to reduce child poverty, with a projected cost of £3.5 billion by the end of the current Parliament in 2029/30.
Despite mounting pressure, Reeves has so far stopped short of announcing a definitive policy shift. Treasury officials have reportedly considered a range of options, including a “tapered” approach in which parents would receive most benefits for their first child, and less for each subsequent child. Other possibilities floated include limiting additional benefits to three or four children, rather than scrapping the cap entirely. However, Reeves’ recent comments suggest she is leaning away from limiting benefits based on family size altogether.
Labour’s position on the cap has evolved over the past year. Some Labour MPs have pushed for a full reversal, while others have advocated more incremental changes. The issue gained further prominence during the recent Labour deputy leadership contest, with both successful candidate Lucy Powell and runner-up Bridget Phillipson voicing support for stronger action on child poverty. Education Secretary Bridget Phillipson gave what BBC Breakfast described as "the strongest hint yet" that the government may move to scrap the cap.
Prime Minister Sir Keir Starmer, in his September 2025 conference speech, highlighted the extension of free school meals—a measure he said had already lifted 100,000 children out of poverty—as a “first step” on the journey to end child poverty. “A Britain where no child is hungry, where no child is held back by poverty, that’s a Britain built for all,” Starmer declared, underscoring Labour’s ambitions for broader social reform.
Yet the political calculus is complicated. Polling by YouGov published on November 10, 2025, revealed that 59% of Britons—including 54% of Labour voters—want to see the two-child benefit cap kept in place. This public sentiment is echoed by some politicians who argue that the policy is necessary for fiscal discipline. Conservative leader Kemi Badenoch has insisted the cap remains “right” even if it “may not be popular,” vowing to reinstate it if Labour scraps the measure. “Those on welfare should have to make the same choices as those who aren’t,” Badenoch argued after a symbolic House of Commons vote on the issue in September, accusing Labour and Reform UK of expecting working people to pay for “unlimited handouts.”
Shadow chancellor Sir Mel Stride was even more forceful in his criticism, telling the BBC, “Scrapping the two-child benefit isn’t just irresponsible – it’s unfair. Rachel Reeves must come clean: where’s the money coming from? Will it be more and more debt, or even higher taxes? The UK is in the grip of Labour’s cost-of-living crisis and the public deserve the truth.”
Reeves herself has acknowledged the fiscal challenges, suggesting in her BBC interview that the government may break its manifesto pledge not to raise income tax rates, VAT, or National Insurance. “It would of course be possible to stick with the manifesto commitments. But that would require things like deep cuts in capital spending,” she explained. “What I can promise now is I will always do what I think is right for our country. Not the politically easy choice, but the things that I think are necessary to put our country on the right path.” Reeves has also not ruled out continuing to freeze income tax thresholds beyond the 2028 date set by the previous government, a move that could quietly increase the tax burden as wages rise over time.
Pressed on whether tax hikes could have been avoided through lower public spending, Reeves was unapologetic about prioritizing increased funding for the National Health Service (NHS) and reducing waiting lists—two of her three stated Budget priorities. She claimed that some of the spending unveiled at June’s spending review had been “pencilled in, but not properly funded” by the previous Conservative government.
On the other side of the debate, children’s charities and anti-poverty organizations have welcomed the prospect of lifting the cap, but insist that only a full repeal will deliver meaningful change. The Children’s Charities Coalition—which includes Action for Children, Barnardo’s, The Children’s Society, National Children’s Bureau, and NSPCC—said in a statement, “Removing the two-child limit entirely would immediately benefit hundreds of thousands of children and be a huge step forward in tackling the shameful levels of child poverty in this country.”
Lord John Bird, founder of The Big Issue and a crossbench peer, echoed these sentiments, urging the government to “build on this bold first step to smash the systems that entrench children in poverty and rob them of their potential – which means scrapping the cap in full. Tapered versions of the cap will not be enough to deliver Labour’s ambitious promise to reduce child poverty.”
Steve Darling, Liberal Democrat work and pensions spokesman, called for swift action, arguing, “Lifting the two-child benefit cap is the quickest and most effective way to tackle the scourge of child poverty. And it’s the right thing for our economy too, supporting today’s children to have better health, education and employment prospects in their future.”
As the November Budget approaches, the future of the two-child benefit cap remains uncertain. Reeves’ comments have set the stage for a pivotal policy moment, one that will test the government’s commitment to reducing child poverty while balancing fiscal realities and public opinion. The outcome could reshape the lives of hundreds of thousands of children—and redefine the UK’s approach to social welfare for years to come.
