Reeves ready to ditch two-child benefit cap

Rachel Reeves is planning to remove the two-child benefit cap in full at this month's budget in a move that could cost more than £3bn but lift 350,000 children out of poverty.

- Kiran Stacey Policy editor

The chancellor is understood to be preparing to reverse the Conservative measure entirely, having originally looked at ways to taper it either for very large families or richer ones.

Reeves is acting after the prime minister, Keir Starmer, insisted that Labour should go into the next election having reduced child poverty.

But the chancellor also hopes that removing the cap, which is popular with voters but deeply unpopular among Labour MPs, will placate many in her party who are concerned about the political consequences of raising income tax.

The chancellor told BBC Radio 5 Live yesterday: “I don’t think we can lose sight of the costs to our economy in allowing child poverty to go unchecked. In the end, a child should not be penalised because their parents don’t have very much money.”

She added: “In many cases you might have a mum and dad who were both in work, but perhaps one of them has developed a chronic illness or one of them has passed away.

"There are plenty of reasons why people make decisions to have three, four children, but then find themselves in difficult times. But also you have things like adoption, or foster caring lots and lots of different reasons why families change shape and size over time.