Two-child benefit cap to be lifted in autumn budget

Rachel Reeves is set to lift the two-child benefit limit in the budget, a key demand of Labour MPs and child poverty campaigners, with officials exploring options for a new tapered system.

- Jessica Elgot Deputy political editor

The chancellor and Keir Starmer have both said they expect to respond to recommendations of the child poverty taskforce at the budget, which is expected to say that lifting the two-child limit for universal credit and child tax credit would be one of the most effective ways to lift hundreds of thousands of children out of poverty.

Neither Starmer nor Reeves confirmed they would scrap the cap in their speeches at Labour party conference but have been emphatic about the need to address child poverty. The education secretary, Bridget Phillipson, is a known advocate, calling the cap, introduced under the Conservatives, a “spiteful policy”.

But the prime minister dropped a strong hint in his speech at the Labour conference that the change his government hoped to deliver was the "basic, ordinary hope of a better future for our children" and said the extension of free school meals and the introduction of free breakfast clubs was the first step towards eliminating child poverty.

No decision has been taken on what form the change will take. Officials are said to be wary of the escalating costs for very large families - those with more than six children may be entitled to thousands of pounds more in benefits if the cap is lifted completely.

There is also a parallel pressure of the need to bear down on economic inactivity and caution about a change in policy that could incentivise people to stay out of the workforce.