During this week’s Budget, Chancellor of the Exchequer Rachel Reeves announced that the Two-Child Benefit Cap would be scrapped from April 2026.
The Government’s decision to remove the cap has been fully costed, and will be funded by reforming Motability tax reliefs and clamping down on fraud and error in the tax and benefits systems, including by increasing the number of face-to-face health assessments.
Currently, it is estimated that removing a two-child limit will lift 450,000 children out of poverty by 2029-2030.
Across Portsmouth, this could benefit over 5,000 estimated children living in households affected by the policy.
The two-child limit was initially introduced by the Conservatives in 2017, limiting claims made by parents for universal credit or tax credit to only their first two children.
This major decision was taken as an investment into Britain’s future and out of a moral imperative to address the child-poverty crisis that was left behind by the previous government:
- Child poverty increased by 900,000 between 2010 and 2024
- 10.5% of UK teenagers report not eating once a week due to a lack of money (vs 2.6% in Portugal)
- Child poverty is estimated to cost the country £40 billion a year (CPAG).
- Growing up in poverty makes you less likely to be in work and earn 25% less aged 30.
The Chancellor’s announcement follows a range of other measures taken by this Government since coming into office as part of their wider Child Poverty Strategy:
- Introduction of universal free breakfast clubs
- Expanding the provision of free school meals
- Increasing the provision of free childcare
Commenting on the scrapping of the two-child limit, Stephen Morgan, MP for Portsmouth South, said:
“I have long campaigned for measures to cut child poverty which is a stain on our society, and to ensure every child in our city gets the best start in life.
“That’s why I’m proud of the work I did as Education Minister to introduce free breakfast clubs in primary schools, deliver the 30 hours of government-funded childcare, and increase the number of children eligible for free school meals with half a million more children to benefit and lifting 100,000 children lifted out of poverty.
“I’m even prouder of the Chancellor taking the fair and necessary choices in this week’s Budget to scrap the Two Child Limit.
“This will lead to the largest expected reduction in child poverty over a parliament since comparable records began, and will transform the lives of children and families across Portsmouth.
“This is yet another example of this Labour government putting Labour values into action and delivering the change Portsmouth people voted for.”
Announcing the policy, Chancellor of the Exchequer Rachel Reeves said:
“I understand that many families are finding times hard, and that many have had to make difficult choices when it comes to having kids.
“And there are many reasons why people choose to have children and then find themselves in difficult times
“Because I am tackling fraud and error in our welfare system, because I am cracking down on tax avoidance, because I am reforming gambling taxation… I can announce today – fully costed and fully funded, the removal of the two-child limit in full from April.”
“Combined with other actions we are taking, this Labour government is achieving the biggest reduction in child poverty over a Parliament since records began.”
