Starmer hints two-child benefit cap could be axed in Budget

Sir Keir Starmer has hinted the two-child benefit cap could be lifted, saying the Government would be taking “a number of measures” to “drive child poverty down”.

The Prime Minister’s comments follow Chancellor Rachel Reeves’ signal that she was open to scrapping the limit in her November 26 Budget, in a move that could cost more than £3 billion just as taxes are expected to rise.

Sir Keir told ITV’s Lorraine programme: “I can tell you in no uncertain terms I’m determined to drive child poverty down.

“It is what the last Labour government did, and it’s one of the things we were proudest of.

“I am personally determined that is what we are going to do.

“You won’t have to wait much longer to see what the measures are.

“Some of them are already in place: the free school meals, the breakfast clubs, free childcare are all part of it.

“But look, we need to do more than that and I can look you in the eye and tell you I am personally committed to driving down child poverty.”

Asked whether that would involve axing the two-child benefit cap, the Prime Minister said in the interview recorded on Monday and broadcast on Tuesday: “I wouldn’t be telling you that we’re going to drive down child poverty if I wasn’t clear that we will be taking a number of measures in order to do so.”

The Government is under increasing pressure from anti-poverty campaigners and from within Labour to end the controversial policy, which restricts child tax credit and universal credit to the first two children in most households.

Ms Reeves on Monday said she did not think children should be “penalised” for being part of large families, in the clearest signal so far that she could be open to scrapping the cap entirely.

It had previously been reported the Treasury was looking at different options including whether additional benefits might be limited to three or four children, or whether there could be a taper rate meaning parents would receive the most benefits for their first child and less for subsequent children.

The Chancellor told BBC Radio 5 Live it was important not to let the “costs to our economy in allowing child poverty to go unchecked”.

Her remarks came after Labour grandee Gordon Brown, one of the loudest advocates of removing the limit, said he was “confident” the Government would make changes to the cap at the Budget.

Estimates of scrapping the policy completely vary, with the Resolution Foundation estimating a cost of around £3.5 billion by the end of this Parliament (2029/30), while the Cpag and Joseph Rowntree Foundation have lower calculations of around £3 billion by then.

Ms Reeves has all but admitted Labour’s manifesto pledge not to hike income tax will be ditched in her highly anticipated autumn Budget.

She said on Monday that sticking to the election promise not to increase taxes for working people could only be met with “deep cuts” to public investment, which could derail hopes of future economic growth.

Ms Reeves could use an income tax rise to help plug what the National Institute of Economic and Social Research think tank said is a £50 billion black hole in public finances and give herself a larger fiscal headroom.

Campaigners from the Child Poverty Action Group argue that 109 children across the UK are pulled into poverty every day by the policy, which was first announced by the Conservatives in 2015 and came into effect in 2017.

Ministers have also faced calls from some Labour MPs and think tanks to lift the overall cap on benefits, amid concerns the current £22,000-a-year limit outside London could keep some families in poverty even if the two-child policy is abolished.

A Downing Street spokesman declined to comment on Budget speculation when asked about the demands, saying only the Government is “clear that the current welfare system isn’t fair or sustainable” and pointing to universal credit reforms.